What changed in this filing

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Item 7. Management’s Discussion and Analysis

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(“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.

Approximately 196,000 transacting service professionals actively sought consumer matches, completed jobs, or advertised work through Angi Inc.

platforms during the three months ended December 31, 2023.

Additionally, consumers turned to at least one of our brands to find a professional for approximately 23 million projects during the year ended December 31, 2023.

The Company has four operating segments:

The Company has three 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.

and (iii) International (consisting of businesses in Europe and Canada) and operates under multiple brands including Angi, HomeAdvisor, and Handy.

Ads and Leads provides service professionals the capability to engage with potential customers, including quoting 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.

Services 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.

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.

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We have made, and expect to continue to make, substantial investments in digital and traditional advertising (with continued expansion into new and existing digital platforms) to consumers and service professionals to promote our products and services and to drive traffic to our various platforms and service professionals.

Total Home Roofing, LLC Sale

On November 1, 2023, Angi Inc.

completed the sale of 100% of its wholly-owned subsidiary, Total Home Roofing, LLC (“THR,” which comprised its Roofing segment), and has reflected it as a discontinued operation in its financial statements.

The financial information for prior periods has been recast to conform to the current year presentation.

For additional details, see “ Note 16 — Discontinued Operations ” to the consolidated financial statements included in “ Item 8.

Consolidated Financial Statements and Supplementary Data .”

Defined Terms and Operating Metrics:

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:

• 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.

• Ads and Leads Revenue primarily reflects domestic 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 connects them with a service professional to perform the service.

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

• 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.

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• 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.

• 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, which commenced February 15, 2021.

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

Components of Results of Operations

Sources of Revenue

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.

Ads and Leads revenue includes consumer connection revenue, which comprises fees paid by service professionals for consumer matches (regardless of whether the service professional ultimately provides the requested service), revenue from service professionals under contract for advertising, membership subscription revenue from service professionals and consumers, and revenue from other services.

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

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.

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

International revenue primarily comprises consumer connection revenue for consumer matches and membership subscription revenue 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.

Effective January 1, 2023, we 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 revenue to be reported as the net amount of what is received from the consumer after deducting the amounts owed to the service professional providing the service effective for all arrangements entered into after December 31, 2022.

There is no impact to operating loss or Adjusted EBITDA from this change in revenue recognition.

For the years ended December 31, 2022 and 2021, if Services revenue were recorded on a net basis, revenue would have been reduced by $242.6 million and $180.7 million, respectively.

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.

Cost of revenue, which excludes depreciation, consists primarily of (i) payments made to independent third-party service professionals who perform work contracted under Services arrangements that were entered into prior to January 1, 2023 and the change to net revenue reporting, (ii) credit card processing fees, and (iii) hosting fees.

Gross profit is revenue less cost of revenue.

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Operating Costs and Expenses:

• 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.

• 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, and (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) service guarantee expense, (iv) software license and maintenance costs, and (v) outsourced personnel 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) provision for credit losses, (iii) software license and maintenance costs, (iv) outsourced personnel costs for personnel engaged in assisting in customer service functions, (v) fees for professional services, 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 (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

Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”) is a non-GAAP financial measure.

See “ Principles of Financial Reporting ” for the definition of Adjusted EBITDA and a reconciliation of net loss attributable to Angi Inc.

See “ Principles of Financial Reporting ” for the definition of Adjusted EBITDA and a reconciliation of net

loss attributable to Angi Inc.

shareholders to operating loss to consolidated Adjusted EBITDA for the years ended December 31, 2023, 2022, and 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

In March 2021, the Company changed its name to Angi Inc.

and updated one of its leading websites and brands, Angie’s List, to Angi, and since then, has concentrated its marketing investment in the Angi brand in order to focus its marketing, sales, and branding efforts on a single brand.

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 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 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.

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

As previously disclosed, the impact of COVID-19 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 early 2021, Service Requests started to decline in May 2021 and continued to decline during 2022 due, in part, to COVID-19 measures that were more widely in place in prior periods.

Our ability to monetize Service Requests rebounded modestly in the second half of 2021 and the first half of 2022;

however, that improved monetization plateaued in the third quarter of 2022 returning to monetization rates similar to those experienced pre-COVID-19.

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 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.

Results of Operations for the Years Ended December 31, 2023, 2022, and 2021

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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.

Included below are year-over-year comparisons between 2023 and 2022, as well as 2022 and 2021, reflecting our current segment structure following the sale of THR.

Years Ended December 31,

2022 $ Change % Change 2021 $ Change % Change 2020

2023 2022 2021 2023 Change 2022 Change

(Dollars in thousands)

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Advertising revenue 290,799 265,466 252,206 25,333 10% 13,260 5%

Membership revenue 60,411 (7,651) (11)% 68,062 (6,011) (8)% 74,073

Membership subscription revenue 52,305 60,411 68,062 (8,106) (13)% (7,651) (11)%

Other revenue 715 1,449 8,384 (734) (51)% (6,935) (83)%

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Services revenue 118,033 381,256 289,948 (263,223) (69)% 91,308 31%

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 1,242,941 1,663,317 1,517,022 (420,376) (25)% 146,295 10%

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Years Ended December 31,

2022 Change % Change 2021 Change % Change 2020

2023 2022 2021 2023 Change 2022 Change

(In thousands, rounding differences may occur)

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For the year ended December 31, 2023 compared to the year ended December 31, 2022

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.

Ads and Leads revenue decreased $157.2 million, or 12%, due primarily to a decrease in consumer connection revenue of $173.6 million, or 18%, and a decrease in membership subscription revenue of $8.1 million, or 13%, due to a decline in Monetized Transactions and a decline in service professionals in the Angi network, respectively, partially offset by an increase of $25.3 million, or 10%, in advertising revenue.

The decrease in Monetized Transactions was a result of an effort to rationalize sales to service professionals that are unprofitable, as well as efforts to increase lead quality, including changes to certain demand channels, to enhance the user experience for both homeowners and service professionals.

The increase in advertising revenue was primarily driven by continued growth in sales and improved retention.

Services revenue decreased $263.2 million, or 69%, due primarily to the change to net revenue reporting described above under “Sources of Revenue,” a decrease of $92.4 million due to the continued shift away from complex and less profitable offerings, and lower Service Requests.

International revenue increased $14.8 million, or 15%, due primarily to a larger service professional network and higher revenue per service professional.

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 an 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

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2022 $ Change % Change 2021 $ Change % Change 2020

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For the year ended December 31, 2023 compared to the year ended December 31, 2022

Services cost of revenue decreased $274.8 million, or 93%, and decreased as a percentage of revenue, due primarily to a $248.8 million decrease in payments to third-party professional service providers due primarily to the change to net revenue reporting effective January 1, 2023, described above.

Additionally, payments to third-party professional service providers decreased as a result of the shift away from complex and less profitable offerings.

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

2023 2022 2021 2023 Change 2022 Change

(Dollars in thousands)

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For the year ended December 31, 2023 compared to the year ended December 31, 2022

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.

Angi gross profit decreased $130.8 million, or 9%, due primarily to the decrease in revenue described in the revenue discussion above.

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

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.

Angi gross profit increased $82.3 million, or 6%, 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.

Selling and marketing expense

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2022 $ Change % Change 2021 $ Change % Change 2020

2023 2022 2021 2023 Change 2022 Change

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For the year ended December 31, 2023 compared to the year ended December 31, 2022

Ads and Leads selling and marketing expense decreased $81.8 million, or 11%, driven by decreases of $82.0 million in advertising expense and $4.1 million in professional fees, partially offset by an increase of $5.0 million in compensation expense.

The decrease in advertising expense was primarily due to a $107.5 million decrease in online marketing spend due to increased efficiency, partially offset by a $25.3 million increase in television spend due to efforts to build awareness of the Angi brand.

The decrease in professional fees is primarily due to a decrease in marketing and branding consultancy fees.

The increase in compensation expense is primarily due to increased sales commissions due to the immediate expensing of commissions for certain transactions beginning October 1, 2022.

Services selling and marketing expense decreased $34.8 million, or 47%, driven by decreases of $22.1 million in professional fees and third-party wages, $17.4 million in compensation expense, and $7.1 million of advertising expense, partially offset by an increase of $14.9 million in service guarantee expense.

The decrease in professional fees and third-party wages is primarily due to $12.7 million less in phone-based sales wages primarily resulting from increased reliance on more profitable digital conversion channels and $6.1 million less due to streamlined fulfillment operations, partially driven by fewer complex services.

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

The decrease in advertising expense is primarily due to a decrease in service professional marketing spend.

The increase in service guarantee expense is due to the aforementioned change in contractual terms and conditions such that this expense is no longer a component of cost of revenue, which is where the expense was recorded prior to January 1, 2023.

International selling and marketing expense decreased $5.8 million, or 14%, driven by a $10.2 million decrease in advertising expense, partially offset by an increase in compensation expense of $3.3 million.

The decrease in advertising expense is primarily due to improved online efficiency and a decrease in television advertising expense.

The increase in compensation expense is primarily driven by an increase in headcount.

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.

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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 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.

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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 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,

2023 2022 2021 $ Change $ Change

$ Change % Change $ Change % Change

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For the year ended December 31, 2023 compared to the year ended December 31, 2022

Ads and Leads general and administrative expense decreased $69.9 million, or 24%, due primarily to decreases of $24.5 million in provision for credit losses, $21.4 million in professional fees, $12.9 million in compensation expense, and $8.6 million in third-party wages.

The decrease in the provision for credit losses is primarily due to lower revenue and improved collection rates.

The decrease in professional fees is primarily due to a decrease in legal fees, including a $10.9 million benefit in 2023 related to insurance coverage for previously incurred legal fees.

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

The decrease in third-party wages is primarily due to a reduction in third-party providers.

Services general and administrative expense decreased $22.7 million, or 34%, due primarily to decreases of $11.1 million in compensation expense, $8.6 million in professional fees, and $4.8 million in the provision for credit losses.

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

The decrease in professional fees is primarily due to a reduction in legal fees.

The decrease in the provision for credit losses is primarily due to lower revenue and improved collection rates.

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.

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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 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.

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.

3 unchanged sentences

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.

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,

2022 $ Change % Change 2021 $ Change % Change 2020

2023 2022 2021 2023 Change 2022 Change

(Dollars in thousands)

2 unchanged sentences

For the year ended December 31, 2023 compared to the year ended December 31, 2022

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.

Product development expense increased $22.7 million, or 31%.

This contrasts with a $67.7 million, or 59%, decrease in capital expenditures, which primarily comprises internally developed software.

The increase in product development expense was driven by a decrease in the percentage of internally developed software that was subject to capitalization.

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

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.

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.

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.

Product development expense increased $2.9 million, or 4%.

This increase is in addition to the increase in capital expenditures.

Years Ended December 31,

2022 $ Change % Change 2021 $ Change % Change 2020

(In thousands)

2023 2022 2021 2023 Change 2022 Change

(Dollars in thousands)

Depreciation $ 93,604 $ 77,523 $ 59,025 $ 16,081 21% $ 18,498 31%

1 unchanged sentence

For the year ended December 31, 2023 compared to the year ended December 31, 2022

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,

2022 $ Change % Change 2021 $ Change % Change 2020

(In thousands)

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

As a percentage of revenue 1 % — % — %

Depreciation increased due primarily to investments in capitalized software which are being depreciated over an average useful life of two years.

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.

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.

Operating income (loss)

Years Ended December 31,

2022 $ Change % Change 2021 $ Change % Change 2020

2023 2022 2021 2023 Change 2022 Change

(Dollars in thousands)

1 unchanged sentence

Services (23,450) (95,166) (63,984) 71,716 75% (31,182) (49)%

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

Corporate (61,377) (61,794) (56,196) 417 1% (5,598) (10)%

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 Domestic (34,784) (71,367) (54,695) 36,583 51% (16,672) (30)%

International 8,286 (4,253) (13,222) 12,539 NM 8,969 68%

Total $ (26,498) $ (75,620) $ (67,917) $ 49,122 65% $ (7,703) (11)%

2 unchanged sentences

NM = Not meaningful

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.

Operating losses decreased for fiscal year 2023 compared to fiscal year 2022 and increased for fiscal year 2022 compared to fiscal year 2021 due primarily to the factors described above in the revenue, cost of revenue, sales and marketing, general and administrative, product development, and depreciation expense discussions.

At December 31, 2023, there is $47.8 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 2.29 years.

1 unchanged sentence

Years Ended December 31,

2022 $ Change % Change 2021 $ Change % Change 2020

2023 2022 2021 2023 Change 2022 Change

(Dollars in thousands)

Ads and Leads $ 147,357 $ 168,952 $ 136,260 $ (21,595) (13)% $ 32,692 24%

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

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

Services 8,123 (52,126) (48,203) 60,249 NM (3,923) (8)%

Corporate (50,076) (49,866) (46,066) (210) —% (3,800) (8)%

Total Domestic 105,404 66,960 41,991 38,444 57% 24,969 59%

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

International 13,074 (481) (6,615) 13,555 NM 6,134 93%

Total $ 118,478 $ 66,479 $ 35,376 $ 51,999 78% $ 31,103 88%

4 unchanged sentences

For the year ended December 31, 2023 compared to the year ended December 31, 2022

Ads and Leads Adjusted EBITDA decreased $21.6 million, or 13%, to $147.4 million, and decreased as a percentage of revenue, driven by lower gross profit due to a decrease in revenue, partially offset by lower general and administrative expense due to a decrease in the provision for credit losses, legal fees, and compensation costs and lower selling and marketing expense due to improved marketing efficiency.

Services Adjusted EBITDA increased $60.2 million, from a loss of $52.1 million to income of $8.1 million, and increased as a percentage of revenue, driven by higher gross profit due to pricing and fulfillment optimization efforts over the past year and lower operating expenses due to a reduced overall cost base as a result of exiting complex and less profitable offerings.

International Adjusted EBITDA increased $13.6 million, from a loss of $0.5 million to income of $13.1 million, driven by an increase in revenue and lower selling and marketing expense due to more efficient marketing spend.

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.

Corporate Adjusted EBITDA loss increased $3.8 million, or 8%, to $49.9 million, primarily due to 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 to 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

Interest expense relates to interest on the ANGI Group Senior Notes, ANGI Group Term Loan, and commitment fees on the ANGI Group Revolving Facility.

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

The ANGI Group Revolving Facility was terminated effective August 3, 2021.

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

Interest expense relates to interest on the ANGI Group Senior Notes.

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

4 unchanged sentences

Interest expense $ (20,137) $ (20,107) $ (23,485) $ (30) —% $ 3,378 (14)%

For the year ended December 31, 2023 compared to the year ended December 31, 2022

Interest expense was flat for the year ended December 31, 2023 compared to the year ended December 31, 2022.

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

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

4 unchanged sentences

Other income (expense), net $ 18,427 $ 1,169 $ (2,510) $ 17,258 1,476% $ 3,679 NM

Other income, net in 2023 primarily includes interest income of $17.1 million and net foreign currency exchange gains of $1.2 million.

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.

Income tax benefit

Income tax (provision) benefit

Years Ended December 31,

1 unchanged sentence

(Dollars in thousands)

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

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.

Income tax (provision) benefit $ (1,839) $ 5,390 $ 29,894 $ (7,229) NM $ (24,504) (82)%

Effective income tax rate NM 6% 32%

In 2023, the Company recorded an income tax provision, despite pre-tax losses, due primarily to tax shortfalls generated by the vesting and exercise of stock-based awards, nondeductible executive compensation expense, and unbenefited foreign losses, partially offset by research credits.

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

For further details of income tax matters, see “ Note 12—Income Taxes ” to the consolidated financial statements included in “ Item 8.

3 unchanged sentences

generally accepted accounting principles (“GAAP”).

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.

This measure is one of the primary metrics by which we evaluate the performance of our businesses, and on which 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.

17 unchanged sentences

Net earnings attributable to noncontrolling interests 629 468 884

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

Loss from discontinued operations, net of tax 10,264 38,814 6,476

Income tax provision (benefit) 1,839 (5,390) (29,894)

Other (income) expense, net (18,427) (1,169) 2,510

4 unchanged sentences

Amortization of intangibles 7,958 13,774 16,097

Goodwill impairment 26,005 — —

Adjusted EBITDA $ 118,478 $ 66,479 $ 35,376

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

For a reconciliation of operating income (loss) to Adjusted EBITDA for the Company’s reportable segments, see “ Note 9 —Segment Information ” to the consolidated financial statements included in “ Item 8.

Consolidated Financial Statements and Supplementary Data .”

7 unchanged sentences

Amortization of intangible assets and impairments of goodwill and intangible assets are non-cash expenses related primarily to acquisitions.

At the time of an acquisition, the identifiable definite-lived intangible assets of the acquired company, such as service professional relationships, technology, memberships, customer lists and user base, and trade names, are valued and amortized over their estimated lives.

At the time of an acquisition, the identifiable definite-lived intangible assets of the acquired company, such as service professional relationships, technology, and trade names, are valued and amortized over their estimated lives.

Value is also assigned to acquired indefinite-lived intangible assets, which comprise trade names and trademarks, and goodwill that are not subject to amortization.

10 unchanged sentences

Long-term debt:

Senior Notes $ 500,000 $ 500,000

Total long-term debt 500,000 500,000

ANGI Group Senior Notes $ 500,000 $ 500,000

unamortized debt issuance costs 3,953 4,716

Total long-term debt, net $ 496,047 $ 495,284

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

At December 31, 2023, all of the Company’s international cash can be repatriated without significant consequences.

Cash Flow Information

1 unchanged sentence

Years Ended December 31,

2023 2022 2021

(In thousands)

Net cash (used in) provided by:

Operating activities $ 27,069 $ 6,209

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

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

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 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.

Net cash provided by (used in):

Operating activities attributable to continuing operations $ 94,184 $ 46,402 $ 24,576

Investing activities attributable to continuing operations $ (46,557) $ (115,317) $ (19,412)

Financing activities attributable to continuing operations $ (16,983) $ (17,227) $ (345,168)

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

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

Adjustments to net loss attributable to continuing operations consist primarily of $93.6 million of depreciation, $79.4 million of provision for credit losses, $43.4 million of stock-based compensation expense, $11.9 million of non-cash lease expense, and $8.0 million of amortization of intangibles, partially offset by $10.0 million of deferred income taxes.

The decrease from changes in working capital consists primarily of an increase of $58.2 million in accounts receivable, a decrease of $20.7 million in operating lease liabilities, an increase of $13.9 million of other assets, and a decrease of $8.0 million in accounts payable and other liabilities.

The increase in accounts receivable is due primarily to timing of cash receipts.

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

The increase in other assets is due primarily to a $10.9 million receivable related to insurance coverage for previously incurred legal fees.

The decrease in accounts payable and other liabilities is due to a decrease in accrued advertising.

Net cash used in investing activities attributable to continuing operations includes capital expenditures of $47.8 million primarily related to investments in capitalized software to support the Company’s products and services and purchases of marketable debt securities of $12.4 million, partially offset by maturities of marketable debt securities of $12.5 million and $1.0 million of proceeds for the sale of THR.

Net cash used in financing activities attributable to continuing operations includes $10.9 million for the repurchase of 4.4 million shares of Angi Inc.

Class A common stock, on a settlement date basis, at an average price of $2.50 per share and $6.0 million for the payment of withholding taxes on behalf of employees for stock-based awards that were net settled.

Adjustments to net loss attributable to continuing operations consist primarily of $104.3 million of provision for credit losses, $77.5 million of depreciation, $50.8 million of stock-based compensation expense, $13.8 million of non-cash lease expense (including impairment of right-of-use assets), and $13.8 million of amortization of intangibles, partially offset by deferred income taxes of $9.8 million.

The decrease from changes in working capital consists primarily of an increase of $111.9 million in accounts receivable, a decrease of $16.7 million in operating lease liabilities, and a decrease of $3.0 million in deferred revenue, partially offset by increases of $11.6 million in accounts payable and other liabilities and $3.2 million in income taxes payable and receivable.

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

1 unchanged sentence

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.

The increase in accounts payable and other liabilities is due primarily to increases in accrued expenses related to the 2021 brand integration initiative.

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

Net cash used in investing activities attributable to continuing operations includes $115.5 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 attributable to continuing operations 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.

Adjustments to net loss attributable to continuing operations consist primarily of $86.6 million of provision for credit losses, $59.0 million of depreciation, $28.2 million of stock-based compensation expense, $20.5 million of non-cash lease expense, and $16.1 million of amortization of intangibles, partially offset by $34.2 million of deferred income taxes.

The decrease from changes in working capital consists primarily of an increase of $107.0 million in accounts receivable, and a decrease of $16.6 million in operating lease liabilities, partially offset by an increase of $21.7 million in accounts payable and other liabilities.

1 unchanged sentence

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.

The increase in accounts payable and other liabilities is due primarily to increases in accrued advertising.

Net cash used in investing activities attributable to continuing operations includes $69.9 million of capital expenditures, primarily related to investments in capitalized software to support the Company’s products and services, partially offset by proceeds of $50.0 million from the maturities of marketable debt securities.

Net cash used in financing activities attributable to continuing operations 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.

Discontinued Operations

Net cash provided by (used in) discontinued operations of $11.0 million, $(20.1) million, and $(44.0) million for the years ended December 31, 2023, 2022, and 2021, respectively, relates to the operations for THR.

The Company does not expect cash flows from discontinued operations following the sale of THR on November 1, 2023.

Liquidity and Capital Resources

Financing Arrangements

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, 2023, the Company repurchased 4.4 million shares, on a trade date basis, of its common stock at an average price of $2.50 per share, or $11.1 million in aggregate.

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.

During the fourth quarter of 2023, Angi Inc.

put in place a share repurchase plan with the intent of utilizing the remaining shares in its stock repurchase authorization.

The plan will be subject to price and volume limitations.

From January 1, 2024 through February 9, 2024, the Company repurchased an additional 2.7 million shares at an average price of $2.36 per share, or $6.3 million in aggregate.

The Company had 7.9 million shares remaining in its share repurchase authorization as of February 9, 2024.

The Company may purchase its shares pursuant to its authorization over an indefinite period of time in 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

12 unchanged sentences

(In thousands)

Stock appreciation rights $ 80 $ 40 14

RSUs 58,925 28,855 10,405

Other equity awards (a)(b)

RSUs and other equity awards (a)(b)

67,367 32,548 14,097

Total outstanding employee stock-based awards $ 67,367 $ 32,548 14,097

6 unchanged sentences

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 .”

Consolidated Financial Statements and Supplementary Data ” includes operating leases as described in “ Note 5—Leases ,” and principal and interest payments on long-term as debt described in “ Note 6 — Long-term Debt .”

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

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Purchase obligations $ 25,147 $ 2,091 $ — $ — $ 27,238

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.

Purchase obligations include (i) $13.0 million for the final payment related to a three-year cloud computing arrangement, with the final payment expected to be made by September 2024, (ii) $8.4 million related to technology contracts spend, and (iii) $3.5 million related to media spend to be made in 2024.

Capital Expenditures

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.

The Company’s 2024 capital expenditures are expected to be higher than 2023 capital expenditures of $47.8 million by approximately 15% to 30% due to an increase in the capitalization rate of software development projects.

Liquidity Assessment

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.

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

At December 31, 2023, IAC held all Class B shares of Angi Inc., which represent 84.2% of the economic interest and 98.1% of the voting interest of the Company.

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.

While Angi 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’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.

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Management of the Company is required to make certain estimates, judgments and assumptions during the preparation of its consolidated financial statements in accordance with GAAP.

These estimates, judgments and assumptions impact the reported amount of assets, liabilities, revenue and expenses and the related disclosure of contingent assets and liabilities.

These estimates, judgments and assumptions impact the reported amount of assets, liabilities, revenue and expenses and the related disclosure of assets and liabilities.

Actual results could differ from these estimates.

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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.

The Company maintains a credit loss reserve to provide for the estimated amount of accounts receivable that will not be collected.

The credit loss reserve is based upon a number of factors, including the length of time accounts receivable are past due, the Company’s previous loss history and the specific customer’s ability to pay its obligation to the Company.

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

The Company maintains an allowance for credit losses to provide for the estimated amount of accounts receivable that will not be collected.

The allowance for credit losses is based upon a number of factors, including the length of time accounts receivable are past due, the Company’s previous loss history, the specific customer’s ability to pay its obligation to the Company and any other forward-looking data regarding customers’ ability to pay that is available.

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

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.

The carrying value of the credit loss allowance is $24.7 million and $38.8 million at December 31, 2023 and 2022, respectively.

The provision for credit losses was $79.4 million, $104.3 million, and $86.6 million for the years ended December 31, 2023, 2022, and 2021, respectively.

Business Combinations

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

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 Company made no acquisitions, which are generally referred to in GAAP as business combinations, in the years ended December 31, 2023 and 2022.

The Company acquired THR in the year ended December 31, 2021, however, following its sale on November 1, 2023, it is reflected as a discontinued operation in the Company’s financial statements.

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.

Management makes two critical determinations at the time of an acquisition, the reporting unit that will benefit from the acquisition and to which goodwill will be assigned and the allocation of the purchase price of the business to the assets acquired and the liabilities assumed based upon their fair values.

Management makes two critical determinations at the time of an acquisition:

(1) the reporting unit(s) that will benefit from the acquisition and to which goodwill will be assigned and (2) the allocation of the purchase price of the acquired business to the assets acquired and the liabilities assumed based upon their fair values.

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, 2022, the Company has four reporting units:

Ads and Leads, Services, Roofing and International.

At October 1, 2023, the Company had four reporting units:

Ads and Leads, Services, Roofing (subsequently sold as described above) 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.

The determination of purchase price and the fair value of monetary assets acquired and liabilities assumed is typically the least complex aspect of the Company’s accounting for business combinations due to management’s experience and the inherently lower level of complexity.

Due to the higher degree of complexity associated with the valuation of intangible assets, the Company usually obtains the assistance of outside valuation experts in the allocation of purchase price to the identifiable intangible assets acquired, which can be both definite-lived, such as acquired technology, customer and contractor relationships, or indefinite lived, such as acquired trade names and trademarks.

While outside valuation experts may be used, management has ultimate responsibility for the valuation methods, models and inputs used and the resulting purchase price allocation.

The excess purchase price over the net tangible and identifiable intangible assets is recorded as goodwill and is assigned to the reporting unit that is expected to benefit from the business combination as of the acquisition date.

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

Due to the higher degree of complexity associated with the valuation of acquired intangible assets, the Company usually obtains the assistance of outside valuation experts in the allocation of purchase price to the identifiable intangible assets acquired, which can be both definite-lived, such as acquired technology, customer and contractor relationships, or indefinite lived, such as acquired trade names and trademarks.

While outside valuation experts may be used, management has the ultimate responsibility for the valuation methods, models and inputs used and the resulting purchase price allocation.

The excess purchase price over the value of the net tangible and identifiable intangible assets acquired is recorded as goodwill and is assigned to the reporting unit(s) that is expected to benefit from the business combination as of the acquisition date.

Recoverability of Goodwill and Indefinite-Lived Intangible Assets

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Indefinite-lived intangible assets, which consist of the Company’s acquired trade names and trademarks, have a carrying value of $170.8 million and $170.1 million at December 31, 2023 and 2022, 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.

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;

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management considers the factors it deems relevant in making its more likely than not assessments.

While the Company also has the option under GAAP to qualitatively assess whether it is more likely than not that the fair values of its indefinite-lived intangible assets are less than their carrying values, the Company’s policy is to quantitatively determine the fair value of each of its indefinite-lived intangible assets annually as of October 1, in part, because the level of effort required to perform the quantitative and qualitative assessments is essentially equivalent.

While the Company also has the option under GAAP to qualitatively assess whether it is more likely than not that the fair values of its indefinite-lived intangible assets are less than their carrying values, the Company’s policy is to determine the fair value of each of its indefinite-lived intangible assets annually as of October 1, in part, because the level of effort required to perform the quantitative and qualitative assessments is essentially equivalent.

If the conclusion of our qualitative assessment is that there are indicators of impairment and a quantitative test is required, the annual or interim quantitative test of the recovery of goodwill involves a comparison of the estimated fair value of the Company’s reporting unit that is being tested to its carrying value.

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A reporting unit is an operating segment or one level below an operating segment, which is referred to as a component.

This reassessment of reporting units is also made each time the Company changes its operating segments.

This reassessment of reporting units is also made each time the Company changes its operating segments to the extent that this also results in a change in reporting units.

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.

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.

For the Company’s annual goodwill test at October 1, 2023, a qualitative assessment of the Ads and Leads, Services, and International reporting units was performed by the Company to evaluate whether it is more likely than not that the fair value of these reporting units was in excess of their respective carrying values.

The primary factors that the Company considered in its qualitative assessment for each of these reporting units are described below:

• The Company considered the strong forecasted operating performance, in addition to actual operating results in the current year, of the Ads and Leads, Services, and International reporting units.

• The Company also considered the prior year annual valuations of the Ads and Leads, Services, and International reporting units prepared as of October 1, 2022, and valuations of the International reporting unit prepared approximate to, however, not as of, October 1, 2023, in connection with the issuance and/or settlement of equity awards that are denominated in the equity of this business.

Based on these factors we concluded that it is not more likely than not that the fair value of the reporting units is below their respective carrying amounts.

As of October 1, 2023, prior to its sale on November 1, 2023, the Roofing reporting unit had no goodwill or indefinite-lived intangible assets.

If and when a quantitative test is performed, the fair value of the Company’s reporting units is determined using both an income approach based on discounted cash flows (“DCF”) and 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.

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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 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.

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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.

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The discount rates used in the Company’s annual indefinite-lived impairment assessment ranged from 15.0% to 17.0% in 2023 and 12.0% to 18.5% in 2022, and the royalty rates used ranged from 2.5% to 4.5% in 2023 and 2.0% to 4.5% in 2022.

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

We review the carrying value of all long-lived assets, comprising of leased right-of-use assets (“ROU assets”), capitalized software, leasehold improvements and equipment and definite-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable.

The carrying value of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset.

If the carrying value is deemed not to be recoverable, an impairment loss is recorded equal to the amount by which the carrying value of the long-lived asset exceeds its fair value.

In addition, the Company reviews the useful lives of its long-lived assets whenever events or changes in circumstances indicate that these lives may be changed.

The carrying value of these long-lived assets is $219.2 million and $210.5 million at December 31, 2022 and 2021, respectively.

The October 1, 2023 and 2021 annual assessments of goodwill and indefinite-lived intangible assets did not identify any impairments.

The October 1, 2022 annual assessment identified a $26.0 million goodwill impairment at the Roofing reporting unit, which is reflected as a discontinued operation in the Company’s financial statements.

Software Development Costs

We capitalize internally developed software costs (including employee payroll costs, stock-based compensation and benefit costs as well as third party production and other content costs), subsequent to identifying technological feasibility of the software project.

Significant management judgement is required in assessing when technological feasibility is established.

Depreciation of internally developed software commences when the software is available for release for its intended use and is recorded on a straight-line basis over the estimated useful life of the software, which is typically 2-3 years.

The net carrying value of capitalized software is $92.3 million and $128.5 million at December 31, 2023 and 2022, respectively.

The Company is included within IAC’s tax group for purposes of federal and consolidated state income tax return filings.

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Stock-Based Compensation

The stock-based compensation expense reflected in our statements of operations includes expense related to the Company’s stock options, stock appreciation rights, RSU awards, including those that are linked to the achievement of the Company’s stock price, known as market-based awards (“MSUs”) and those that are linked to the achievement of a performance target, known as performance-based awards (“PSUs”), equity instruments denominated in shares of subsidiaries, and IAC denominated stock options.

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 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.

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.

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.

Stock-based compensation at the Company is inherently complex.

Our desire is to attract, retain, inspire and reward our management team and employees at the Company, including those employed by recently acquired companies, as applicable, by allowing them to benefit directly from the value they help to create.

We accomplish these objectives, in part, by issuing equity awards denominated in the equity of our subsidiaries as well as in Angi Inc.

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The nature and variety of these types of equity-based awards creates complexity in our determination of stock-based compensation expense.

In addition, acquisitions are an important part of the Company’s growth strategy.

These transactions may result in the modification of equity awards which creates additional complexity and additional stock-based compensation expense.

Also, our internal reorganizations can also lead to modifications of equity awards and result in additional complexity and stock-based compensation expense.

Business combinations may result in the modification of equity awards, which may create additional complexity and additional stock-based compensation expense.

Also, our internal reorganizations can also lead to modifications of equity awards and may result in additional complexity and stock-based compensation expense.

Finally, the means by which we settle our equity-based awards also introduces complexity into our financial reporting.

We provide a path to liquidity by settling the subsidiary denominated awards in IAC or Angi Inc.

In addition, certain former HomeAdvisor (US) awards can be settled in IAC or Angi Inc.

In addition, certain former Angi Inc.

stock appreciation rights can be settled in IAC or Angi Inc.

awards at IAC’s election.

These features increase the complexity of our earnings per share calculations.

There were no stock options or stock appreciation rights granted by the Company for the years ended December 31, 2022, 2021 or 2020.

The Company estimates the fair value of newly granted or modified stock appreciation rights and stock options, including equity instruments denominated in shares of subsidiaries, using the Black-Scholes option-pricing model.

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.

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 and MSUs.

Stock-based compensation expense reflected in our statements of operations includes expense related to the Company’s RSU awards, including those that are linked to the achievement of the Company’s stock price, known as market-based awards (“MSUs”) and those that are linked to the achievement of a performance target, known as performance-based awards (“PSUs”), stock options, stock appreciation rights, equity instruments denominated in shares of subsidiaries, and an allocation of expense related to IAC denominated restricted stock.

The Company recorded stock-based compensation expense of $43.4 million, $50.8 million, and $28.2 million for the years ended December 31, 2023, 2022, and 2021, respectively.

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.

These modified awards finished vesting in the first quarter of 2021, therefore, there was no modification charge for the awards in the years ended December 31, 2023 and 2022.

The Company 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.

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For MSUs, a lattice model is used to estimate the value of the awards.

The Company also issues stock options and stock appreciation rights.

The Company estimates the fair value of newly granted or modified stock appreciation rights and

stock options, including equity instruments denominated in shares of subsidiaries, using the Black-Scholes option-pricing model.

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.

Recent Accounting Pronouncements

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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