What changed in this filing

/stocks — the workspaceLOADING

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

2024-02-29 compared with 2023-03-01 · 765 added, 743 removed, 616 unchanged (71% of the section changed)

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

At December 31, 2022, the principal amount of the Company’s outstanding debt is comprised of $500.0 million of ANGI Group Senior Notes, which bears interest at a fixed rate.

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

At December 31, 2023, the principal amount of the Company’s outstanding debt comprises $500.0 million of ANGI Group Senior Notes, which bears interest at a fixed rate.

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

A 100-basis point increase or decrease in the level of interest rates would, respectively, decrease or increase the fair value of the fixed-rate debt by $20.0 million.

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

Foreign Currency Exchange Risk

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operations have customers in international markets.

International revenue, which is measured based upon where the customer is located, accounted for 5%, 6%, and 6% for the years ended December 31, 2022, 2021 and 2020, respectively.

International revenue, including revenue of our operations located outside the U.S., which is measured based upon where the customer is located, accounted for 9%, 6%, and 6% for the years ended December 31, 2023, 2022 and 2021, respectively.

The Company is also exposed to foreign currency transaction gains and losses to the extent it or its subsidiaries conduct transactions in and/or have assets and/or liabilities that are denominated in a currency other than the entity’s functional currency.

The Company recorded foreign exchange gains and (losses) of $1.2 million, $(3.4) million, and $(1.7) million for the year ended December 31, 2023, 2022 and 2021, respectively.

The Company’s exposure to foreign currency exchange gains or losses have not been material to the Company, therefore, the Company has not hedged any foreign currency exposures.

The Company’s exposure to foreign currency exchange gains or losses have not been material to the Company;

therefore, the Company has not hedged its foreign currency exposures.

Any growth and expansion of our international operations increases our exposure to foreign exchange rate fluctuations.

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

and subsidiaries (the Company) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive operations, shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes and the financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”).

and subsidiaries (the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive operations, shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with U.S.

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 1, 2023 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 29, 2024 expressed an unqualified opinion thereon.

Basis for Opinion

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

Goodwill - Quantitative Impairment Assessment for Angi Services

Revenue Processed By Highly Automated Proprietary Systems - Leads and Services

Description of

the Matter As of December 31, 2022, the Company’s goodwill balance was $882.9 million.

As disclosed in Note 2 to the consolidated financial statements, goodwill is assessed annually for impairment using either a qualitative or quantitative approach as of October 1, or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value.

In 2022, the Company performed a quantitative test over the Services reporting unit.

The fair value of the Services reporting unit is determined using both an income approach based on discounted cash flows (“DCF”) and a market approach.

The Company determined the fair value exceeded the carrying value of the Services reporting unit by $ 40 million.

Auditing management’s quantitative impairment test for goodwill recorded for the Angi Services reporting unit was complex and judgmental due to the measurement uncertainty in estimating the fair value of the reporting unit for goodwill.

Specifically, the fair value estimate was sensitive to assumptions such as the discount rate and revenue growth rates used in the DCF model as well as the selection of a peer group of companies used in the market approach.

These assumptions are affected by such factors as expected future market or economic conditions.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company’s controls over its goodwill impairment review process.

For example, we tested controls over management’s review of the valuation methodologies and significant assumptions used to estimate the fair value of the Angi Services reporting unit for goodwill, including projected financial information, the discount rate, and the selection of a peer group of companies.

To test the estimated fair value of the Company’s Angi Services reporting unit, our audit procedures included, among others, assessing the appropriateness of the valuation methodologies and testing the significant assumptions and underlying data used by the Company.

We evaluated the reasonableness of the projected financial information by comparing the significant assumptions to current industry and economic trends and changes in the Company’s business.

We also evaluated management’s projected financial information to identify, understand and evaluate changes in forecasted results as compared to historical results.

We evaluated the reasonableness of the Company’s selection of a peer group of companies.

We performed sensitivity analyses of significant assumptions to evaluate the change in the fair value of the Company’s reporting units for goodwill resulting from changes in the assumptions.

In addition, we involved an internal valuation specialist to assist in evaluating the valuation methodologies and significant assumptions applied in developing the fair value estimates.

the Matter As more fully described in Note 2 to the consolidated financial statements, the Company’s revenue primarily consists of domestic Ads and Leads revenue as well as Services revenue.

Ads revenue is primarily derived from service professionals under contract for advertising.

Leads revenue includes consumer connection revenue for consumer matches as well as membership subscription revenue from service professionals.

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.

In aggregate, Leads and Services Revenue was approximately $1 billion, as disclosed in Note 9, for the year ended December 31, 2023.

The Company’s Leads and Services Revenue is based on contractual terms with the Company’s customers and is comprised of a significant volume of low-dollar transactions.

The processing and recording of Leads and Services revenue is highly automated within the Company’s information technology (“IT”) systems that are principally proprietary.

Given the complexity of the IT systems involved, auditing Leads and Services Revenue required a significant extent of effort and increased involvement of professionals with expertise in IT to identify, test, and evaluate the Company’s relevant systems and automated controls utilized to process and record these transactions.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of the Company’s controls related to the recording and accounting for Leads and Services Revenue.

With the involvement of IT professionals, we identified the relevant systems used by the Company to process, calculate, and record revenue and the related deferred revenue.

Where applicable, we tested the IT general controls over those systems, including testing of user access controls, change management controls, and IT operations controls as well as certain automated application controls related to the recording of revenue and the related deferred revenue at period end.

We also tested the Company’s controls to address the completeness and accuracy of transaction data.

Our audit procedures related to the Company’s Leads and Services Revenue also included reconciling revenue recorded to cash received, testing the details for a sample of specific cash receipts to third party banking information and evidence of the related customer arrangement, testing the calculations of revenue and the related deferred revenue performed within the Company’s systems to the amount recorded in the general ledger, and testing revenue transactions occurring near year-end.

/s/ Ernst & Young LLP

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New York, New York

March 1, 2023

February 29, 2024

AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

December 31, 2022 December 31, 2021

(In thousands, except par value amounts)

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Other current assets 72,075 64,330

Current assets of discontinued operations — 26,750

Total current assets 487,219 484,202

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Other non-current assets, net 54,466 61,527

Non-current assets of discontinued operations — 10,058

TOTAL ASSETS $ 1,856,215 $ 1,907,778

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Accrued expenses and other current liabilities 179,329 182,794

Current liabilities of discontinued operations — 18,468

Total current liabilities 258,655 281,784

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Other long-term liabilities 54,266 75,507

Non-current liabilities of discontinued operations — 919

Commitments and contingencies

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authorized 1,500,000 shares;

422,019 and 422,019 shares issued and outstanding

422,019 shares issued and outstanding

Class C common stock, $ 0.001 par value;

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Accumulated deficit ( 231,019 ) ( 190,079 )

Accumulated other comprehensive (loss) income ( 1,172 ) 3,309

Accumulated other comprehensive income (loss) 1,187 ( 1,172 )

Treasury stock, 24,640 and 20,211 shares, respectively

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

Goodwill impairment 26,005 — —

Total operating costs and expenses 1,322,699 1,502,579 1,412,573

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

Loss before income taxes ( 145,234 ) ( 102,507 ) ( 19,328 )

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

Loss from continuing operations before income taxes ( 28,208 ) ( 94,558 ) ( 93,912 )

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

Net loss from continuing operations ( 30,047 ) ( 89,168 ) ( 64,018 )

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

Net loss ( 40,311 ) ( 127,982 ) ( 70,494 )

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shareholders $ ( 40,940 ) $ ( 128,450 ) $ ( 71,378 )

Per share information from continuing operations:

Basic loss per share $ ( 0.06 ) $ ( 0.18 ) $ ( 0.13 )

Diluted loss per share $ ( 0.06 ) $ ( 0.18 ) $ ( 0.13 )

Per share information attributable to Angi Inc.

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CONSOLIDATED STATEMENT OF COMPREHENSIVE OPERATIONS

Years Ended December 31,

Year Ended December 31,

2023 2022 2021

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Net loss $ ( 40,311 ) $ ( 127,982 ) $ ( 70,494 )

Other comprehensive (loss) income:

Other comprehensive income (loss):

Change in foreign currency translation adjustment 2,501 ( 5,028 ) ( 1,219 )

Comprehensive (loss) income ( 133,010 ) ( 71,713 ) 2,667

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

Comprehensive loss ( 37,810 ) ( 133,010 ) ( 71,713 )

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

Net earnings attributable to noncontrolling interests ( 629 ) ( 468 ) ( 884 )

Change in foreign currency translation adjustment attributable to noncontrolling interests ( 142 ) 547 ( 109 )

Comprehensive loss (income) attributable to noncontrolling interests 79 ( 993 ) ( 2,934 )

Comprehensive (income) loss attributable to noncontrolling interests ( 771 ) 79 ( 993 )

Comprehensive loss attributable to Angi Inc.

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Years Ended December 31, 2023, 2022, and 2021

Shareholders’ Equity

Class B Convertible

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Shareholders’ Equity

Accumulated Other Comprehensive (Loss) Income Total

Accumulated Other Comprehensive Income (Loss) Total

Shareholders’

Noncontrolling

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

Interests Additional Paid-in Capital Accumulated Deficit Treasury

Stock Noncontrolling

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

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

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

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

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

Adjustment of redeemable noncontrolling interests to redemption amount 1,462 — — — — — — ( 430 ) — — — ( 430 ) — ( 430 )

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

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Net (loss) earnings — — — — — — — — ( 128,450 ) — — ( 128,450 ) 468 ( 127,982 )

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

Other comprehensive loss — — — — — — — — — ( 4,481 ) — ( 4,481 ) ( 547 ) ( 5,028 )

Stock-based compensation expense — — — — — — — 55,891 — — — 55,891 — 55,891

Issuance of common stock pursuant to stock-based awards, net of withholding taxes — 3 3,066 — — — — ( 8,630 ) — — — ( 8,627 ) — ( 8,627 )

Issuance of common stock to IAC Inc.

pursuant to the employee matters agreement — 3 2,588 — 157 — — ( 3 ) — — — — — —

Purchase of treasury stock — — — — — — — — — — ( 8,144 ) ( 8,144 ) — ( 8,144 )

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

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

Adjustment to noncontrolling interests resulting from the reorganization of a foreign subsidiary — — — — — — — 7,580 — — — 7,580 ( 7,835 ) ( 255 )

Other — — — — — — — ( 4 ) — — — ( 4 ) — ( 4 )

Balance as of December 31, 2022 $ — $ 103 102,811 $ 422 422,019 $ — — $ 1,405,294 $ ( 190,079 ) $ ( 1,172 ) $ ( 166,184 ) $ 1,048,384 $ 2,994 $ 1,051,378

AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

Years Ended December 31, 2022, 2021, and 2020

Shareholders’ Equity

Class B Convertible

Class C Common Stock

Shareholders’ Equity

Accumulated Other Comprehensive (Loss) Income Total

Shareholders’

Noncontrolling

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

Stock Noncontrolling

$ Shares $ Shares $ Shares

(In thousands)

Net (loss) earnings — — — — — — — — ( 40,940 ) — — ( 40,940 ) 629 ( 40,311 )

Other comprehensive loss — — — — — — — — — ( 4,481 ) — ( 4,481 ) ( 547 ) ( 5,028 )

Other comprehensive income — — — — — — — — — 2,359 — 2,359 142 2,501

Stock-based compensation expense — — — — — — — 48,388 — — — 48,388 — 48,388

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Purchase of treasury stock — — — — — — — — — — ( 11,099 ) ( 11,099 ) — ( 11,099 )

Adjustment to noncontrolling interests resulting from the reorganization of a foreign subsidiary — — — — — — — 7,580 — — — 7,580 ( 7,835 ) ( 255 )

Other — — — — — — — ( 37 ) — — — ( 37 ) ( 24 ) ( 61 )

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CONSOLIDATED STATEMENT OF CASH FLOWS

Year Ended December 31,

Years Ended December 31,

2023 2022 2021

(In thousands)

Cash flows from operating activities:

Cash flows from operating activities attributable to continuing operations:

Net loss $ ( 40,311 ) $ ( 127,982 ) $ ( 70,494 )

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

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

Net loss attributable to continuing operations ( 30,047 ) ( 89,168 ) ( 64,018 )

Adjustments to reconcile net loss to net cash provided by operating activities attributable to continuing operations:

Depreciation 93,604 77,523 59,025

Provision for credit losses 79,385 104,261 86,594

Stock-based compensation expense 43,414 50,802 28,171

Depreciation 78,270 59,246 52,621

Non-cash lease expense (including impairment of right-of-use assets) 11,878 13,799 20,484

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

Deferred income taxes ( 10,009 ) ( 9,758 ) ( 34,217 )

Foreign currency transaction loss 3,357 1,679 87

Goodwill impairment 26,005 — —

Non-cash lease expense (including impairment of right-of-use assets) 15,107 20,716 13,659

Foreign currency transaction (gain) loss ( 1,291 ) 3,357 1,679

Other adjustments, net 232 ( 811 ) 8,262

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Deferred revenue ( 355 ) ( 2,966 ) ( 1,491 )

Net cash provided by operating activities 27,069 6,209 188,419

Cash flows from investing activities:

Acquisitions, net of cash acquired — ( 25,607 ) ( 2,264 )

Net cash provided by operating activities attributable to continuing operations 94,184 46,402 24,576

Cash flows from investing activities attributable to continuing operations:

Capital expenditures ( 47,780 ) ( 115,479 ) ( 69,909 )

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Net proceeds from the sale of a business 1,000 — 750

Proceeds from sale of fixed assets 266 — 20

Other, net — — 24

Net cash used in investing activities ( 116,086 ) ( 45,072 ) ( 103,954 )

Cash flows from financing activities:

Proceeds from the issuance of Senior Notes — — 500,000

Proceeds from sales of fixed assets 85 162 —

Other — — ( 253 )

Net cash used in investing activities attributable to continuing operations ( 46,557 ) ( 115,317 ) ( 19,412 )

Cash flows from financing activities attributable to continuing operations:

Principal payments on Term Loan — — ( 220,000 )

Debt issuance costs — — ( 6,484 )

Purchase of treasury stock ( 8,144 ) ( 35,403 ) ( 63,674 )

Purchases of treasury stock ( 10,932 ) ( 8,144 ) ( 35,403 )

Withholding taxes paid on behalf of employees on net settled stock-based awards ( 5,994 ) ( 8,827 ) ( 61,908 )

Distribution from IAC pursuant to the tax sharing agreement — — 3,071

Purchase of noncontrolling interests — — ( 27,857 )

Other, net ( 57 ) ( 256 ) —

Net cash (used in) provided by financing activities ( 17,227 ) ( 345,168 ) 337,053

Total cash (used) provided ( 106,244 ) ( 384,031 ) 421,518

Net cash used in financing activities attributable to continuing operations ( 16,983 ) ( 17,227 ) ( 345,168 )

Total cash provided by (used in) continuing operations 30,644 ( 86,142 ) ( 340,004 )

Net cash provided by (used in) operating activities attributable to discontinued operations 10,661 ( 19,333 ) ( 18,367 )

Net cash provided by (used in) investing activities attributable to discontinued operations 325 ( 769 ) ( 25,660 )

Total cash provided by (used in) discontinued operations 10,986 ( 20,102 ) ( 44,027 )

Effect of exchange rate changes on cash and cash equivalents and restricted cash 535 ( 1,105 ) ( 45 )

Net (decrease) increase in cash and cash equivalents and restricted cash ( 107,349 ) ( 384,076 ) 422,083

Net increase (decrease) in cash and cash equivalents and restricted cash 42,165 ( 107,349 ) ( 384,076 )

Cash and cash equivalents and restricted cash at beginning of period 322,136 429,485 813,561

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

During the year ended December 31, 2022, over 220,000 domestic service professionals actively sought consumer matches, completed jobs, or advertised work through Angi Inc.

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

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 businesses to find a service professional for approximately 23 million projects during the year ended December 31, 2023.

The Company has three operating segments:

(i) Ads and Leads;

(ii) 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 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.

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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.

The Company has four operating segments:

(i) Ads and Leads;

(ii) Services;

(iii) Roofing;

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

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

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

and its subsidiaries (unless the context requires otherwise).

At December 31, 2022, IAC Inc., formerly known as IAC/InterActiveCorp (“IAC”) owned 84.1 % and 98.1 % of the economic interest and voting interest, respectively, of the Company.

At December 31, 2023, IAC Inc.

(“IAC”) owned 84.2 % and 98.1 % of the economic and voting interests, respectively, of the Company.

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.

See “ Note 16 — Discontinued Operations ” for additional details.

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

NOTE 2— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Consolidation

The Company prepares its consolidated financial statements in accordance with U.S.

generally accepted accounting principles (“GAAP”).

The consolidated financial statements include the accounts of the Company, all entities that are wholly-owned by the Company and all entities in which the Company has a controlling financial interest.

The Company prepares its consolidated financial statements (referred to herein as “financial statements”) in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”).

The financial statements include the accounts of the Company, all entities that are wholly-owned by the Company and all entities in which the Company has a controlling financial interest.

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

See “ Note 14—Related Party Transactions with IAC ” for information on transactions between Angi and IAC.

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

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

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

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

Segment Changes

As a result of management’s continued assessments of reporting structure, there was a decision in the fourth quarter of 2022 to refine segments to more effectively measure the businesses’ performance.

Management has identified four reportable segments with discrete financial results to appropriately match operating costs to the revenues generated for these businesses (Ads & Leads, Services, Roofing and International).

Our financial information for prior periods has been recast to conform to the current period presentation.

See “ Note 17—Related Party Transactions with IAC ” for information on transactions between Angi and IAC.

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).

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

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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.

Accounting Estimates

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

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

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

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

Actual results could differ from these estimates.

On an ongoing basis, the Company evaluates its estimates and judgments, including those related to:

the fair values of cash equivalents;

the fair values of cash equivalents and marketable debt securities;

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

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

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

the useful lives and recoverability of definite-lived intangible assets and capitalized software, leasehold improvements, and equipment;

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

the useful lives and recoverability of capitalized software, leasehold improvements, equipment, and definite-lived intangible assets;

the recoverability of goodwill and indefinite-lived intangible assets;

unrecognized tax benefits;

contingencies, unrecognized tax benefits;

the liability for potential refunds and customer credits;

the valuation allowance for deferred income tax assets;

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Revenue Recognition

The Company’s disaggregated revenue disclosures are presented in “ Note 11—Segment Information .”

The Company accounts for a contract with a customer when it has approval and commitment from all parties, the rights of the parties and payment terms are identified, the contract has commercial substance and collectability of consideration is probable.

The Company accounts for a contract with a customer when it has approval and commitment from all authorized parties, the rights of the parties and payment terms are identified, the contract has commercial substance and collectability of consideration is probable.

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

The Company’s disaggregated revenue disclosures are presented in “ Note 9—Segment Information .”

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.

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.

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The Company maintains a liability for potential credits issued to services providers.

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

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

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

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

Service professional membership subscription revenue is initially deferred upon receipt of payment and is

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

recognized using the straight-line method over the applicable subscription period, which is typically one year.

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

Services Revenue

Primarily reflects domestic revenue from pre-priced offerings by which the consumer requests services through Services platforms and we engage a service professional to perform the service.

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.

Consumers are billed when a job is scheduled through the Services platform.

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

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

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

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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.

Roofing Revenue

Primarily reflects revenue from the roof replacement business offering by which the consumer purchases services directly from the Roofing business, which was acquired on July 1, 2021, and we then engage a service professional to perform the service.

Consumers typically pay when a job is completed and revenue is recognized based on the Company’s progress in satisfying the roofing service.

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.

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.

International revenue primarily comprises consumer connection revenue for consumer matches and membership subscription revenue from service professionals and consumers.

Transaction Price

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The Company excludes from the measurement of transaction price all taxes assessed by governmental authorities that are both (i) imposed on and concurrent with a specific revenue-producing transaction and (ii) collected from customers.

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

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

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

Arrangements with Multiple Performance Obligations

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The Company generally determines standalone selling prices based on the prices charged to customers, which are directly observable or based on an estimate if not directly observable.

Assets Recognized from the Costs to Obtain a Contract with a Customer

The Company has determined that certain costs, primarily commissions paid to employees pursuant to certain sales incentive programs, meet the requirements to be capitalized as a cost of obtaining a contract.

Capitalized sales commissions are amortized over the estimated customer relationship period.

The Company calculates the estimated customer relationship period as the average customer life, which is based on historical data.

When customer renewals are expected and the renewal commission is not commensurate with the initial commission, the average customer life includes renewal periods.

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

The following table provides information about our contract asset balances at the balance sheet dates.

Practical Expedients and Exemptions

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

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accounted for under the series guidance, and (iii) contracts for which the Company recognizes revenue at the amount which we have the right to invoice for services performed.

The Company also applies the practical expedient for sales commissions where the anticipated customer relationship period is one year or less as noted below.

Costs to Obtain a Contract with a Customer

The Company has determined that commissions paid to employees pursuant to certain sales incentive programs, meet the requirements to be capitalized as a cost of obtaining a contract.

Capitalized sales commissions are amortized over the estimated customer relationship period and are included in “Selling and marketing expense” in the statement of operations.

The Company calculates the anticipated customer relationship period as the average customer life, which is based on historical data.

When customer renewals are expected and the renewal commission is not commensurate with the initial commission, the average customer life includes renewal periods.

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

Beginning October 1, 2022, commissions earned on certain transactions within the Ads & Leads segment were expensed as incurred after determining the related customer relationship was less than one year.

The following table presents the capitalized sales commissions balances and balance sheet classification at the balance sheet dates:

Classification December 31, 2023 December 31, 2022

(In thousands)

Contract Assets

Other current assets $ 34,927 $ 37,220

Other non-current assets $ 3,528 $ 1,904

During the years ended December 31, 2022 and 2021, the Company recognized expense of $ 77.4 million and $ 84.7 million, respectively, related to the amortization of these costs.

Performance Obligations

As permitted under the practical expedient available under ASC 606, the Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less, (ii) contracts with variable consideration that is allocated entirely to unsatisfied performance obligations or to a wholly unsatisfied promise accounted for under the series guidance, and (iii) contracts for which the Company recognizes revenue at the amount which we have the right to invoice for services performed.

Accounts Receivables, Net of the Allowance for Credit Losses

During the years ended December 31, 2023 and 2022, the Company recognized expense of $ 61.4 million and $ 77.4 million, respectively, related to the amortization of these capitalized costs.

Accounts Receivable, Net of the Allowance for Credit Losses

Accounts receivable include amounts billed and currently due from customers.

The allowance for credit loss 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.

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 and any other forward-looking data regarding customers’ ability to pay that is available.

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

customer payments that are not collected in advance of the transfer of promised services or goods are generally due no later than 30 days from invoice date.

Credit Losses

The following table presents the changes in the allowance for credit loss for the years ended December 31, 2022 and 2021:

December 31, 2022 December 31, 2021

(In thousands)

Balance at January 1 $ 33,652 $ 26,046

Current period provision for credit losses 108,151 88,076

Write-offs charged against the allowance for credit loss ( 103,985 ) ( 82,911 )

Recoveries collected 5,342 2,441

Balance at December 31 $ 43,160 $ 33,652

Deferred Revenue

Deferred revenue consists of advance payments that are received or are contractually due in advance of the Company’s performance.

Deferred revenue consists of payments that are received or are contractually due in advance of the Company’s performance obligation.

The Company’s deferred revenue is reported on a contract-by-contract basis at the end of each reporting period.

The Company classifies deferred revenue as current when the term of the applicable subscription period or expected completion of its performance obligation is one year or less.

During the years ended December 31, 2022 and 2021, the Company recognized $ 53.4 million and $ 54.5 million of revenue that was included in the deferred revenue balance as of December 31, 2021 and 2020, respectively.

The current deferred revenue balances are $ 50.9 million and $ 53.8 million at December 31, 2022 and 2021, respectively.

The non-current deferred revenue balances are $ 0.1 million at both December 31, 2022 and 2021.

Non-current deferred revenue is included in “Other long-term liabilities” in the accompanying consolidated balance sheet.

The Company classifies deferred revenue as current when the remaining term or expected completion of its performance obligation is one year or less.

At December 31, 2022, the current and non-current deferred revenue balances were $ 50.1 million and less than $ 0.1 million, respectively, and during the year ended December 31, 2023, the Company recognized $ 48.0 million that was included in the deferred revenue balance as of December 31, 2022.

At December 31, 2021, the current and non-current deferred revenue balances were $ 53.2 million and $ 0.1 million, respectively, and during the year ended December 31, 2022, the Company recognized $ 52.8 million of revenue that was included in the deferred revenue balance at December 31, 2021.

The current and non-current deferred revenue balances at December 31, 2023 are $ 49.9 million and less than $ 0.1 million, respectively.

Non-current deferred revenue is included in “Other long-term liabilities” in the balance sheet.

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Fair Value Measurements

The Company categorizes its financial instruments measured at fair value into a fair value hierarchy that prioritizes the inputs used in pricing the asset or liability.

The three levels of the fair value hierarchy are:

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

Other inputs, which are observable directly or indirectly, such as quoted market prices for similar assets or liabilities in active markets, quoted market prices for identical or similar assets or liabilities in markets that are not active and inputs that are derived principally from or corroborated by observable market data.

The fair values of the Company’s Level 2 financial assets are primarily obtained from observable market prices for identical underlying securities that may not be actively traded.

Certain of these securities may have different market prices from multiple market data sources, in which case an average market price is used.

Unobservable inputs for which there is little or no market data and require the Company to develop its own assumptions, based on the best information available in the circumstances, about the assumptions market participants would use in pricing the assets or liabilities.

The Company’s non-financial assets, such as goodwill, intangible assets, ROU assets, capitalized software, leasehold improvements and equipment are adjusted to fair value only when an impairment is recognized.

Such fair value measurements are based predominantly on Level 3 inputs.

Cash and Cash Equivalents

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Internationally, there are no cash equivalents at December 31, 2023 and 2022.

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Investments in Marketable Debt Securities

The Company invests in marketable debt securities with active secondary or resale markets to ensure portfolio liquidity to fund current operations or satisfy other cash requirements as needed.

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

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

At times, the Company invests in marketable debt securities with active secondary or resale markets to ensure portfolio liquidity to fund current operations or satisfy other cash requirements as needed.

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

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

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Capitalized Software, Leasehold Improvements and Equipment

Capitalized software, leasehold improvements and equipment, including significant improvements, are recorded at cost.

Capitalized software, leasehold improvements and equipment, including significant improvements, are recorded at cost or at fair value to the extent acquired in a business combination.

Repairs and maintenance costs are expensed as incurred.

Depreciation is computed using the straight-line method over the estimated useful lives of the assets, or, in the case of leasehold improvements, the lease term, if shorter.

Amortization of leasehold improvements, which is included in “Depreciation” in the statement of operations, and depreciation are computed using the straight-line method over the estimated useful lives of the assets, or, in the case of leasehold improvements, the lease term, if shorter.

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Asset Category Estimated

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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.

The Company usually uses the assistance of outside valuation experts to assist in the allocation of purchase price to identifiable intangible assets acquired.

The Company usually obtains the assistance of outside valuation experts to assist in the allocation of purchase price to the identifiable intangible assets acquired.

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(s) that is expected to benefit from the combination as of the acquisition date.

The excess purchase price over the value of 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.

Goodwill and Indefinite-Lived Intangible Assets

The Company assesses goodwill and indefinite-lived intangible assets for impairment annually 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.

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

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

Ads and Leads, Services, Roofing, and International.

THR was sold on November 1, 2023 and is reflected as a discontinued operation in the Company’s financial statements.

See “ Note 1—Organization ” for additional information.

When the Company elects to perform a qualitative assessment and concludes it is not more likely than not that the fair value of the reporting unit is less than its carrying value, no further assessment of that reporting unit’s goodwill is necessary;

otherwise, a quantitative assessment is performed and the fair value of the reporting unit is determined.

If the carrying value of the reporting unit exceeds its estimated fair value, a goodwill impairment equal to the excess is recorded.

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.

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otherwise, a quantitative assessment is performed and the fair value of the reporting unit is determined.

If the carrying value of the reporting unit exceeds its fair value an impairment equal to the excess is recorded.

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 Angi North America;

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.

If and when a quantitative test is performed, the fair value of the Company’s reporting units are 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 million, and $ 143 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 million in 2022.

While the Company has the option 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.

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

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

Significant judgments inherent in this analysis include the selection of appropriate royalty and discount rates and estimating the amount and timing of expected future cash flows.

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

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Long-Lived Assets and Intangible Assets with Definite Lives

Long-lived assets, which consist of ROU assets, capitalized software, leasehold improvements and equipment and intangible assets with definite lives, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable.

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.

Long-Lived Assets

Long-lived assets, other than goodwill and indefinite-lived intangible assets, are reviewed 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.

Amortization of definite-lived intangible assets is computed either on a straight-line basis or based on the pattern in which the economic benefits of the asset will be realized.

Fair Value Measurements

The Company categorizes its financial instruments measured at fair value into a fair value hierarchy that prioritizes the inputs used in pricing the asset or liability.

The three levels of the fair value hierarchy are:

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

The fair values of the Company’s Level 2 financial assets are primarily obtained from observable market prices for identical underlying securities that may not be actively traded.

Certain of these securities may have different market prices from multiple market data sources, in which case an average market price is used.

Such fair value measurements are based predominantly on Level 3 inputs.

Warranty Costs

As part of certain of our revenue arrangements, we include warranties providing customers with assurance on the quality of the services provided.

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

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

Advertising Costs

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Advertising expense was $ 459.4 million, $ 558.4 million and $ 553.8 million for the years ended December 31, 2023, 2022 and 2021, respectively.

Legal costs are expensed as incurred.

Legal costs, other than certain costs incurred to obtain financing, are expensed as incurred.

Debt Issuance Costs

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Costs incurred to obtain financing are deferred and amortized to “Interest expense” in the statement of operations over the related financing period using the effective interest method.

The Company records debt issuance costs as a direct reduction of the carrying value of the related debt.

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

In all periods presented, the income tax provision and/or benefit has been computed for the Company on an as if standalone, separate return basis and payments to and refunds from IAC for the Company’s share of IAC’s consolidated federal and state tax return liabilities/receivables calculated on this basis have been reflected within cash flows from operating activities in the accompanying consolidated statement of cash flows.

The Company accounts for income taxes under the liability method, and deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying values of existing assets and liabilities and their respective tax bases.

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Diluted earnings per share reflects the potential dilution that could occur if stock appreciation rights, stock options and other commitments to issue common stock were exercised or equity awards vested resulting in the issuance of common stock that could share in the earnings of the Company.

See “ Note 13—Loss per share ” for additional information on dilutive securities.

Foreign Currency Translation and Transaction Gains and Losses

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Translation gains and losses are included in accumulated other comprehensive income (loss) as a component of shareholders’ equity.

Transaction gains and losses resulting from assets and liabilities denominated in a currency other than the functional currency are included in the consolidated statement of operations as a component of other income (expense), net.

Transaction gains and losses resulting from assets and liabilities denominated in a currency other than the functional currency are included in the statement of operations as a component of other income (expense), net.

Translation gains and losses relating to foreign entities that are liquidated or substantially liquidated are reclassified out of accumulated other comprehensive income (loss) into earnings.

See “ Note 14—Financial Statement Details ” for additional information regarding foreign currency exchange gains and losses.

Stock-Based Compensation

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See “ Note 10—Stock‑based Compensation ” for a discussion of the Company’s stock-based compensation plans.

Redeemable Noncontrolling Interests

Noncontrolling interests in the consolidated subsidiaries of the Company are ordinarily reported on the consolidated balance sheet within shareholders’ equity, separately from the Company’s equity.

However, securities that are redeemable at the option of the holder and not solely within the control of the issuer must be classified outside of shareholders’ equity.

Accordingly, all noncontrolling interests that are redeemable at the option of the holder are presented outside of shareholders’ equity in the accompanying consolidated balance sheet.

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Redeemable Noncontrolling Interests

Noncontrolling interests in the subsidiaries of the Company are ordinarily reported on the balance sheet within shareholders’ equity, separately from the Company’s equity.

However, securities that are redeemable at the option of the holder and not solely within the control of the issuer must be classified outside of shareholders’ equity.

Accordingly, all noncontrolling interests that are redeemable at the option of the holder are presented outside of shareholders’ equity in the balance sheet.

In connection with the acquisition of certain subsidiaries, management of these businesses has retained an ownership interest.

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The put arrangements do not meet the definition of a derivative instrument as the put agreements do not provide for net settlement.

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

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

One of these arrangements was exercised during the year ended December 31, 2020.

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

During the years ended December 31, 2021 and 2020, the Company recorded adjustments of $ 28.3 million and $ 1.6 million, respectively, to increase these interests to fair value.

Fair value determinations require high levels of judgment and are based on various valuation techniques, including market comparables and discounted cash flow projections.

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

These put arrangements are exercisable by the counter-party outside the control of the Company.

Accordingly, to the extent that the redemption amount of these interests exceeds the value determined by normal noncontrolling interest accounting, the value of such interests is adjusted to the redemption amount with a corresponding adjustment to additional paid-in capital.

During the year ended December 31, 2021, the remaining redeemable non-controlling interest was exercised for which the Company had recorded an adjustment of $ 0.4 million to increase this interest to its redemption amount.

Adjustments to this interest required high levels of judgment and were based on various valuation techniques, including market comparables and discounted cash flow projections.

Certain Risks and Concentrations

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

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

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

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

Cash and cash equivalents are maintained with financial institutions and are in excess of any applicable third-party insurance limits, such as the Federal Deposit Insurance Corporation and the Securities Investor Protection Corporation.

Recent Accounting Pronouncements

There are no recently issued accounting pronouncements adopted or that have not yet been adopted by the Company that are expected to have a material effect on the results of operations, financial condition, or cash flows of the Company.

Reclassifications

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

NOTE 3— INCOME TAXES

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

In all periods presented, the income tax benefit and/or provision has been computed for the Company on an as if standalone, separate return basis and payments to and refunds from IAC for the Company’s share of IAC’s consolidated federal and state tax return liabilities/receivables calculated on this basis have been reflected within cash flows from operating activities in the accompanying consolidated statement of cash flows.

The tax sharing agreement between the Company and IAC governs the parties’ respective rights, responsibilities and obligations with respect to tax matters, including responsibility for taxes attributable to the Company, entitlement to refunds, allocation of tax attributes and other matters and, therefore, ultimately governs the amount payable to or receivable from IAC with respect to income taxes.

Any differences between taxes currently payable to or receivable from IAC under the tax sharing agreement and the current tax provision or benefit computed on an as if standalone, separate return basis for GAAP are reflected as adjustments to additional paid-in capital in the consolidated statement of shareholders’ equity and financing activities within the consolidated statement of cash flows.

Recent Accounting Pronouncements Adopted by the Company

There are no recently issued accounting pronouncements adopted by the Company during the year ended December 31, 2023.

Recent Accounting Pronouncements Not Yet Adopted by the Company

ASU 2023-07— Segment Reporting (Topic 280)— Improvements to Reportable Segment Disclosures

In November 2023, the FASB issued ASU 2023-07 , which is intended to provide users of financial statements with more decision-useful information about reportable segments of a public business entity, primarily through enhanced disclosures of significant segment expenses.

This ASU requires annual and interim disclosures of significant expenses that are regularly provided to the chief operating decision maker ("CODM") and included within each reported measure of segment profit or loss and an amount and description of its composition of other segment items.

The provisions of this ASU also require entities to include all annual disclosures required by Topic 280 in the interim periods and permits entities to include multiple measures of a segment's profit or loss if such measures are used by the CODM to assess segment performance and determine allocation of resources, provided that at least one of those measures is determined in a way that is consistent with the measurement principles under GAAP.

The amendments in ASU 2023-07 apply retrospectively and is effective for fiscal years beginning after December 15, 2023 and interim periods after December 15, 2024.

Early adoption is permitted.

The Company does not plan to early adopt and is currently assessing the impact of adopting the updated guidance on the financial statements.

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

Years Ended December 31,

2022 2021 2020

ASU 2023-09— Income Taxes (Topic 740)— Improvements to Income Tax Disclosures

In December 2023, the FASB issued ASU 2023-09, which establishes required categories and a quantitative threshold to the annual tabular rate reconciliation disclosure and disaggregated jurisdictional disclosures of income taxes paid.

The guidance’s annual requirements are effective for the Company beginning with the December 31, 2025 reporting period.

Early adoption is permitted and prospective disclosure should be applied, however, retrospective disclosure is permitted.

The Company is currently assessing the pronouncement and its impact on its income tax disclosures, but it does not impact the Company’s results of operations, financial condition, or cash flows.

NOTE 3— FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

Fair Value Measurements

Instruments measured at fair value on a recurring basis

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

December 31, 2023

Quoted Market Prices for Identical Assets in Active Markets

(Level 1) Significant Other Observable Inputs

(Level 2) Significant Unobservable Inputs

(Level 3) Total

(In thousands)

$ ( 138,233 ) $ ( 88,777 ) $ ( 10,913 )

Foreign ( 7,001 ) ( 13,730 ) ( 8,415 )

Cash equivalents:

Money market funds $ 215,891 $ — $ — $ 215,891

Treasury discount notes — 74,802 — 74,802

Total $ 215,891 $ 74,802 $ — $ 290,693

The components of the income tax (benefit) provision are as follows:

Years Ended December 31,

2022 2021 2020

(In thousands)

Current income tax provision (benefit):

Federal $ 27 $ 36 $ ( 306 )

State 2,640 3,008 1,408

Foreign 1,692 1,249 ( 992 )

Current income tax provision 4,359 4,293 110

Deferred income tax (benefit) provision

Federal ( 19,898 ) ( 29,889 ) ( 5,163 )

State ( 2,894 ) ( 8,712 ) ( 6,249 )

Foreign 1,181 2,295 ( 3,866 )

Deferred income tax benefit ( 21,611 ) ( 36,306 ) ( 15,278 )

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

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The tax effects of cumulative temporary differences that give rise to significant deferred tax assets and deferred tax liabilities are presented below.

The valuation allowance relates to deferred tax assets for which it is more likely than not that the tax benefit will not be realized.

(In thousands)

Deferred tax assets:

Net operating loss (“NOL”) carryforwards $ 187,449 $ 212,315

Long-term lease liabilities 22,338 26,182

Tax credit carryforwards 21,588 13,411

Capitalized software, leasehold improvements and equipment, net 8,393 —

Other 32,440 27,363

Total deferred tax assets 272,208 279,271

Less valuation allowance ( 65,040 ) ( 66,626 )

Net deferred tax assets 207,168 212,645

Deferred tax liabilities:

Intangible assets, net ( 41,068 ) ( 46,591 )

Right-of-use assets ( 14,199 ) ( 17,270 )

Capitalized costs to obtain a contract with a customer ( 9,264 ) ( 9,263 )

Capitalized software, leasehold improvements and equipment, net — ( 18,624 )

Other ( 83 ) ( 87 )

Total deferred tax liabilities ( 64,614 ) ( 91,835 )

Net deferred tax assets $ 142,554 $ 120,810

The portion of the December 31, 2022 deferred tax assets that will be payable to IAC pursuant to the tax sharing agreement, upon realization, is $ 93.7 million.

At December 31, 2022, the Company has federal and state NOLs of $ 515.9 million and $ 452.2 million, respectively, available to offset future income.

Of these federal NOLs, $ 215.8 million can be carried forward indefinitely and $ 300.1 million, if not utilized, will expire at various times between 2032 and 2037.

Of these state NOLs, $ 32.2 million will be carried forward indefinitely and $ 420.0 million will expire at various times primarily between 2025 and 2042.

Federal and state NOLs of $ 322.5 million and $ 230.4 million, respectively, can be used against future taxable income without restriction and the remaining NOLs will be subject to limitations under Section 382 of the Internal Revenue Code, separate return limitations, and applicable state law.

At December 31, 2022, the Company has foreign NOLs of $ 303.3 million available to offset future income.

Of these foreign NOLs, $ 296.3 million can be carried forward indefinitely and $ 7.0 million, if not utilized, will expire at various times between 2037 and 2042.

During 2022, the Company recognized tax benefits related to NOLs of $ 0.7 million.

At December 31, 2022, the Company has tax credit carryforwards of $ 27.7 million relating to federal and state tax credits for research activities.

Of these credit carryforwards, $ 0.9 million can be carried forward indefinitely and $ 26.8 million, if not utilized, will expire between 2023 and 2042.

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

At December 31, 2022, the Company has a U.S.

gross deferred tax asset of $ 206.8 million that the Company expects to fully utilize on a more likely than not basis.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

During 2022, the Company’s valuation allowance decreased by $ 1.6 million primarily due to currency translation adjustments and a net decrease in foreign NOLs, partially offset by an increase in unbenefited capital losses and state tax attributes.

At December 31, 2022, the Company has a valuation allowance of $ 65.0 million related to the portion of NOLs and other items for which it is more likely than not that the tax benefit will not be realized.

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

Years Ended December 31,

2022 2021 2020

(In thousands)

Income tax (benefit) at the federal statutory rate of 21% $ ( 30,499 ) $ ( 21,527 ) $ ( 4,058 )

State income taxes, net of effect of federal tax benefit ( 1,450 ) ( 1,379 ) 1,641

Unbenefited losses 7,942 4,481 2,899

Research credit ( 7,123 ) ( 2,431 ) ( 2,494 )

Non-deductible executive compensation 4,731 3,312 5,743

Foreign income taxed at a different statutory tax rate 4,519 — —

Stock-based compensation 4,104 ( 13,643 ) ( 8,657 )

Change in judgement on beginning of the year valuation allowance 966 ( 4,165 ) ( 3,544 )

Net adjustment related to the reconciliation of income tax provision accruals to tax returns ( 886 ) 335 ( 743 )

Deferred tax adjustment for enacted changes in tax law and rates 178 768 ( 5,244 )

Other, net 266 2,236 ( 711 )

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

In 2022, there was an increase in the foreign income taxed at different rates from the effects of capitalization and amortization of R&D expenses in 2022 as required by the 2017 Tax Cuts and Jobs Act.

A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding interest, is as follows:

2022 2021 2020

December 31, 2022

Quoted Market Prices for Identical Assets in Active Markets

(Level 1) Significant Other Observable Inputs

(Level 2) Significant Unobservable Inputs

(Level 3) Total

(In thousands)

Balance at January 1 $ 6,298 $ 5,268 $ 4,025

Additions based on tax positions related to the current year 1,342 1,317 1,676

Additions for tax positions of prior years 1,006 264 423

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

Settlements ( 2,465 ) ( 460 ) ( 856 )

Balance at December 31 $ 6,181 $ 6,298 $ 5,268

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

At December 31, 2022 and 2021, accruals for interest are not material and there are no accruals for penalties.

The Company is routinely under audit by federal, state, local and foreign authorities in the area of income tax as a result of previously filed separate company and consolidated tax returns with IAC.

These audits include questioning the timing and the amount of income and deductions and the allocation of income and deductions among various tax jurisdictions.

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

The settlement of these tax years has been submitted to the Joint Committee of Taxation for approval.

The statutes of limitations for the years 2013 through 2019 have been extended to

Cash equivalents:

Money market funds $ 189,000 $ — $ — $ 189,000

Treasury discount notes — 24,961 — 24,961

Total $ 189,000 $ 24,961 $ — $ 213,961

Financial instruments measured at fair value only for disclosure purposes

The total fair value of the outstanding long-term debt, including the current portion, is estimated using observable market prices or indices for similar liabilities, which are Level 2 inputs, and was approximately $ 418.1 million and $ 368.8 million at December 31, 2023 and December 31, 2022, respectively.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2023.

Returns filed in various other jurisdictions are open to examination for various tax years beginning with 2014.

Income taxes payable include unrecognized tax benefits considered sufficient to pay assessments that may result from examination of prior year tax returns.

The Company considers many factors when evaluating and estimating its tax positions and tax benefits, which may not accurately anticipate actual outcomes and, therefore, may require periodic adjustment.

Although management currently believes changes in unrecognized tax benefits from period to period and differences between amounts paid, if any, upon resolution of issues raised in audits and amounts previously provided will not have a material impact on liquidity, results of operations, or financial condition of the Company, these matters are subject to inherent uncertainties and management’s view of these matters may change in the future.

At December 31, 2022 and 2021, the Company has unrecognized tax benefits, including interest, of $ 6.2 million and $ 6.3 million respectively;

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

If unrecognized tax benefits at December 31, 2022 are subsequently recognized, the income tax provision would be reduced by $ 5.8 million.

The comparable amount as of December 31, 2021 is $ 6.0 million.

NOTE 4— GOODWILL AND INTANGIBLE ASSETS

6 unchanged sentences

The following table presents the balance of goodwill by reportable segment, including the changes in the carrying value of goodwill, for the year ended December 31, 2023:

Balance at December 31, 2021 Deductions Reporting Unit Allocation Adjustment Impairments Foreign

Balance at December 31, 2022 Foreign

Translation Balance at December 31, 2023

(In thousands)

North America $ 843,193 $ ( 816 ) $ ( 841,800 ) $ — $ ( 577 ) $ —

Europe 72,846 — ( 61,334 ) — ( 11,512 ) —

Ads and Leads $ 761,133 $ — $ 761,133

Services 51,197 — 51,197

Roofing — — 26,005 ( 26,005 ) — —

International 70,619 3,098 73,717

Total goodwill $ 882,949 $ 3,098 $ 886,047

See “ Note 2—Summary of Significant Accounting Policies ” for further discussion of the Company’s assessments of impairment of goodwill and indefinite-lived intangible assets.

AND SUBSIDIARIES

1 unchanged sentence

The following table presents the balance of goodwill by reportable segment, including the changes in the carrying value of goodwill, for the year ended December 31, 2022:

Balance at December 31, 2020 Additions (Deductions) Foreign

Balance at December 31, 2021 Deductions Reporting Unit Allocation Adjustment Impairments Foreign

Translation Balance at December 31, 2022

2 unchanged sentences

Europe 72,846 — ( 61,334 ) — ( 11,512 ) —

Ads and Leads — — 761,133 — — 761,133

Services — — 51,197 — — 51,197

International — — 64,799 — 5,820 70,619

Total 916,039 ( 816 ) ( 26,005 ) — ( 6,269 ) 882,949

Roofing (included in discontinued operations) — — 26,005 ( 26,005 ) — —

Total goodwill $ 916,039 $ ( 816 ) $ — $ ( 26,005 ) $ ( 6,269 ) $ 882,949

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

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

4 unchanged sentences

(Dollars in thousands)

Service professional relationships $ 96,858 $ ( 96,858 ) $ — 3.0

Technology $ 82,234 $ ( 82,234 ) $ — 5.5

Service professional relationships 5,619 ( 5,619 ) — 2.5

Trade names 1,376 ( 1,376 ) — 5.0

4 unchanged sentences

(Dollars in thousands)

Service professional relationships $ 97,989 $ ( 97,322 ) $ 667 3.0

Technology $ 82,114 $ ( 74,156 ) $ 7,958 5.5

Service professional relationships 95,858 ( 95,858 ) — 3.0

Trade names 1,327 ( 1,327 ) — 5.0

Total $ 179,299 $ ( 171,341 ) $ 7,958 4.1

At December 31, 2022, amortization of intangible assets with definite lives is estimated to be $ 8.0 for the year ended December 31, 2023 and none thereafter.

NOTE 5— FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

Marketable Debt Securities

The Company did no t hold any available-for-sale marketable debt securities at December 31, 2022 and December 31, 2021.

For the year ended December 31, 2021, proceeds from maturities of available-for-sale marketable debt securities was $ 50.0 million.

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

The decreases in gross carrying amount and accumulated amortization of intangible assets from December 31, 2022 was due primarily to the retirement of certain fully amortized service professional relationships within Ads and Leads of $ 90.5 million as these assets are no longer in use.

See “ Note 2—Summary of Significant Accounting Policies ” for further discussion of the Company’s assessments of impairment of goodwill and indefinite-lived intangible assets.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Fair Value Measurements

Instruments measured at fair value on a recurring basis

Cash and cash equivalents are measured at fair value and classified within Level 1 and Level 2 in the fair value hierarchy, because we use quoted prices for identical assets in active markets.

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

December 31, 2022

Quoted Market Prices for Identical Assets in Active Markets

(Level 1) Significant Other Observable Inputs

(Level 2) Significant Unobservable Inputs

(Level 3) Total

NOTE 5— LEASES

The Company primarily leases office space used in connection with its operations under various operating leases, the majority of which contain escalation clauses.

ROU assets represent the Company’s right to use the underlying assets for the lease term and lease liabilities represent the present value of the Company’s obligation to make payments arising from these leases.

ROU assets and related lease liabilities are based on the present value of fixed lease payments over the lease term using the Company’s incremental borrowing rate on the lease commencement date, the date of acquisition for any leases acquired in connection with a business combination, or January 1, 2019, the date ASC Topic 842, Leases (“ASC 842”) was adopted, for leases that commenced prior to that date.

The Company combines the lease and non-lease components of lease payments in determining ROU assets and related lease liabilities.

If the lease includes one or more options to extend the term of the lease, the renewal option is considered in the lease term if it is reasonably certain the Company will exercise the option(s).

Lease expense is recognized on a straight-line basis over the term of the lease.

As permitted by ASC 842, leases with an initial term of twelve months or less (“short-term leases”) are not recorded on the balance sheet.

Variable lease payments consist primarily of common area maintenance, utilities, and taxes, which are not included in the recognition of ROU assets and related lease liabilities.

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

The following table presents the balances of ROU assets and lease liabilities within the balance sheet:

Leases Balance Sheet Classification 2023 2022

(In thousands)

Cash equivalents:

Money market funds $ 189,000 $ — $ — $ 189,000

Treasury discount notes — 24,961 — 24,961

Total $ 189,000 $ 24,961 $ — $ 213,961

December 31, 2021

Quoted Market Prices for Identical Assets in Active Markets

(Level 1) Significant Other Observable Inputs

(Level 2) Significant Unobservable Inputs

(Level 3) Total

ROU assets Other non-current assets $ 45,971 $ 56,313

Current lease liabilities Accrued expenses and other current liabilities $ 17,797 $ 16,328

Long-term lease liabilities Other long-term liabilities 51,550 72,688

Total lease liabilities $ 69,347 $ 89,016

The following table presents the net lease expense within the statement of operations:

Years Ended December 31,

Lease Expense Statement of Operations Classification 2023 2022 2021

(In thousands)

Cash equivalents:

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

Total $ 280,052 $ — $ — $ 280,052

Assets measured at fair value on a nonrecurring basis

Such fair value measurements are based predominantly on Level 3 inputs.

During the year ended December 31, 2022 and December 31, 2021, the Company recorded $ 2.8 million and $ 12.7 million in impairment charges on ROU assets and leasehold improvements and furniture and equipment, respectively.

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

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

During the year ended December 31, 2022 the Company recorded $ 10.9 million and $ 4.6 million in impairment charges on capitalized software within the Services and Ads and Leads segments, respectively.

Impairment expense was determined by comparing the carrying value to the fair value of each capitalized software asset group.

Based on this analysis, the carrying amount was determined to not be recoverable and an impairment charge was recognized in the amount of the carrying value and is included within depreciation expense.

Fixed lease expense Cost of revenue $ 392 $ 437 $ 346

Fixed lease expense Selling and marketing expense 116 2,669 7,305

Fixed lease expense General and administrative expense 11,225 11,122 16,461

Fixed lease expense Product development expense 399 492 1,232

Total fixed lease expense (a)

12,132 14,720 25,344

Variable lease expense Selling and marketing expense 36 200 1,087

Variable lease expense General and administrative expense 5,071 4,444 2,438

Variable lease expense Product development expense 156 23 567

Total variable lease expense 5,263 4,667 4,092

Net lease expense $ 17,395 $ 19,387 $ 29,436

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Financial instruments measured at fair value only for disclosure purposes

The following table presents the carrying value and the fair value of financial instruments measured at fair value only for disclosure purposes:

December 31, 2022 December 31, 2021

Carrying Value Fair Value Carrying Value Fair Value

________________________________

(a) Includes (i) lease impairment charges of $ 0.7 million, $ 1.7 million, and $ 7.8 million, and (ii) sublease income of $ 4.3 million, $ 4.7 million, and $ 1.8 million for the years ended December 31, 2023, 2022, and 2021, respectively.

Maturities of lease liabilities as of December 31, 2023 (b) are summarized below:

Years Ending December 31:

(In thousands)

Long-term debt, net (a)

2024 $ 21,396

Thereafter 5,329

Interest 10,578

Present value of lease liabilities $ 69,347

________________________________

(a) At December 31, 2022 and December 31, 2021, the carrying value of long-term debt, net includes unamortized debt issuance costs of $ 4.7 million and $ 5.4 million, respectively .

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

(b) At December 31, 2023 there were no legally binding minimum lease payments for leases signed but not yet commenced.

The following are the weighted average assumptions used for lease term and discount rate:

Remaining lease term 4.4 years 5.3 years

Discount rate 6.59 % 6.19 %

The following is the supplemental cash flow information:

Years Ended December 31,

2023 2022 2021

(In thousands)

ROU assets obtained in exchange for lease liabilities $ 6,696 $ 2,911 $ 2,848

Derecognition of ROU assets due to termination or modification $ ( 5,266 ) $ ( 772 ) $ ( 1,555 )

Cash paid for amounts included in the measurement of lease liabilities $ 25,806 $ 22,484 $ 23,285

NOTE 6— LONG-TERM DEBT

3 unchanged sentences

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

interest payable each February 15 and August 15, which commenced February 15, 2021

interest payable each February 15 and August 15

$ 500,000 $ 500,000

Total long-term debt 500,000 500,000

unamortized debt issuance costs 3,953 4,716

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

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

ANGI Group Senior Notes

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

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

At any time prior to August 15, 2023, these notes may be redeemed at a redemption price equal to the sum of the principal amount thereof, plus accrued and unpaid interest and a make-whole premium.

Thereafter, these notes may be redeemed at the redemption prices set forth below, plus accrued and unpaid interest thereon, if any, to the applicable redemption date, if redeemed during the twelve-month period beginning on August 15 of the years indicated below:

ANGI Group, LLC (“ANGI Group”), a direct wholly-owned subsidiary of Angi Inc., issued the ANGI Group Senior Notes were issued on August 20, 2020.

These notes may be redeemed at the redemption prices set forth below, plus accrued and unpaid interest thereon, if any, to the applicable redemption date, if redeemed during the twelve-month period beginning on August 15 of the years indicated below:

Year Percentage

2 unchanged sentences

2025 and thereafter 100.000 %

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The indenture governing the ANGI Group Senior Notes contains a covenant that would limit ANGI Group’s ability to incur liens for borrowed money in the event a default has occurred or ANGI Group’s secured leverage ratio exceeds 3.75 to 1.0, provided that ANGI Group is permitted to incur such liens under certain permitted credit facilities indebtedness notwithstanding the ratio, all as defined in the indenture.

4 unchanged sentences

ANGI Group Term Loan

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

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

During 2021, ANGI Group prepaid the remaining balance of $ 220.0 million of the ANGI Group Term Loan principal, which otherwise would have matured on November 5, 2023.

NOTE 7— SHAREHOLDERS’ EQUITY

16 unchanged sentences

Board of Directors out of funds legally available therefor.

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

In the event of a liquidation, dissolution or winding up, holders of the Company’s Class A common stock,

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Class B common stock and Class C common stock are entitled to receive ratably the assets available for distribution to the stockholders after payment of all liabilities and accrued but unpaid dividends and liquidation preferences on any outstanding preferred stock.

At December 31, 2023, IAC holds all 422.0 million outstanding shares of the Company’s Class B common stock, and 2.6 million outstanding shares of the Company’s Class A common stock, in total representing approximately 84.2 % economic interest and 98.1 % voting interest in the Company.

1 unchanged sentence

issues or proposes to issue any shares of Angi Inc.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

proposed issuance, with respect to issuances of our voting capital stock, or (ii) enable IAC to maintain ownership of at least 80.1 % of each class of the Company’s non-voting capital stock, with respect to issuances of our non-voting capital stock.

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

Reserved Common Shares

2 unchanged sentences

Common Stock Repurchases

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

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

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

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

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

During the year ended December 31, 2022, the Company repurchased 1.0 million shares of Angi Inc.

common stock for aggregate consideration, on a trade date basis, of $ 8.1 million.

On March 9, 2020, the Board of Directors of Angi Inc.

authorized the Company to repurchase up to 20 million shares of its common stock.

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 is subject to price and volume limitations.

During the years ended December 31, 2023, 2022, and 2021, the Company repurchased 4.4 million, 1.0 million, and 3.2 million of Angi Inc.

common stock for aggregate consideration, on a trade date basis, of $ 11.1 million, $ 8.1 million, and $ 35.4 million, respectively.

At December 31, 2023, the Company has approximately 10.6 million shares remaining in its share repurchase authorization.

NOTE 8— ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME

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

NOTE 8— ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following tables present the components of accumulated other comprehensive income (loss), which exclusively consists of foreign currency translation adjustment:

Years Ended December 31,

2023 2022 2021

Adjustment Accumulated Other Comprehensive Income (Loss) Foreign

Adjustment Accumulated Other Comprehensive Income Foreign

Adjustment Accumulated Other Comprehensive (Loss) Income

(In thousands)

Balance at January 1 $ ( 1,172 ) $ 3,309 $ 4,637

Other comprehensive (loss) income ( 4,481 ) ( 4,481 ) ( 1,328 ) ( 1,328 ) 6,016 6,016

Other comprehensive income (loss) 2,359 ( 4,481 ) ( 1,328 )

Balance at December 31 $ 1,187 $ ( 1,172 ) $ 3,309

At December 31, 2022, 2021, and 2020, there was no tax benefit or provision on the accumulated other comprehensive (loss) income.

NOTE 9— LOSS PER SHARE

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

Class A and Class B Common Stock shareholders:

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended December 31,

2022 2021 2020

Basic Diluted Basic Diluted Basic Diluted

(In thousands, except per share data)

Net loss $ ( 127,982 ) $ ( 127,982 ) $ ( 70,494 ) $ ( 70,494 ) $ ( 4,160 ) $ ( 4,160 )

Net earnings attributable to noncontrolling interests ( 468 ) ( 468 ) ( 884 ) ( 884 ) ( 2,123 ) ( 2,123 )

Net loss attributable to Angi Inc.

Class A and Class B Common Stock shareholders $ ( 128,450 ) $ ( 128,450 ) $ ( 71,378 ) $ ( 71,378 ) $ ( 6,283 ) $ ( 6,283 )

Weighted average basic Class A and Class B common stock shares outstanding 503,008 503,008 502,761 502,761 498,159 498,159

Dilutive securities (a) (b)

Denominator for loss per share—weighted average shares 503,008 503,008 502,761 502,761 498,159 498,159

Loss per share attributable to Angi Inc.

shareholders:

Loss per share $ ( 0.26 ) $ ( 0.26 ) $ ( 0.14 ) $ ( 0.14 ) $ ( 0.01 ) $ ( 0.01 )

________________________

(a) If the effect is dilutive, weighted average common shares outstanding include the incremental shares that would be issued upon the assumed exercise of stock options and subsidiary denominated equity and vesting of restricted stock units (“RSUs”).

For the years ended December 31, 2022, 2021, and 2020, 23.6 million, 17.5 million, and 24.9 million of potentially dilutive securities, respectively, were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive.

Accordingly, the weighted average basic shares outstanding were used to compute all earnings per share amounts.

(b) Market-based awards and performance-based stock units (“PSUs”) are considered contingently issuable shares.

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

For the years ended December 31, 2022, 2021, and 2020, 0.8 million, 2.2 million and 2.0 million underlying market-based awards and PSUs, respectively, were excluded from the calculation of diluted earnings per share because the market or performance condition(s) had not been met.

NOTE 10— STOCK-BASED COMPENSATION

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

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

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

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

At December 31, 2022, there are 22.4 million shares available for grant under the Plan.

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

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

Board of Directors (the “Committee”).

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

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

RSU awards granted under the Plan generally vest either in one installment over a three-year period, in equal annual installments over a four-year period, or a three-year graded schedule (installments of 57 % in first year, 29 % in second year, and 14 % in last year), in each case, from the grant date.

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

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

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Stock-based compensation expense recognized in the consolidated statement of operations includes expense related to:

(i) the Company’s stock options, stock appreciation rights and RSUs;

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

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

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

The forfeiture rate is estimated at the grant date based on historical experience and revised, if necessary, in subsequent periods if actual forfeitures differ from the estimated rate.

The expense ultimately recorded is for the awards that vest.

At December 31, 2022, there was $ 68.9 million of unrecognized compensation cost, net of estimated forfeitures, related to all equity-based awards, which is expected to be recognized over a weighted average period of approximately 2.5 years.

The total income tax benefit recognized in the accompanying consolidated statement of operations for the years ended December 31, 2022, 2021, and 2020 related to all stock-based compensation is $ 3.6 million, $ 16.9 million, $ 24.3 million, respectively.

The aggregate income tax (detriment)/benefit recognized related to the exercise of stock options and stock appreciation rights for the years ended December 31, 2022, 2021, and 2020 is $( 0.3 ) million, $ 10.8 million, and $ 11.4 million, respectively.

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

Stock Options and Stock Appreciation Rights

Stock options and stock appreciation rights outstanding at December 31, 2022 and changes during the year ended December 31, 2022 were as follows:

December 31, 2022

Shares Weighted Average

Exercise Price

Weighted Average

Contractual Term (In Years)

Intrinsic Value

(Shares and intrinsic value in thousands)

Outstanding at January 1, 2022 1,609 $ 7.32

Exercised ( 386 ) 2.49

Forfeited — —

Expired ( 136 ) 5.56

Outstanding at December 31, 2022 1,087 $ 9.26 2.86 $ —

Exercisable 1,087 $ 9.26 2.86 $ —

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

closing stock price on the last trading day of 2022 and the exercise price, multiplied by the number of in-the-money awards that would have been exercised had all award holders exercised their awards on December 31, 2022.

The total intrinsic value of awards exercised during the years ended December 31, 2022, 2021, and 2020 is $ 1.3 million, $ 103.8 million and $ 120.9 million, respectively.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table summarizes the information about stock options and stock appreciation rights outstanding and exercisable at December 31, 2022:

Awards outstanding & exercisable

Range of Exercise Prices Outstanding

2022 Weighted average

life in years Weighted

(Shares in thousands)

$ 0.01 to $ 10.00

593 2.8 $ 4.73

$ 10.01 to $ 20.00

479 3.0 14.48

$ 20.01 to $ 30.00

1,087 2.9 $ 9.26

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

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

equity awards resulting in a modification charge.

There were no charges included in stock-based compensation expense in the year ended December 31, 2022 and charges of $ 0.9 million and $ 21.1 million, for the years ended December 31, 2021 and 2020 respectively, related to these modified awards.

No cash was received from stock option exercises during the years ended December 31, 2022, 2021 and 2020 because they were net settled in shares of Angi Inc.

common stock.

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

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

or shares of IAC common stock.

If settled in IAC common stock, Angi Inc.

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

Assuming all of the stock appreciation rights outstanding on December 31, 2022 were net settled on that date, ANGI would have issued no Class A shares (either to award holders or to IAC as reimbursement) and ANGI would have remitted nothing in cash for withholding taxes (assuming a 50 % withholding rate).

Assuming all other ANGI equity awards outstanding on December 31, 2022, were net settled on that date, including stock options, RSUs and subsidiary denominated equity described below, ANGI would have issued 11.1 million Class A shares and would have remitted $ 26.2 million in cash for withholding taxes (assuming a 50 % withholding rate).

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

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

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

common stock at the date of grant.

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

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

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

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

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

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

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

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

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

Unvested RSUs, MSUs, and PSUs outstanding at December 31, 2022 and changes during the year ended December 31, 2022 are as follows:

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

RSUs MSUs PSUs

Number of Shares Weighted Average

Fair Value Number of Shares (a)

Weighted Average

Fair Value Number of Shares (a)

Weighted Average

(Shares in thousands)

Unvested at January 1, 2022 13,296 $ 11.49 3,711 $ 14.27 1,174 $ 8.89

Granted 21,530 4.95 13 6.39 — —

Vested ( 4,782 ) 10.28 — — ( 18 ) 13.17

Forfeited ( 8,355 ) 7.77 ( 3,315 ) 14.4 ( 648 ) 13.28

Unvested at December 31, 2022 21,689 $ 7.04 409 $ 12.97 507 $ 3.14

___________________________

(a) Included in the table are MSUs and PSUs which vests in varying amounts depending upon certain market or performance conditions.

The MSUs and PSUs in the table above includes these awards at their maximum potential payout.

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

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

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

common stock on the settlement date.

The weighted average fair value of RSUs granted during the years ended December 31, 2022, 2021, and 2020 based on market prices of Angi Inc.

common stock on the grant date was $ 4.95 , $ 12.73 , and $ 7.37 , respectively.

The weighted average fair value of MSUs granted during the years ended December 31, 2022 and 2021, based on the lattice model, was $ 6.39 and $ 14.39 , respectively.

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

There were no PSUs granted during the year ended December 31, 2022.

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

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

The total fair value of RSUs that vested during the years ended December 31, 2022, 2021, and 2020 was $ 20.8 million, $ 35.2 million and $ 23.4 million, respectively.

There were no MSUs that vested during the year ended December 31, 2022.

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

The total fair value of PSUs that vested during the year ended December 31, 2022 and 2021 was $ 0.1 million and $ 3.6 million, respectively.

There were no PSUs that vested during the year ended December 31, 2020.

Equity Instruments Denominated in the Shares of Certain Subsidiaries

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

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

The value of the stock appreciation rights is tied to the value of the common stock of these subsidiaries, which is determined by the Company using a variety of valuation techniques including a combination of market based and discounted cash flow valuation methodologies.

Accordingly, these interests only have value to the extent the relevant business appreciates in value above the initial value utilized to determine the exercise price.

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

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

Class A common stock, at IAC’s election.

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

The expense associated with these equity awards is initially measured at fair value, using the Black-Scholes option pricing model, at the grant date and is expensed as stock-based compensation over the vesting term.

The plans under which these awards are granted establish specific settlement dates or liquidity events for which the valuation of the relevant subsidiary is determined for purposes of settlement of the awards.

There were no items reclassified out of accumulated other comprehensive income (loss) into earnings during the years ended December 31, 2023, 2022, and 2021.

At December 31, 2023, 2022, and 2021, there was no tax benefit or provision on the accumulated other comprehensive income (loss).

NOTE 9— SEGMENT INFORMATION

The overall concept that the Company employs in determining its operating segments is to present the financial information in a manner consistent with the CODM’s view of the businesses.

In addition, the Company considers how the businesses are organized as to segment management and the focus of the businesses with regards to the types of services or products offered or the target market.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company has determined its operating segments consistent with how the chief operating decision maker views the businesses.

Additionally, the Company considers how the businesses are organized as to segment management and the focus of the businesses with regards to the types of services or products offered or the target market.

The following table presents revenue by reportable segment:

4 unchanged sentences

Services 118,033 381,256 289,948

Roofing 137,509 68,028 —

Intersegment eliminations (a)

( 10,340 ) ( 1,907 ) —

Total Domestic 1,242,941 1,663,317 1,517,022

International 115,807 101,038 102,295

$ 1,891,524 $ 1,685,438 $ 1,467,925

________________________

(a) Intersegment eliminations related to Ads and Leads revenue earned from the sale of leads to Roofing.

Total $ 1,358,748 $ 1,764,355 $ 1,619,317

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

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended December 31,

8 unchanged sentences

Services revenue 118,033 381,256 289,948

Roofing revenue 137,509 68,028 —

Intersegment eliminations (a)

( 10,340 ) ( 1,907 ) —

Total Domestic revenue 1,242,941 1,663,317 1,517,022

5 unchanged sentences

Total revenue $ 1,358,748 $ 1,764,355 $ 1,619,317

________________________

(a) Intersegment eliminations related to Ads and Leads revenue earned from the sale of leads to Roofing.

Geographic information about revenue and long-lived assets is presented below.

5 unchanged sentences

Total $ 1,358,748 $ 1,764,355 $ 1,619,317

The United States is the only country whose revenue is greater than 10 % of total revenue of the Company for the years ended December 31, 2022, 2021, and 2020.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2023 December 31, 2022

(In thousands)

Long-lived assets (excluding goodwill, intangible assets, and ROU assets):

Long-lived assets (excluding goodwill and intangible assets):

United States $ 145,710 $ 199,744

2 unchanged sentences

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

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended December 31,

4 unchanged sentences

Services ( 23,450 ) ( 95,166 ) ( 63,984 )

Roofing ( 50,685 ) ( 8,596 ) —

Corporate ( 61,377 ) ( 61,794 ) ( 56,196 )

4 unchanged sentences

(In thousands)

Adjusted EBITDA (b) :

Adjusted EBITDA (a) :

Ads and Leads $ 147,357 $ 168,952 $ 136,260

Services 8,123 ( 52,126 ) ( 48,203 )

Roofing $ ( 21,400 ) $ ( 7,511 ) $ —

Corporate ( 50,076 ) ( 49,866 ) ( 46,066 )

International 13,074 ( 481 ) ( 6,615 )

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

Total $ 118,478 $ 66,479 $ 35,376

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

(1) stock-based compensation expense;

1 unchanged sentence

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

We consider operating income (loss) to be the financial measure calculated and presented in accordance with GAAP that is most directly comparable to our segment reporting performance measure, Adjusted EBITDA.

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

shareholders to Adjusted EBITDA:

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Year Ended December 31, 2023

1 unchanged sentence

Compensation Expense Depreciation Amortization

of Intangibles Goodwill Impairment Adjusted

of Intangibles Adjusted

(In thousands)

1 unchanged sentence

Services ( 23,450 ) 7,586 23,987 — 8,123

Roofing ( 50,685 ) $ 1,866 $ 747 $ 667 $ 26,005 $ ( 21,400 )

Corporate ( 61,377 ) 11,301 — — ( 50,076 )

International 8,286 1,382 3,406 — 13,074

Operating loss ( 126,305 )

Total ( 26,498 ) $ 43,414 $ 93,604 $ 7,958 $ 118,478

Interest expense ( 20,137 )

Other income, net 18,427

Loss before income taxes ( 145,234 )

Income tax benefit 17,252

Loss from continuing operations before income taxes ( 28,208 )

Income tax provision ( 1,839 )

Net loss from continuing operations ( 30,047 )

Loss from discontinued operations, net of tax ( 10,264 )

Net loss ( 40,311 )

2 unchanged sentences

shareholders $ ( 40,940 )

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Year Ended December 31, 2022

5 unchanged sentences

Services ( 95,166 ) 18,012 21,904 3,124 ( 52,126 )

Roofing ( 8,596 ) $ 531 $ 221 $ 333 $ ( 7,511 )

Corporate ( 61,794 ) 11,928 — — ( 49,866 )

International ( 4,253 ) 890 2,882 — ( 481 )

Operating loss ( 76,513 )

Total ( 75,620 ) $ 50,802 $ 77,523 $ 13,774 $ 66,479

Interest expense ( 20,107 )

Other expense, net ( 2,509 )

Loss before income taxes ( 102,507 )

Other income, net 1,169

Loss from continuing operations before income taxes ( 94,558 )

Income tax benefit 5,390

Net loss from continuing operations ( 89,168 )

Loss from discontinued operations, net of tax ( 38,814 )

Net loss ( 127,982 )

2 unchanged sentences

shareholders $ ( 128,450 )

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Year Ended December 31, 2021

5 unchanged sentences

Services ( 63,984 ) 4,672 7,049 4,060 ( 48,203 )

Roofing — $ — $ — $ — $ —

Corporate ( 56,196 ) 10,121 — 9 ( 46,066 )

International ( 13,222 ) 656 5,951 — ( 6,615 )

Operating loss ( 6,368 )

Total ( 67,917 ) $ 28,171 $ 59,025 $ 16,097 $ 35,376

Interest expense ( 23,485 )

Other income, net 1,218

Loss before income taxes ( 19,328 )

Other expense, net ( 2,510 )

Loss from continuing operations before income taxes ( 93,912 )

Income tax benefit 29,894

Net loss from continuing operations ( 64,018 )

Loss from discontinued operations, net of tax ( 6,476 )

Net loss ( 70,494 )

2 unchanged sentences

shareholders $ ( 71,378 )

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table presents capital expenditures by reportable segment:

5 unchanged sentences

Services 2,551 35,833 17,439

Roofing 873 306 —

International 537 2,860 2,444

Total $ 47,780 $ 115,479 $ 69,909

NOTE 12— LEASES

The Company leases office space, data center facilities, and equipment in connection with its operations under various operating leases, the majority of which contain escalation clauses.

The Company combines the lease and non-lease components of lease payments in determining ROU assets and related lease liabilities.

If the lease includes one or more options to extend the term of the lease, the renewal option is considered in the lease term if it is reasonably certain the Company will exercise the option(s).

Lease expense is recognized on a straight-line basis over the term of the lease.

As permitted by ASC 842, leases with an initial term of twelve months or less (“short-term leases”) are not recorded on the accompanying consolidated balance sheet.

Variable lease payments consist primarily of common area maintenance, utilities, and taxes, which are not included in the recognition of ROU assets and related lease liabilities.

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

Leases Balance Sheet Classification 2022 2021

(In thousands)

Right-of-use assets Other non-current assets $ 57,408 $ 69,858

Current lease liabilities Accrued expenses and other current liabilities 16,908 17,098

Long-term lease liabilities Other long-term liabilities 73,607 88,423

Total lease liabilities $ 90,515 $ 105,521

NOTE 10— STOCK-BASED COMPENSATION

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

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

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

At December 31, 2023, there are 14.0 million shares available for grant under the Plan.

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

Board of Directors (the “Committee”).

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

Stock options and stock appreciation rights granted under the Plan generally

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Lease Cost Income Statement Classification 2022 2021 2020

(In thousands)

Fixed lease cost Cost of revenue $ 437 $ 346 $ 321

Fixed lease cost Selling and marketing expense 2,669 7,305 9,913

Fixed lease cost General and administrative expense 12,908 16,829 7,545

Fixed lease cost Product development expense 492 1,232 1,848

Total fixed lease cost (a)

vest in equal annual installments over a four-year period from the grant date.

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

Stock-based compensation expense recognized in the statement of operations includes expense related to:

(i) the Company’s RSUs, stock options and stock appreciation rights;

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

and (iii) IAC denominated restricted stock.

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

The forfeiture rate is estimated at the grant date based on historical experience and revised, if necessary, in subsequent periods if actual forfeitures differ from the estimated rate.

The expense ultimately recorded is for the awards that vest.

At December 31, 2023, there was $ 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.

The total income tax benefit recognized in the statement of operations for the years ended December 31, 2023, 2022, and 2021 related to all stock-based compensation is $ 2.9 million, $ 3.6 million, $ 16.8 million, respectively.

The aggregate income tax benefit/(detriment) recognized related to the exercise of stock options and stock appreciation rights for the years ended December 31, 2023, 2022, and 2021 is $ 0.1 million, $( 0.3 ) million, and $ 10.8 million, respectively.