In the face of a macro environment in which investors have shifted from rewarding growth at all costs to valuing earnings and cash flow above all else,
change your tone. The online marketplace and database still targets the massive home services market in the United States, but indicates that they are more focused on generating profits along the way. Time will tell if Angi can thread the needle and resurrect her tumble stock.
Angi (ticker: ANGI) has fallen more than 53% in 2022, including a 13% decline on Monday ahead of its first quarter report that evening. It is one of Barrons worst performing stock picks of 2022. Angi stock is up 19.5% in recent trades to $4.29 per share.
Angi said it lost about $33 million, or 7 cents per share, on $436 million in revenue in the first three months of the year. Its Adjusted Ebitda – short for Earnings Before Interest, Taxes, Depreciation and Amortization – was a loss of $3 million.
These results were hardly a surprise, all falling within a few million dollars of Wall Street consensus estimates. Angi publishes monthly performance metrics, which analysts feed into their models as the quarter progresses.
Angi, majority owned by
(IAC), saw its total revenue increase 13% year-over-year. This is the sixth consecutive quarter of double-digit growth, but slower than the 15-20% target that management has set.
The company’s growth engine is its nascent product Angi Services, which is a marketplace for owners to book services from pre-screened contractors. Angi’s website or mobile app serves as the hub for all communications, scheduling, and invoicing, and the company receives a percentage of each job. The growing ranks of digitally savvy homeowners are the target customers there.
Angi Services revenue grew 107% year-over-year to $113 million, or about 26% of the company’s total. This growth rate is slowing: it was 160% in the third quarter of 2021 and 116% in the fourth quarter. Angi is not disclosing the segment’s earnings, but said it remains in investment mode to drive adoption.
“We have clearly entered a more volatile macroeconomic period,” said Angi CEO Oisin Hanrahan. Barrons. “We are now more focused than ever on the profitability of our services business.”
That means prioritizing the most profitable of the more than 500 home services available, which run the gamut from plumbing, landscaping, painting, roofing, remodeling, housekeeping and wrestling. pest control. Hanrahan says Angi can be more “effective” in its marketing and devote more resources to promoting these services.
Angi’s core business is selling advertisements and leads to contractors, so they can connect with homeowners who need work. It proved somewhat countercyclical during the pandemic housing boom. The overworked contractors faced such overwhelming demand for services – while facing material and labor shortages – that they hardly needed to pay for advertising.
First-quarter revenue from Angi’s Ads and Leads segment was down 3% year-over-year. There is, however, a silver lining in a slowing housing market, as consumer demand for services slows. This could bring entrepreneurs back to Angi’s ads and leads segment to secure jobs.
“We’re getting back to a more normal relationship between supply and demand, which is, frankly, a good thing for us,” Hanrahan said.
It continues to expect annual revenue growth in the range of 15% to 20% and “similar to 2021” profitability, when Angi recorded $28 million in Adjusted Ebitda on nearly 1, $7 billion in sales.
This would bring full-year 2022 revenue to between $1.9 and $2.0 billion and Adjusted Ebitda to between $32 and $33.5 million. Wall Street analyst consensus for 2022 was $1.9 billion in sales and $18.8 million in Adjusted Ebitda ahead of Monday’s report.
Write to Nicholas Jasinski at email@example.com