Angi Q2 Earnings Call Highlights

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Angi (NASDAQ:ANGI) reported that second-quarter revenue declined 11% year over year, as the company continued to move away from network channels, reduced spending on lower-quality marketing channels, and experienced a shift in homeowner demand following higher oil and gas prices.

Chief Financial Officer Julie Hoarau said network revenue fell 34% from a year earlier. She also said homeowner demand shifted away from larger projects such as roofing and HVAC toward smaller jobs, where the company has less available professional capacity and therefore less ability to monetize demand.

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U.S. service requests declined 6% year over year, while leads fell 13%. Revenue per lead increased 1%, which Hoarau attributed to the mix-out of a heavily discounted legacy advertising product. Compared with pre-March 11 run rates, second-quarter revenue was in the double-digit percentage range lower than historical seasonal patterns, she said.

Hoarau said demand trends have improved but remained below pre-March 10 levels. The company expects modest quarterly improvement going forward but did not reinstate guidance. She said July EBITDA margin was already several hundred basis points above the second-quarter level, while fourth-quarter margins typically decline somewhat because of seasonality.

Marketing changes and cash-flow target

Sequentially from the first quarter, revenue and adjusted EBITDA both increased, with approximately 50% flow-through, according to Hoarau. Angi reallocated about $6 million of TV spending during the second quarter toward higher-return marketing channels after determining that television advertising had been less effective than in previous years. The company expects to remove a comparable amount of TV spending entering the third quarter.

Management said it remains on track for its annual adjusted EBITDA less capital expenditures objective. Chief Executive Officer Jeff Kip had previously said the company would be satisfied with approximately $50 million annually of EBITDA less CapEx.

Angi also recorded a $235 million non-cash impairment charge during the quarter related to goodwill and trade names in its U.S. reporting unit. Hoarau said the charge was triggered by sustained declines in the company’s market capitalization since year-end. The international reporting unit had “substantial headroom,” she said, and the impairment does not affect cash, liquidity or commitments.

The company’s annual goodwill impairment test is scheduled for October, although another charge could be recorded earlier if another triggering event occurs. Hoarau said additional impairment would be possible if market conditions, valuation assumptions or operating performance deteriorate.

Large professional segment central to growth strategy

Kip characterized the large professional customer segment as central to Angi’s plan to return its core lead-generation business to growth. The company estimates that completed home-services work in the U.S. represents a $700 billion market, with less than 1.5% flowing through Angi’s platform.

Angi estimates total professional spending on customer acquisition at $70 billion to $80 billion annually, with about 65% coming from businesses with more than 20 employees. Kip said Angi has less than 0.5% share of that large-professional segment, compared with roughly 4% share of the small- and medium-sized business portion of the market.

Matching its small-business penetration in the larger segment could produce roughly $2.5 billion in revenue for the existing core business, Kip said. He added that the large-professional segment has been growing more than 20% year over year despite having fewer than 10 sellers so far this year. Angi expects to have 30 sellers by year-end.

The company is changing its sales approach from selling lead volume and discounts to establishing operating partnerships with professionals, including working with them on lead-to-close processes and software. Kip said Angi’s professionals are now winning about one in six leads, compared with roughly one in nine leads two summers ago, with win rates up about 20% from a year ago.

Professional capacity is another key metric, management said. Capacity declined 13% in the first quarter but was down 2% as of June and approximately flat year over year in July. Hoarau said average capacity per professional increased about 13% year over year in the second quarter, despite a decline in nominal professional count, as Angi targeted and retained larger customers.

Kip said Angi could return to growth at some point in 2027 if it executes its strategy, though he emphasized that the statement was not formal guidance.

AI platform, agents and traffic acquisition

The company is migrating from legacy technology to what Kip called an AI-first platform. Angi’s homeowner account experience is already live on the new technology, and the company expects to complete the homeowner-platform build and migration by year-end. It aims to begin migrating an initial test cohort to a new professional platform by the end of the first quarter of 2027.

Kip said professional churn for users with roughly six months of tenure on Angi’s international platform is about half the U.S. rate. Management believes some of that benefit could be captured through platform migration and AI-powered professional tools, although it did not provide guidance for the potential impact.

Angi’s homeowner AI agent currently touches 50% of homeowner traffic and converts that traffic at three times the rate of traffic that does not interact with the agent, Kip said. The company also launched its first professional-facing AI tool, the AI Front Desk, which answers calls and books appointments. Dozens of professionals are using the product, and about 80% of those onboarded remain active, according to Kip.

The company plans to demonstrate its broader Angi Pro Chief Revenue Officer, or Pro CRO, suite at an investor day on Nov. 17. The proposed tools are intended to respond to homeowners, answer calls, schedule appointments, optimize routing, prepare estimates, provide sales coaching and follow up with customers.

Kip said Angi may monetize the tools through improved professional retention and lifetime value, pricing improvements in the core lead business, or potential usage and subscription fees. He said the company is not yet providing a formal revenue model or rollout timetable for the agent suite.

Angi is also testing advertising through ChatGPT and said it has reached a roughly $3 million revenue run rate on that platform. Kip said the channel is currently profitable, though not yet as profitable as Meta or Google, and that traffic quality and conversion appear generally consistent with other channels at the current volume.

Management said it expects existing marketing channels to provide ample room to grow service requests as professional capacity expands. Kip also cited a 20% increase in homeowner repeat rates over the past several quarters as an important factor supporting future traffic and marketing efficiency.

About Angi (NASDAQ:ANGI)

Angi (NASDAQ: ANGI) operates a digital marketplace that connects homeowners and renters with service professionals for home improvement, maintenance and repair projects. Through its flagship platform, Angi provides user-friendly tools that allow consumers to research service providers, compare prices, read verified reviews and book appointments. The company's services span a wide range of home needs, including plumbing, electrical work, landscaping, painting, cleaning, remodeling and general handyman tasks.

Originally founded in 1995 as Angie's List, the company built its reputation on a subscription-based model and a comprehensive database of customer reviews.

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