10-Q 1 angi-20220630.htm 10-Q angi-20220630
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As filed with the Securities and Exchange Commission on August 9, 2022
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 2022
Or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from__________to__________                            
Commission File No. 001-38220
angi-20220630_g1.gif
Angi Inc.
(Exact name of Registrant as specified in its charter)
Delaware82-1204801
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
3601 Walnut Street, Denver, CO 80205
(Address of Registrant’s principal executive offices)
(303963-7200
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of exchange on which registered
Class A Common Stock, par value $0.001ANGIThe Nasdaq Stock Market LLC

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes     No 

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes     No 

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filerNon-accelerated filerSmaller reporting companyEmerging growth company
If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes     No 

As of August 5, 2022, the following shares of the Registrant’s common stock were outstanding:
Class A Common Stock81,270,011 
Class B Common Stock422,019,247 
Class C Common Stock— 
Total outstanding Common Stock503,289,258 



TABLE OF CONTENTS
  Page
Number




2

PART I
FINANCIAL INFORMATION
Item 1.    Consolidated Financial Statements
ANGI INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Unaudited)
June 30, 2022December 31, 2021
(In thousands, except par value amounts)
ASSETS
Cash and cash equivalents $360,950 $428,136 
Accounts receivable, net of reserves of $46,317 and $36,360, respectively
119,768 84,387 
Other current assets 81,864 70,548 
Total current assets 562,582 583,071 
Capitalized software, leasehold improvements and equipment, net 156,230 118,267 
Goodwill909,964 916,039 
Intangible assets, net 185,174 193,826 
Deferred income taxes135,315 122,693 
Other non-current assets, net68,250 76,245 
TOTAL ASSETS $2,017,515 $2,010,141 
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES:
Accounts payable $41,700 $38,860 
Deferred revenue 56,940 53,834 
Accrued expenses and other current liabilities 238,962 183,815 
Total current liabilities 337,602 276,509 
Long-term debt, net 494,913 494,552 
Deferred income taxes 2,223 1,883 
Other long-term liabilities82,905 91,670 
Commitments and contingencies
SHAREHOLDERS’ EQUITY:
Class A common stock, $0.001 par value; authorized 2,000,000 shares; issued 100,897 and 99,745 shares, respectively, and outstanding 80,686 and 80,578, respectively
101 100 
Class B convertible common stock, $0.001 par value; authorized 1,500,000 shares; 422,019 and 422,019 shares issued and outstanding
422 422 
Class C common stock, $0.001 par value; authorized 1,500,000 shares; no shares issued and outstanding
  
Additional paid-in capital1,374,200 1,350,457 
Accumulated deficit(119,251)(61,629)
Accumulated other comprehensive (loss) income(393)3,309 
Treasury stock, 20,211 and 19,167 shares, respectively
(166,184)(158,040)
Total Angi Inc. shareholders’ equity1,088,895 1,134,619 
Noncontrolling interests 10,977 10,908 
Total shareholders’ equity1,099,872 1,145,527 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $2,017,515 $2,010,141 
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
3

ANGI INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
(In thousands, except per share data)
Revenue$515,782 $420,988 $951,941 $808,017 
Cost of revenue (exclusive of depreciation shown separately below)127,771 69,704 226,769 123,532 
Gross profit388,011 351,284 725,172 684,485 
Operating costs and expenses:
Selling and marketing expense251,159 239,031 476,960 444,871 
General and administrative expense119,626 107,486 229,281 195,648 
Product development expense20,954 18,752 38,813 36,799 
Depreciation13,354 15,058 27,353 31,027 
Amortization of intangibles3,804 3,688 7,608 8,762 
Total operating costs and expenses408,897 384,015 780,015 717,107 
Operating loss(20,886)(32,731)(54,843)(32,622)
Interest expense(5,026)(5,814)(10,048)(12,431)
Other expense, net(1,750)(636)(2,141)(1,403)
Loss before income taxes(27,662)(39,181)(67,032)(46,456)
Income tax benefit3,665 9,129 9,748 18,418 
Net loss(23,997)(30,052)(57,284)(28,038)
Net earnings attributable to noncontrolling interests(235)(241)(338)(324)
Net loss attributable to Angi Inc. shareholders$(24,232)$(30,293)$(57,622)$(28,362)
Per share information attributable to Angi Inc. shareholders:
Basic loss per share$(0.05)$(0.06)$(0.11)$(0.06)
Diluted loss per share$(0.05)$(0.06)$(0.11)$(0.06)
Stock-based compensation expense by function:
Selling and marketing expense$1,891 $865 $3,130 $1,882 
General and administrative expense8,662 7,410 18,297 7,494 
Product development expense2,864 1,268 4,975 2,201 
Total stock-based compensation expense$13,417 $9,543 $26,402 $11,577 
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

4

ANGI INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMPREHENSIVE OPERATIONS
(Unaudited)
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
(in thousands)
Net loss$(23,997)$(30,052)$(57,284)$(28,038)
Other comprehensive (loss) income:
Change in foreign currency translation adjustment (3,225)1,395 (3,971)2,075 
Comprehensive loss(27,222)(28,657)(61,255)(25,963)
Components of comprehensive loss (income) attributable to noncontrolling interests:
Net earnings attributable to noncontrolling interests(235)(241)(338)(324)
Change in foreign currency translation adjustment attributable to noncontrolling interests 326 (45)269 (739)
Comprehensive loss (income) attributable to noncontrolling interests91 (286)(69)(1,063)
Comprehensive loss attributable to Angi Inc. shareholders$(27,131)$(28,943)$(61,324)$(27,026)
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

5

ANGI INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
Three and Six Months Ended June 30, 2022
(Unaudited)
Class A
Common Stock
$0.001
Par Value
Class B
Convertible Common Stock
$0.001
Par Value
Class C
Common Stock
$0.001
Par Value
Total Angi Inc. Shareholders' Equity
Accumulated Other Comprehensive (Loss) IncomeTotal
Shareholders'
Equity
Redeemable
Noncontrolling
Interests
Additional Paid-in CapitalAccumulated DeficitTreasury
Stock
Noncontrolling
Interests
$Shares$Shares$Shares
(In thousands)
Balance as of March 31, 2022$ $100 100,426 $422 422,019 $— — $1,361,540 $(95,019)$2,506 $(166,184)$1,103,365 $11,068 $1,114,433 
Net (loss) earnings— — — — — — — — (24,232)— — (24,232)236 (23,996)
Other comprehensive loss— — — — — — — — — (2,899)— (2,899)(326)(3,225)
Stock-based compensation expense— — — — — — — 14,111 — — — 14,111 — 14,111 
Issuance of common stock pursuant to stock-based awards, net of withholding taxes— 1 471 — — — — (1,451)— — — (1,450)— (1,450)
Other— — — — — — — — — — —  (1)(1)
Balance as of June 30, 2022$ $101 100,897 $422 422,019 $— — $1,374,200 $(119,251)$(393)$(166,184)$1,088,895 $10,977 $1,099,872 
Balance as of December 31, 2021$ $100 99,745 $422 422,019 $— — $1,350,457 $(61,629)$3,309 $(158,040)$1,134,619 $10,908 $1,145,527 
Net (loss) earnings— — — — — — — — (57,622)— — (57,622)339 (57,283)
Other comprehensive loss— — — — — — — — — (3,702)— (3,702)(269)(3,971)
Stock-based compensation expense— — — — — — — 27,667 — — — 27,667 — 27,667 
Issuance of common stock pursuant to stock-based awards, net of withholding taxes— 1 1,152 — — — — (3,924)— — — (3,923)— (3,923)
Purchase of treasury stock— — — — — — — — — — (8,144)(8,144)— (8,144)
Other— — — — — — — — — — —  (1)(1)
Balance as of June 30, 2022$ $101 100,897 $422 422,019 $— — $1,374,200 $(119,251)$(393)$(166,184)$1,088,895 $10,977 $1,099,872 
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
6

ANGI INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
Three and Six Months Ended June 30, 2021
(Unaudited)

Class A
Common Stock
$0.001
Par Value
Class B
Convertible Common Stock
$0.001
Par Value
Class C
Common Stock
$0.001
Par Value
Total Angi Inc. Shareholders' Equity
Accumulated Other Comprehensive IncomeTotal
Shareholders'
Equity
Redeemable
Noncontrolling
Interests
Additional Paid-in Capital(Accumulated Deficit) Retained EarningsTreasury
Stock
Noncontrolling
Interests
$Shares$Shares$Shares
(In thousands)
Balance as of March 31, 2021$4,608 $98 98,408 $422 421,958 $— — $1,333,294 $11,680 $4,623 $(126,997)$1,223,120 $10,823 $1,233,943 
Net earnings (loss)48 — — — — — — — (30,293)— — (30,293)194 (30,099)
Other comprehensive income8 — — — — — — — — 1,350 — 1,350 37 1,387 
Stock-based compensation expense— — — — — — — 11,477 — — — 11,477 — 11,477 
Issuance of common stock pursuant to stock-based awards, net of withholding taxes— 1 697 — — — — (6,691)— — — (6,690)— (6,690)
Issuance of common stock to IAC pursuant to the employee matters agreement— — 6 — 19 — — — — — —  —  
Purchase of treasury stock— — — — — — — — — — (721)(721)— (721)
Adjustment of redeemable noncontrolling interests to fair value(128)— — — — — — 128 — — — 128 — 128 
Balance as of June 30, 2021$4,536 $99 99,111 $422 421,977 $— — $1,338,208 $(18,613)$5,973 $(127,718)$1,198,371 $11,054 $1,209,425 
Balance as of December 31, 2020$26,364 $94 94,238 $422 421,862 $— — $1,379,469 $9,749 $4,637 $(122,081)$1,272,290 $10,567 $1,282,857 
Net (loss) earnings(12)— — — — — — — (28,362)— — (28,362)336 (28,026)
Other comprehensive income588 — — — — — — — — 1,336 — 1,336 151 1,487 
Stock-based compensation expense— — — — — — — 14,019 — — — 14,019 — 14,019 
Issuance of common stock pursuant to stock-based awards, net of withholding taxes— 2 2,288 — — — — (54,743)— — — (54,741)— (54,741)
Issuance of common stock to IAC pursuant to the employee matters agreement— 3 2,585 — 115 — — (3)— — —  —  
Purchase of treasury stock— — — — — — — — — — (5,637)(5,637)— (5,637)
Purchase of redeemable noncontrolling interests(22,938)— — — — — — — — — — — — — 
Adjustment of redeemable noncontrolling interests to fair value534 — — — — — — (534)— — — (534)— (534)
Balance as of June 30, 2021$4,536 $99 99,111 $422 421,977 $— — $1,338,208 $(18,613)$5,973 $(127,718)$1,198,371 $11,054 $1,209,425 
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
7

ANGI INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Six Months Ended June 30,
20222021
(In thousands)
Cash flows from operating activities:
Net loss$(57,284)$(28,038)
Adjustments to reconcile net loss to net cash provided by operating activities:
Provision for credit losses47,926 42,731 
Stock-based compensation expense26,402 11,577 
Depreciation27,353 31,027 
Amortization of intangibles7,608 8,762 
Deferred income taxes (12,095)(20,344)
Impairment of long-lived and right-of-use assets2,195 12,280 
Non-cash lease expense6,612 6,326 
Revenue reserves3,009 4,667 
Other adjustments, net 1,976 2,592 
Changes in assets and liabilities, net of effects of acquisitions and dispositions:
Accounts receivable (84,234)(63,192)
Other assets (11,140)2,050 
Accounts payable and other liabilities 52,661 51,442 
Operating lease liabilities(8,624)(8,243)
Income taxes payable and receivable1,571 315 
Deferred revenue 3,143 5,301 
Net cash provided by operating activities7,079 59,253 
Cash flows from investing activities:
Capital expenditures(62,138)(35,713)
Proceeds from maturities of marketable debt securities 50,000 
Net proceeds from the sale of a business 750 
Proceeds from sale of fixed assets164  
Net cash (used in) provided by investing activities(61,974)15,037 
Cash flows from financing activities:
Principal payments on Term Loan (220,000)
Purchase of treasury stock(8,144)(5,637)
Withholding taxes paid on behalf of employees on net settled stock-based awards(3,513)(54,596)
Purchase of noncontrolling interests  (22,938)
Net cash used in financing activities(11,657)(303,171)
Total cash used(66,552)(228,881)
Effect of exchange rate changes on cash and cash equivalents and restricted cash(983)546 
Net decrease in cash and cash equivalents and restricted cash(67,535)(228,335)
Cash and cash equivalents and restricted cash at beginning of period 429,485 813,561 
Cash and cash equivalents and restricted cash at end of period $361,950 $585,226 
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
8

ANGI INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


NOTE 1—THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
Angi Inc. (“Angi,” the “Company,” “we,” “our,” or “us”) connects quality home service professionals with consumers across more than 500 different categories, from repairing and remodeling homes to cleaning and landscaping. Over 256,000 domestic service professionals actively sought consumer matches, completed jobs, or advertised work through Angi platforms during the three months ended June 30, 2022. Additionally, consumers turned to at least one of our brands to find a service professional for approximately 31 million projects during the twelve months ended June 30, 2022.
The Company has two operating segments: (i) North America (United States and Canada), which includes Angi Ads, Angi Leads, and Angi Services; and (ii) Europe. In March 2021, the Company rebranded its North American brands which operate as follows: Angi Ads operates under the Angi brand, Angi Leads operates primarily under the HomeAdvisor, powered by Angi brand, and Angi Services operates primarily under the Handy and Angi Roofing brands.
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 June 30, 2022, IAC/InterActiveCorp (“IAC”) owned 84.5% and 98.2% of the economic interest and voting interest, respectively, of the Company.
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. All intercompany transactions and balances between and among the Company and its subsidiaries have been eliminated. All intercompany transactions between (i) Angi and (ii) IAC and its subsidiaries are considered to be effectively settled for cash at the time the transaction is recorded. See “Note 10—Related Party Transactions with IAC” for additional information on transactions between Angi and IAC.
The Company is included within IAC’s tax group for purposes of federal and consolidated state income tax return filings. For the purpose of these financial statements, income taxes have been computed on an as if standalone, separate return basis. Any differences between taxes currently payable to or receivable from IAC under the tax sharing agreement between the Company and IAC and the current tax provision computed on an as if standalone, separate return basis for GAAP are reflected as adjustments to additional paid-in capital and as financing activities within the statement of cash flows.
In management's opinion, the unaudited interim consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and reflect all adjustments, consisting of normal and recurring adjustments, necessary for the fair presentation of the Company's consolidated financial position, consolidated results of operations and consolidated cash flows for the periods presented. Interim results are not necessarily indicative of the results that may be expected for the full year. The accompanying unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2021.
COVID-19 Update
The impact on the Company from the COVID-19 pandemic and the measures designed to contain its spread has been varied and volatile. The impact of COVID-19 has been difficult to precisely identify and measure in 2021 and beyond because we launched the rebranding initiative in March 2021.
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 these businesses experienced a rebound in service requests from mid-2020 through early 2021, service requests started to decline in
9

ANGI INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
May 2021 and continued to decline into early 2022 due to the launch of Angi Inc.’s brand integration in March 2021, and the Omicron variant surge in late 2021 and early 2022. Our ability to monetize service requests rebounded modestly in the second half of 2021, continued to increase in the first half of 2022, and is approaching levels experienced pre-COVID-19. No assurances can be provided that we will continue to be able to improve monetization, or that service professionals’ businesses and, as a consequence, our revenue and profitability will not continue to be adversely impacted by COVID-19 in the future.
The extent to which developments related to the COVID-19 pandemic and measures designed to curb its spread continue to impact the Company’s business, financial condition, and results of operations will depend on future developments, all of which are highly uncertain and many of which are beyond the Company’s control, including the continuing spread of COVID-19, the severity of resurgences of COVID-19 caused by variant strains of the virus, the effectiveness of vaccines and attitudes toward receiving them, materials and supply chain constraints, labor shortages, the scope of governmental and other restrictions on travel, discretionary services and other activity, and public reactions to these developments.
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. 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 and marketable debt securities; the carrying value of accounts receivable, including the determination of the allowance for credit losses and the determination of revenue reserves; 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 goodwill and indefinite-lived intangible assets; unrecognized tax benefits; the valuation allowance for deferred income tax assets; and the fair value of and forfeiture rates for stock-based awards, among others. The Company bases its estimates and judgments on historical experience, its forecasts and budgets, and other factors that the Company considers relevant.
General Revenue Recognition
Revenue is recognized when control of the promised goods or services is transferred to the Company’s customers and in the amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.
The Company’s disaggregated revenue disclosures are presented in “Note 7—Segment Information.”
Deferred Revenue
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 remaining term of the applicable subscription period or expected completion of its performance obligation is one year or less. At December 31, 2021, the current and non-current deferred revenue balances were $53.8 million and $0.1 million, respectively, and during the six months ended June 30, 2022, the Company recognized $45.8 million of revenue that was included in the deferred revenue balance as of December 31, 2021. At December 31, 2020, the current and non-current deferred revenue balances were $54.7 million and $0.2 million, respectively, and during the six months ended June 30, 2021, the Company recognized $46.0 million of revenue that was included in the deferred revenue balance as of December 31, 2020.
The current and non-current deferred revenue balances at June 30, 2022 are $56.9 million and less than $0.1 million, respectively. Non-current deferred revenue is included in “Other long-term liabilities” in the accompanying consolidated balance sheet.

Practical Expedients and Exemptions
10

ANGI INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
As permitted under the practical expedient available under Accounting Standard Codification (“ASC”) 606, Revenue from Contracts with Customers, 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 the Company has the right to invoice for services performed.
Commissions Paid to Employees Pursuant to Sales Incentive Programs
The Company has determined that commissions paid to employees pursuant to certain sales incentive programs meet the requirements to be capitalized as the incremental costs to obtain a contract with a customer. When customer renewals are expected and the renewal commission is not commensurate with the initial commission, the average customer life includes renewal periods. Capitalized commissions paid to employees pursuant to these sales incentive programs are amortized over the estimated customer relationship period and are included in “Selling and marketing expense” in the accompanying statement of operations. The Company calculates the anticipated customer relationship period as the average customer life, which is based on historical data.

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 commissions as incurred.
Assets Recognized from the Costs to Obtain a Contract with a Customer
The Company uses a portfolio approach to assess the accounting treatment of the incremental costs to obtain a contract with a customer. The Company recognizes an asset for these costs if we expect to recover those costs. To the extent that these costs are capitalized, the resultant asset is amortized on a systematic basis consistent with the pattern of the transfer of the services to which the asset relates. The current contract assets are $47.6 million and $38.0 million at June 30, 2022 and December 31, 2021, respectively. The non-current assets are $1.0 million and $1.1 million at June 30, 2022 and December 31, 2021, respectively. The current and non-current capitalized costs to obtain a contract with a customer are included in “Other current assets” and “Other non-current assets” in the accompanying balance sheet.
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 2—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 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.
At the end of each interim period, the Company estimates the annual expected effective income tax rate and applies that rate to its ordinary year-to-date earnings or loss. The income tax provision or benefit related to significant, unusual, or
11

ANGI INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
extraordinary items, if applicable, that will be separately reported or reported net of their related tax effects are individually computed and recognized in the interim period in which they occur. In addition, the effect of changes in enacted tax laws or rates, tax status, judgment on the realizability of a beginning-of-the-year deferred tax asset in future years or unrecognized tax benefits is recognized in the interim period in which the change occurs.
The computation of the annual expected effective income tax rate at each interim period requires certain estimates and assumptions including, but not limited to, the expected pre-tax income (or loss) for the year, projections of the proportion of income (and/or loss) earned and taxed in foreign jurisdictions, permanent and temporary differences, and the likelihood of the realization of deferred tax assets generated in the current year. The accounting estimates used to compute the provision or benefit for income taxes may change as new events occur, more experience is acquired, additional information is obtained or the Company’s tax environment changes. To the extent that the expected annual effective income tax rate changes during a quarter, the effect of the change on prior quarters is included in income tax provision or benefit in the quarter in which the change occurs.
For the three and six months ended June 30, 2022, the Company recorded an income tax benefit of $3.7 million and $9.7 million, which represents an effective income tax rate of 13% and 15%, respectively. For the three and six months ended June 30, 2022, the effective income tax rate is lower than the statutory rate of 21% due primarily to unbenefited foreign losses and tax shortfalls generated by the exercise and vesting for stock-based awards. For the three and six months ended June 30, 2021, the Company recorded an income tax benefit of $9.1 million and $18.4 million, which represents an effective income tax rate of 23% and 40%, respectively. For the three months ended June 30, 2021, the effective income tax rate is higher than the statutory rate of 21% due primarily to benefits related to a change in the annual expected effective income tax rate, partially offset by nondeductible share-based compensation expense. For the six months ended June 30, 2021, the effective income tax rate is higher than the statutory rate of 21% due primarily to excess tax benefits generated by the exercise and vesting for stock-based awards.
The Company recognizes interest and, if applicable, penalties related to unrecognized tax benefits in the income tax provision. Accruals for interest are not material and there are currently 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 substantially 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 statutes of limitations for the years 2013 through 2019 have been extended to 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 June 30, 2022 and December 31, 2021, the Company has unrecognized tax benefits of $6.7 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 June 30, 2022 are subsequently recognized, the income tax provision would be reduced by $6.4 million. The comparable amount as of December 31, 2021 is $6.0 million.
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 June 30, 2022, the Company has a U.S. gross deferred tax asset of $223.4 million that the Company expects to fully utilize on a more likely than not basis. Of this amount, $49.7 million will be utilized upon the future reversal of deferred tax liabilities and the remaining net deferred tax asset of $173.7 million will be utilized based on forecasts of future taxable income. The Company’s most significant net deferred tax asset relates to U.S. federal net operating loss (“NOL”) carryforwards of $124.7 million. The Company expects to generate sufficient future taxable income of at least $593.7 million prior to the expiration of these NOLs,
12

ANGI INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
the majority of which expire between 2030 and 2037, and a portion of which never expire, to fully realize this deferred tax asset.
NOTE 3—FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS
Marketable Debt Securities
The Company did not hold any available-for-sale marketable debt securities at June 30, 2022 and December 31, 2021.
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:
Level 1: Observable inputs obtained from independent sources, such as quoted market prices for identical assets and liabilities in active markets.
Level 2: 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.
Level 3: 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 following tables present the Company’s financial instruments that are measured at fair value on a recurring basis:
June 30, 2022
Quoted Market Prices for Identical Assets in Active Markets (Level 1)Significant Other Observable Inputs (Level 2)Significant Unobservable Inputs
(Level 3)
Total
Fair Value
Measurements
(In thousands)
Assets:
Cash equivalents:
Money market funds$225,464 $ $ $225,464 
Total$225,464 $ $ $225,464 
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
Fair Value
Measurements
(In thousands)
Assets:
Cash equivalents:
Money market funds$280,052 $ $ $280,052 
Total$280,052 $