Table of Contents
As filed with the Securities and Exchange Commission on March 14, 2018

1, 2022
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 20172021
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 HOMESERVICES INC.angi-20211231_g1.gif
Angi Inc.
(Exact name of registrantRegistrant as specified in its charter)
Delaware
82-1204801
(State or other jurisdiction
of
incorporation or organization)
82-1204801
(I.R.S. Employer
Identification No.)
14023 Denver West Parkway, Building 64, Golden, CO
 (Address of Registrant's
3601 Walnut Street, Denver, CO 80205
(Address of Registrant’s principal executive offices)
80401
 (Zip Code)
(303) 963-7200
(Registrant'sRegistrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol
Name of exchange on which registered
Class A Common Stock, par value $0.001
ANGI
The Nasdaq Stock Market LLC
(Nasdaq Global Select Market)
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o    No x
Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes o    No x
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 x    No o
Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes x    No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x
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“large accelerated filer," "accelerated” “accelerated filer," "smaller” “smaller reporting company," and "emerging“emerging growth company"company” in Rule 12b-2 of the Exchange Act.
Large accelerated filero
Accelerated filero
Non-accelerated filero
(Do not check if a smaller
reporting company)
Smaller reporting
companyo
Emerging growth
companyý
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. xAct
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.7262(b)) by the registered public accounting firm that prepared or issued its audit report.
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o    No x
As of February 2, 2018,11, 2022, the following shares of the Registrant's Common StockRegistrant’s common stock were outstanding:
Class A Common Stock63,066,19379,607,313 
Class B Common Stock415,186,297422,019,247 
Class C Common Stock
Total outstanding Common Stock478,252,490501,626,560 
As
The aggregate market value of the voting common stock held by non-affiliates of the Registrant as of June 30, 2017,2021 was $1,076,847,384. For the registrant's common stock was not publicly traded.purpose of the foregoing calculation only, all directors and executive officers of the Registrant are assumed to be affiliates of the Registrant.



DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the Registrant's proxy statement for its 20182022 Annual Meeting of Stockholders are incorporated by reference into Part III herein.





TABLE OF CONTENTS
Page
Number
Page
NumberPART I

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PART I
Item 1.    Business
OVERVIEW
Who We Are
Angi Inc., formerly ANGI Homeservices is the world’s largest digital marketplace for home services, connecting millions of homeowners across the globe with home service professionals. ANGI Homeservices operates leading brands in eight countries, including HomeAdvisor® and Angie's List® (United States)Inc., HomeStars (Canada), Travaux.com (France), MyHammer (Germany and Austria), MyBuilder (UK), Werkspot (Netherlands) and Instapro (Italy).
All references to “ANGI Homeservices,(“Angi,” the “Company,” “we,” “our”“our,” or “us” in this report are) connects quality home service professionals with consumers across more than 500 different categories, from repairing and remodeling homes to ANGI Homeservicescleaning and landscaping. During the year ended December 31, 2021, over 240,000 domestic service professionals actively sought consumer leads, completed jobs or advertised work through Angi Inc. platforms. Additionally, consumers turned to at least one of our brands to find a service professional for approximately 33 million projects during the year ended December 31, 2021.
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 AmericaAmerican brands which operate as follows: Angi Ads operates under the Angi (formerly Angie’s List) brand, Angi Leads operates primarily under the HomeAdvisor, powered by Angi brand, and Angi Services operates primarily under the Handy and Angi Roofing brands. The Company categorizes its services under two main areas: 1) Angi Leads and Angi Ads, which include services that generate revenue from service professionals for consumer matches, revenue from service professionals under contract for advertising, and membership subscription revenue from service professionals and consumers; and 2) Angi Services, which primarily includes its pre-priced offerings by which the operations of HomeAdvisor, Angie’s List, mHelpDeskconsumer purchases services directly from the Company and HomeStars. Europethe Company engages a service professional to perform the service, as well as revenue from services provided by Angi Roofing, LLC (which includes Travaux.com, MyHammer, MyBuilder, Werkspot and Instapro.the business the Company acquired on July 1, 2021 known as Total Home Roofing, Inc.)

History
We werehave been incorporated in the State of Delaware on April 13,since 2017 as Halo TopCo,and operate under the name Angi Inc., a wholly-owned subsidiary of IAC/InterActiveCorp (“IAC”), and changed our name toformerly ANGI Homeservices Inc. on May 4, 2017.
We are a publicly traded holding company that was formed to facilitate the combination of IAC’sIAC/InterActiveCorp’s (“IAC”) HomeAdvisor business (described below) and Angie’s List, Inc. (the “Combination”).
Following the completion of the Combination, which was completed on September 29, 2017, we: (i) own2017.
As used herein, “Angi,” the HomeAdvisor business, which includes“Company,” “we,” “our,” “us,” and similar terms refer to Angi Inc. and its subsidiaries (unless the Marketplace (formerly known as IAC’s HomeAdvisor domestic business and described below) and the various entities operating its international businesses, plus Angie’s List, Inc. (“Angie’s List”), mHelpDesk, CraftJack and Felix, and (ii) became a newly traded public company, with our Class A common stock commencing trading on The Global Select Market of The Nasdaq Stock Market LLC under the ticker “ANGI” on October 2, 2017. For additional information regarding the Combination, see “Note 4-Business Combinations” to the consolidated and combined financial statements set forth in “Item 8-Consolidated and Combined Financial Statements and Supplementary Data.”context requires otherwise).
DESCRIPTION OF OUR BUSINESSES
MarketplaceAngi Ads, Leads, & Angi Services
Overview
We own and operate the HomeAdvisor digital marketplace service inIn the United States, (the “Marketplace”), whichthe Company offers its service professionals and consumers three main services: 1) our Angi Ads business connects consumers with service professionals for local services through a nationwide for home repair, maintenance and improvement projects. The Marketplaceonline directory; 2) our Angi Leads business provides consumers with tools and resources to help them find local, pre-screened and customer-rated service professionals, matching consumers with independently established home services professionals engaged in a trade, occupation and/or businesses that customarily provides such services and provides consumers with tools to communicate with service professionals and pay for related services directly through Angi platforms; and 3) our Angi Services business allows consumers to browse and buy common household services at set prices directly from Angi, rather than requesting quotes, from service professionals (which we refer to as pre-priced offerings), as well as instantly book appointments with those professionals online. The Marketplace also connects consumers with service professionals instantlyonline for household services (primarily cleaning and handyman services) which are fulfilled by telephone, as well as offers several home services-related resources, such as cost guides for different typeshigh-quality, pre-screened independent service professionals. The matching and pre-priced booking services and related tools and directories are provided to consumers free of homecharge. Angi Services also includes roof replacement services projects.fulfilled via the Angi Roofing, LLC business.

As of December 31, 2017, the Marketplace2021, Angi had a network of approximately 181,000206,000 transacting service professionals each(each of whom had an active network membership and/or paid for consumer connectionsmatches through Angi Leads and/or performed an Angi Services job in December 2017. Thesethe quarter. In addition, our Angi Ads business had approximately 38,000 advertising service professionals under contract for advertising as of December 31, 2021.

Collectively, this service professional network provided services in more than 500 different categories, ranging from cleaning and 400installation services to simple home repairs and larger home remodeling projects, and in 64 discrete marketsgeographic areas in the United States, ranging from simple home repairs to larger home remodeling projects. The MarketplaceStates. Angi Ads and Angi Leads generated approximately 18.133 million fully completed and submitted customer service requests during the year ended December 31, 2017.2021. Service requests consist of fully completed domestic service requests submitted to Angi Leads and completed jobs sourced through Angi’s platforms.

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Consumer Services
Consumers can submit a service request for a service professional through HomeAdvisor platforms (website and mobile application), as well as through certain paths on Angie’s List and various third party affiliate platforms. Whena consumer submits a request for a service professional, we generally match that consumer (through our proprietary algorithms) with up to four service professionals from our network based on several factors, including the type of services desired, location and the number of service professionals available to fulfill the request. When a consumer submits a service request through Angie’s List, we generally connect that consumer (through our proprietary algorithms) with a combination of Marketplace service professionals and selected certified service professionals (described below) from the Angie’s List nationwide online directory (as and if available for the given service request). We provide all Marketplace services and tools to consumers free of charge.
Service professionals may contact consumers with whom they have been matched through the Marketplace directly and consumers can review profiles, ratings and reviews of presented service professionals and select the service professional whom they believe best meets their specific needs. In all cases, consumers are under no obligation to work with any service professional(s) referred by or found through the Marketplace (including any from the Angie’s List nationwide online directory).
In addition to (or in lieu of) submitting a service request through the Marketplace, consumers can also search for service professionals, as well as access service professional ratings and reviews and obtain quotes, on their own directly through the HomeAdvisor online directory. Consumers can rate and review service professionals with whom they have been connected through the Marketplace, as well as those listed in the HomeAdvisor online directory.
Wealso provide several on-demand services, including Instant Booking and Instant Connect (patent-pending). Through our Instant Booking offering, consumers can schedule appointments for select home services with a Marketplace service professional instantly across HomeAdvisor platforms (website and mobile application). Through our Instant Connect offering, consumers can connect with a Marketplace service professional instantly by phone, as well as access the service through digital voice assistant platforms. In certain markets, we also provide Same Day Service and Next Day Service for certain home services.
In addition to matching and on-demand services, consumers can access the online HomeAdvisor True Cost Guide, which provides project cost information for more than 400 project types nationwide, as well as an online library of home services-related resources, which consists primarily of articles about home improvement, repair and maintenance, tools to assist consumers with the research, planning and management of their projects and general advice for working with service professionals.
Service Professional Services
We primarily offer and sell Marketplace memberships and related products and services to service professionals through our sales force (described below). Our basic annual membership package includes membership in our network of service professionals, as well as access to consumer matches through the Marketplace and a listing in the HomeAdvisor online directory and certain other affiliate directories. Membership also includes a business profile page on HomeAdvisor.com, a mobile application and access to various online tools designed to help service professionals more effectively market to, and manage and connect with, consumers with whom they are matched. In addition to the membership subscription fee, Marketplace service professionals pay fees for consumer matches.
We also offer certain other subscription products to Marketplace service professionals through mHelpDesk, a provider of cloud-based field service software for small to mid-size service professionals. Through mHelpDesk, we provide (among other products and services) mobile office management software that allows service professionals to complete several job-related tasks (such as scheduling, managing job flow, creating and distributing estimates and invoices and processing payments) real time while on the go. We also provide custom website development and hosting services.
Angie’s List
Angi Ads Overview
We also own and operate Angie’s List, which connectsConnecting consumers with service professionals for local services through athe Angi nationwide online directory of service professionals in over 700across more than 500 service categories. Angie’s List alsocategories, as well as provides consumers with valuable tools, services and content including more than ten million(including verified reviews of local service professionals,professionals), to help them research, shop and hire for local services. We provide consumers withConsumers can access to the Angie’s ListAngi nationwide online directory and related basic tools and services free of charge.

charge upon registration, as well as by way of purchased membership packages. Our Angi Ads business also sells term-based website and mobile and digital magazine advertising to service professionals, as well as provides them with quoting, invoicing, and payment services.
Consumer Services
WhenThrough our Angi Ads business, consumers visit Angie’s List, theywho register for free can search for a service professional in the Angie’s ListAngi nationwide online directory and/or be connectedmatched with a service professional, through the Marketplace.
We provide consumers with access to ratings and reviews and the ability to search for service professionals through the Angie’s List nationwide online directory, as well as the Angie’s List digital magazine and access to certain promotions. Free registration is required in order to access the directory and related basic tools and services. For a fee, we offerservices, ratings, reviews, and certain promotions. In addition, two premium membership packages are available for a fee, which include varying degrees of online and phone support, access to exclusive promotions andpromotion features, and thean award-winning Angie’s ListprintAngidigital magazine. Consumers who choose the Marketplace option will be matched with a combination of Marketplace service professionals and selected certified service professionals (described below) from the Angie’s List nationwide online directory (as and if available for the given service request).
Consumers can rate service professionals listed in the Angie’s ListAngi nationwide online directory on an “A”a one- to “F” gradingfive- star rating scale based on a variety of criteria, including overall experience, availability, price, quality, responsiveness, punctuality and professionalism and other criteria, depending on the type of service provided. Ratings on each applicable criterion are weighted across all reviews submitted for the service professional to produce such professional’s gradeoverall rating on Angie’s List.Angi. Consumers can also provide a detailed description of (and commentary regarding) their experiences with service experience.providers. Ratings and reviews cannot be submitted anonymously, and there are processes in place to prevent service professionals from reporting on themselves or their competitors, as well as to detect fraudulent or otherwise problematic reviews.
Service Professional Services
We provideAngi provides certified service professionals with a variety of services and tools, through Angie’s List.including quoting, invoicing, and payment services. Generally, service professionals who do not havewith an overall member gradeaverage consumer rating below a “B”“3” are not eligible for certification. Service professionals must satisfy certain criteria for certification, including retaining the requisite member grade, passingrating, and owners or principals of businesses affiliated with service professionals must pass certain criminal background checks and attestingattest to properapplicable licensure requirements.
Once eligibility criteria are satisfied, service professionals must then purchase term-based advertising from us in order to obtain certification. As of December 31, 2017, we2021, Angi had approximately 45,00038,000 certified service professionals under contract for advertising. If a certified service professional fails to meet any eligibility criteria during the applicable contract term, of his or her contract, refuses to participate in our complaint resolution process, and/or engages in what we determine to be prohibited behavior through any of our service channels, we suspend anybusiness, existing advertising and exclusive promotions will be suspended, and the related advertising contract iswill be subject to termination.
Certified service professionals rotate among the first service professionals listed in the Angi nationwide online directory search results for an applicable category (together with their company name, overall rating, number of reviews, certification badge and basic profile information), with non-certified service professionals appearing below certified service professionals in directory search results. Certified service professionals can also provide exclusive promotions to members. When consumers choose the Marketplace option, ourto be matched with a service professional, Angi’s proprietary algorithmsalgorithm will determine where a given service professional appears within searchrelated results.
Angi Leads Overview
The Angi Leads (HomeAdvisor powered by Angi) digital marketplace (formerly known as the HomeAdvisor Marketplace) service connects consumers with service professionals nationwide for home repair, maintenance and improvement projects. Our Angi Leads business provides consumers with tools and resources to help them find local, pre-screened and customer-rated service professionals, as well as instantly book appointments online, connect with service professionals instantly by telephone, and access several home services-related resources, such as cost guides for different types of home services projects.
Consumer Services
Consumers can submit a request to be matched with service professionals through the Angi Leads digital marketplace, as well as through certain paths on the Angi Ads and various third-party affiliate platforms. Depending on the nature of the service request and the path through which it was submitted, consumers are generally matched with service professionals from the Angi Leads digital marketplace, an Angi Services service professional or a combination of Angi Leads and Angi Ads service professionals (as and if available for the given service request).
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Matches made through the Angi Leads and Angi Ads businesses and various third-party affiliate platforms and paths are made by way of Angi’s proprietary algorithm, based on several factors (including the type of services desired, location and the number of service professionals available to fulfill the request).
In all cases, service professionals may contact consumers with whom they have been matched directly and consumers can generally review profiles, ratings and reviews of presented service professionals and select the service professional whom they believe best meets their specific needs. Consumers are under no obligation to work with any service professional(s) referred by or found through any Angi branded or third-party affiliate platforms.
Consumers are responsible for booking the service and for paying the service professional directly, which can be done by consumers independently or via the Angi Pay function in the Angi Pro Leads mobile app, through which consumers can also finance payments to service providers through a third party.
In addition to the general matching services described above, our Angi Leads business also provides several on-demand services, including Instant Booking and Instant Connect. Consumers can also access Angi’s online True Cost Guide, which provides project cost information for more than 400 project types nationwide, as well as a library of home services-related content consisting primarily of articles about home improvement, repair and maintenance, tools to assist consumers with the research, planning and management of their projects and general advice for working with service professionals.
Service Professional Services
Angi Leads service professionals pay fees for consumer matches and subscription fees for Angi Leads memberships, which are available for purchase through our sales force. The basic annual membership package includes membership in the Angi Leads digital marketplace, as well as access to consumer matches (for which additional fees are paid) through Angi Leads and Angi Ads platforms, and a listing in the Angi Leads online directory and certain other affiliated directories. Membership also includes a business profile page on HomeAdvisor.com and Angi.com, a mobile application and access to various online tools designed to help service professionals more effectively market to, manage and connect with, consumers with whom they are matched. In addition to the commercial membership terms, in order to be admitted into the Angi Leads network, service professionals must validate their home services experiences, as well as satisfy credential verification of any required state-level licensing and the owner or principal passing certain criminal background checks. Once in the network, the service professional must maintain at least a three-star customer rating. If a service professional in the Angi Leads network fails to meet any eligibility criteria during the term of its contract, refuses to participate in the complaint resolution process, or engages in what we determine to be prohibited behavior through any of our service channels, the service professional is subject to being removed from the Angi network.
Angi Services Overview
Angi began offering pre-priced offerings after acquiring Handy Technologies, Inc. (“Handy”) on October 19, 2018.Angi Services was launched in August 2019 on the Angi platform. Angi Services provides a pre-priced booking service, whereby consumers can request services through either the Angi or Handy platforms and pay Angi or Handy for the services directly. Angi then fulfills the request with independently established home services providers engaged in a trade, occupation and/or business that customarily provides such services.

On July 1, 2021, Angi acquired certain assets and liabilities of Total Home Roofing, LLC. Upon completion of the acquisition, the acquired assets and liabilities were distributed to a newly created legal entity called Angi Roofing LLC, which operates as a part of Angi Services. Angi Roofing is a roof replacement and repair company serving the Florida market (a market leader) and to a limited extent Ohio, Kentucky, and Indiana markets.
Consumer Services
Consumers can submit requests for work to be done on the Handy and Angi apps and matches will be made through Handy platforms and paths based on the type of service desired, location and the date and time the consumer wants the service to be provided. In the case of Handy service professionals, consumers request services and pay for such services directly through the Handy platform and then Handy fulfills the request with independently established home services providers engaged in a trade, occupation and/or business that customarily provides such services. In certain markets, consumers can also submit a request to book a specific Handy service professional for a given household service.
In addition, consumers who purchase furniture, electronics, appliances and other home-related items from select third-party retail partners online (and in certain markets, in store) can simultaneously purchase assembly, installation and other related services to be fulfilled by Handy service professionals, which are then paid for directly through the applicable third-party retail partner platform.
Angi Roofing consumers are identified through lead generation services as well as organically through consumers that reach out directly. Consumers are able to receive roof replacement services, as well as a warranty on the quality of workmanship.
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Service Professional Services
Angi Services service professionals, including those on the Handy platform, are provided with access to a pool of consumers seeking service professionals and must validate their home services experiences, as well as satisfy credential verification and a background check (either as an individual professional or as the owner or principal of the business) and maintain an acceptable rating to remain on the Angi and Handy platforms. Access to the platforms will be revoked for repeatedly receiving low customer satisfaction ratings.
Our International Businesses
We also operate several international businesses that connect consumers with home service professionals. These international businesses include: (i) Travaux, MyHammer Travaux and Werkspot, the leading home services marketplaces in France, Germany France and the Netherlands, respectively, (ii) MyBuilder, HomeStars and Instapro, leading home services marketplaces in the United Kingdom Canada and Italy, respectively, and (iii) the Austrian operations of MyHammer. We own controlling interests in MyHammer MyBuilder and HomeStars and wholly-own MyBuilder, Travaux, Werkspot and Instapro. The business models of our international businesses vary by jurisdiction and differ in certain respects from the MarketplaceAngi business model.models.
Revenue
Our revenueAngi Ads and Leads Revenue is primarily derived from (i) advertising revenue, which includes revenue from service professionals under contract for advertising, (ii) consumer connection revenue, which includesis comprised of fees paid by Marketplace service professionals for consumer matches (regardless of whether the service professional ultimately provides the requested service), and (iii) membership subscription fees paid by Marketplacerevenue from service professionals.professionals and consumers. Consumer connection revenue varies based upon several factors, including the service requested, type of match (such as Instant Booking, Instant Connect, Same Day Service or Next Day Service)product experience offered, and geographic location of service. Our consumer connectionAngi Services revenue is generatedprimarily comprised of revenue from jobs (i) sourced through the “Book Now” feature which lets consumers complete booking the entire transaction digitally for work that is completed physically, (ii) under managed projects (including Angi Roofing) which are home improvement projects, and recognized when a consumer match is delivered(iii) through retail partnerships for installation of furniture or other household items.
Marketing
In March 2021, the Company changed its name to Angi Inc. and updated one of its leading websites and brands, Angie’s List, to Angi, and concentrated its marketing investment in the Angi brand in order to focus its marketing, sales, and branding efforts to a Marketplace service professional. Membership subscription revenue is generated through

subscription sales to Marketplace service professionals and is deferred and recognized over the term (primarily one year) of the applicable membership.
Revenue is also derived from the sale of time-based advertising to certified service professionals listed in the Angie’s List nationwide directory and membership subscription fees from consumers for premium membership packages. Service professionals generally pay for advertisements in advance on a monthly or annual basis, at their option, with the average advertising contract term being approximately one year. Advertising contracts generally include an early termination penalty. Revenue from the sale of website, mobile and call center advertising is recognized ratably over the time period in which the advertisements run. Revenue from the sale of advertising in the Angie’s List Magazine is recognized in the period in which the publication containing the advertisement is published and distributed. Angie's List prepaid membership subscription fees are recognized as revenue ratably over the term of the associated subscription, which is typically one year.
Marketingsingle brand.
We market our various products and services to consumers primarily through digital marketing (primarily paid search engine marketing, display advertising and third partythird-party affiliate agreements) and traditional offline marketing (national television and radio campaigns), as well as through email.e-mail and free search engine marketing. Pursuant to third partythird-party affiliate agreements, third parties agree to advertise and promote Marketplaceour products and services and(and those of Marketplaceour service professionalsprofessionals) on their platforms. In exchange for these efforts, we generally pay these third parties are paid a fixed fee when visitors from their platforms click through to one of our platforms and submit a valid service request through the Marketplace,our platforms, or when visitors submit a valid service request on the affiliate platform and the affiliate transmits the service request to the Marketplace.us. We also market our products and services to consumers through relationships with select third-party retail partners and, to a lesser extent, through partnerships with other contextually related websites and to a lesser extent, through relationships with certain retailers and direct mail.
We market subscription packagesAngi Leads matching services and membership subscriptions and Angi Ads’ term-based advertising and related products and servicesare marketed to service professionals primarily through our Golden, Colorado based sales force, as well as through sales forces in Denver and Colorado Springs, Colorado, Lenexa, Kansas, New York, New York and Indianapolis, Indiana. We also market theseforce. These products and services are also marketed, together with our Handy branded products and services and our pre-priced bookings and various directories, through paid search engine marketing, digital media advertising and direct relationships with trade associations and manufacturers. We market term-based advertising
Both generally, and related products to service professionals primarily through our Indianapolis based sales force.
Wein connection with the brand integration initiative describe below, we have made and(and expect towe will continue to make,make) substantial investments in digital and traditional offline marketing (with continued expansion into new and existing digital platforms) to consumers and service professionals to promote our products and services and drive trafficvisitors to our various platforms and service professionals.
Technology
Each of our brands and businesses develops its own technology to support its products and services, leveraging both open-source and vendor supported software technology. Each of our various brands and businesses has dedicated engineering teams responsible for software development and the creation of new features to support our products and services across a full range of devices (desktop, mobile web, native mobile applications and digital voice assistant platforms). Our engineering teams use an agile development process that allows us to deploy frequent iterative releases for product and service features. We incurred $47.9 million, $20.6 million and $16.8 million in product development costs in the fiscal years ending December 31, 2017, 2016 and 2015, respectively.
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Competition
The home services industry is highly competitive and fragmented, and in many important respects, local in nature. We compete with, among others: (i) search engines and online directories, (ii) home and/or local services-related platforms, (iii) providers of consumer ratings, reviews and referrals and (iv) various forms of traditional offline advertising (primarily local in nature), including radio, direct marketing campaigns, yellow pages, newspapers and other offline directories. We also compete with local and national retailers of home improvement products that offer or promote installation services. We believe our biggest competition comes from the traditional methods most people currently use to find service professionals, which isare by word-of-mouth and through referrals.
We believe that our ability to compete successfully will depend primarily upon the following factors:
the ability to successfully implement the brand integration initiative;
the ability of the Angi Services business to expand pre-priced booking services, while balancing the overall mix of service requests and directory services on Angi platforms generally;
the size, quality, diversity and stability of our network of Marketplace service professionals and the breadth of our online directory listings;

our ability to consistently generate service requests and pre-priced bookings through the Angi platforms that convert into revenue for our service professionals in a cost-effective manner;
our ability to increasingly engage with consumers directly through our platforms, including our various mobile applications (rather than through search engine marketing or via free search engine referrals);
the functionality of our websites and mobile applications and the attractiveness of their features and our products and services generally to consumers and service professionals, as well as our continued ability to introduce new products and services that resonate with consumers and service professionals generally;
our ability to continue to build and maintain awareness of, and trust in and loyalty to, our various brands, particularly our Angie’s ListAngi brand; and HomeAdvisor brands;
our ability to consistently generate service requests through the Marketplace and contacts through our online directories that convert into revenue for our service professionals in a cost-effective manner; and
the quality and consistency of our service professional pre-screening processes and ongoing quality control efforts, as well as the reliability, depth and timeliness of customer ratings and reviews.
Intellectual Property
We regard our intellectual property rights as critical to our success generally, with our trademarks, service marks and domain names being especially critical to the continued development and awareness of our brands and our marketing efforts.
We protect our intellectual property rights through a combination of registered copyrights, trademarks, trade dress, domain name registrations, trade secrets and patent applications, as well as through contractual restrictions and reliance on federal, state and common law. We enter into confidentiality and proprietary rights agreements with employees, consultants, contractors and business partners, and employees and contractors are also subject to invention assignment provisions.
We have several registered trademarks in the United States (the most significant of which relate to our Angie’s ListAngi and HomeAdvisor brands), as well as other trademarks in Canada and Europe, and several pending trademark applications in the United States and certain other jurisdictions. We have also registered a variety of domestic and international domain names, the most significant of which relate to our HomeAdvisor and Angie’s ListAngi brands. In addition, we have one patent in the United States that expires in November 2035 and fourthree patent applications pending in the United States and certain other jurisdictions. We intend to pursue additional domain name registrations, trademark registrations and/or patent applications to the extent we believe doing so will be beneficial and cost-effective.States.
Government Regulation
We are subject to laws and regulations that affect companies conducting business on the Internet generally and through mobile applications, including laws relating to the liability of providers of online services for their operations and the activities of their users. As a result, we could be subject to actionsclaims based on negligence, various torts and trademark and copyright infringement, among other actions.
In addition, because we receive, transmit, store and use a substantial amount of information received from or generated by consumers and service professionals, we are also impacted by laws and regulations governing privacy, the storage, sharing, use, processing, disclosure and protection of personal data and data breaches, primarily in the case of our European operationsbreaches. See “Item 1A-Risk Factors-Risks Related to Our Business and the handlingIndustry-The processing, storage, use and disclosure of personal data could give rise to liabilities and increased costs.”
We are particularly sensitive to laws and regulations that adversely impact the popularity or growth in use of consumersthe Internet and/or online products and service professionals locatedservices generally, restrict or otherwise unfavorably impact the ability or manner in which we
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provide our products and services, regulate the European Union. Aspractices of third parties upon which we rely to provide our products and services and undermine open and neutrally administered Internet access. For example, the United Kingdom’s proposed May 2021 Online Safety Bill, which like previous proposed legislation, seeks to create a result, we could be subject to various private and governmental claims and actions, including under the General Data Protection Regulation, a comprehensive European Union privacy and data protection law that will become effective in May 2018 (the "GDPR"). The GDPR, which applies tonew regulatory body responsible for establishing duties of care for Internet companies that are organized in the European Union (or otherwise provide servicesuser-generated content and for assessing related compliance. As proposed, failure to (or monitor) consumers who reside in the European Union), imposes strict standards regarding the sharing, storage, use, disclosure and protection of end user data and significant penalties (monetary and otherwise) for non-compliance. In addition, the European Union is considering an update to its Privacy and Electronic Communications Directive to impose stricter rules regarding the use of cookies in connectioncomply with the provisionlegislation could result in fines, blocking of digitalservices and personal liability for senior management. To the extent our businesses are required to implement new measures and/or make changes to our products and services to consumers who resideensure compliance, our business, financial condition and results of operations could be adversely affected. Compliance with this legislation or similar or more stringent legislation in other jurisdictions could be costly, and the European Union. Also, the potential exit from the European Union by the United Kingdomfailure to comply could result in service interruptions and negative publicity, any or all of which could adversely affect our business, financial condition and results of operations. In addition, in December 2017, the applicationU.S. Federal Communications Commission (the “FCC”) adopted an order reversing net neutrality protections in the United States, including the repeal of specific rules against blocking, throttling or “paid prioritization” of content or services by Internet service providers. To the extent Internet service providers take such actions, our business, financial condition and results of operations could be adversely affected. Similarly, there have been various legislative efforts to restrict the scope of the protections available to online platforms under Section 230 of the Communications Decency Act, and our current protections from liability for third-party content in the United States could decrease or change as a result. Any future adverse changes to Section 230 could result in additional compliance costs for us and/or exposure for additional liabilities.
We are also generally sensitive to the adoption of new tax laws. The European Commission and conflicting data privacyseveral European countries have recently adopted (or intend to adopt) proposals that would change various aspects of the current tax framework under which our European businesses are taxed, including proposals to change or impose new types of non-income taxes (including taxes based on a percentage of revenue). For example, we are subject to and protection laws and standards to our operationspay the Digital Services Tax in the United Kingdom, France, and howItaly. Similar proposed tax laws could adversely affect our business, financial condition and results of operations.
As a provider of products and services with a membership-based element, we handle personal dataare also sensitive to the adoption of users located in the United Kingdom. Lastly, there are number of draft privacy laws and regulations under consideration inaffecting the United States (including in various states)ability of our businesses to periodically charge for recurring membership or subscription payments. For example, many U.S. states have considered enacting legislation that could impact the ability of our businesses to efficiently process auto-renewal payments for, as well as offer promotional or differentiated pricing. The adoption of any law that adversely affects revenue from recurring membership or subscription payments could adversely affect our business, financial condition and inresults of operations.
We are particularly sensitive to laws and regulations related to the adoption and interpretation of worker classification laws, specifically, laws that could effectively required us to change our classification of certain other foreign jurisdictions in which we do business.



of our service professional from independent contractors to employees.
We are also subject to laws governing marketing and advertising activities conducted by/through telephone, email,e-mail, mobile devices and the Internet, including the Telephone Consumer Protection Act of 1991, the Telemarketing Sales Rule, the CAN-SPAM Act and similar state laws. As a provider of productslaws, as well as federal, state, and services with a membership-based element, we are also subject tolocal laws and regulations in certain states in the United States and in certain foreign jurisdictions in which we do business that apply to membership payment models with auto-renewal provisions.agency guidelines governing background screening.
Financial Information About Segments and Geographic AreasHuman Capital Management
The segment and geographic information required herein is set forth in “Item 7-Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Item 8-Consolidated and Combined Financial Statements and Supplementary Data.”
Employees
As of December 31, 2017,2021, we hademployed approximately 3,9005,200full-time employees worldwide, the substantial majority of which provided services to our brands and businesses located in the United StatesStates. We also retain consultants, independent contractors, and substantially alltemporary and part-time workers.
Talent and Development
The development, attraction and retention of which were full-time employees.employees is critical to our success. We strive to provide an atmosphere that fosters teamwork and growth. We are investing in a more productive, engaged, diverse and inclusive workforce. To support the advancement of our employees, we offer training and development programs and encourage advancement from within. In 2020, we launched a Learning Management system for broader facilitation of training resources. We leverage both formal and informal programs designed to identify, foster, and retain top talent. We believe that our rich culture enables us to create, develop and fully leverage the strengths of our workforce to exceed consumer expectations and meet our growth objectives. We also place a high value on inclusion, engaging employees in our Diversity, Equity and Inclusion Council, or DEI, which is staffed by employees with diverse backgrounds, experiences or characteristics who share a common interest in professional development, improving corporate culture and delivering sustained business results. Recent DEI initiatives include unconscious bias training and a women in leadership program.
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Total Rewards and Benefits
As part of our compensation philosophy, we generallybelieve that we must offer and maintain market competitive total rewards programs for our employees in order to attract and retain superior talent. These programs include base wages and incentives in support of our pay for performance culture, as well as health, welfare, and retirement benefits, vision, dental, life, prescription, and long-term disability insurance plans. We also provide employee paid supplemental life and accident insurance plans. To help employees cover medical expenses pre-tax, we offer employees a Flexible Spending Account. We also focus many programs on employee wellness and have good relationshipsimplemented solutions including mental health support access, telemedicine, and fitness programs. We also offer our US-based full-time employees a 401(k) retirement plan with a Company match.
Community
We encourage our employees to become involved in their communities by providing full-time employees eight hours of paid-time off each year to volunteer in local community-based programs.
COVID Response
In response to the COVID-19 pandemic, we quickly implemented safety and health standards and protocols for our employees to ensure a safe work environment. Employees in our offices have been working remotely since March 2020 and we have moved our sales employees to work fully remotely. When our corporate employees return to the office, we will adhere to the recommended protocols of the Centers for Disease Control or local regulations. We have offered paid leave for COVID-related illness that meet local requirements.
Ethics
Our employees are required to annually agree to comply with our employees.Code of Business Conduct and Ethics and any deviations by our directors and executive officers are required to be approved by our Board. We also maintain an Ethics Hotline that is available to all of our employees to report (anonymously if desired) any matter of concern. Communications to the hotline (which is facilitated by an independent third party) are routed to appropriate functions (whether Human Resources, Legal or Finance) for investigation and resolution. In addition, any shareholder or other interested party may send communications to the Board of Directors, either individually or as a group, through a process that is outlined in the Investor Relations section of our website.
Additional Information
Company Website and Public Filings. Filings
We maintain a website at www.angihomeservices.comwww.angi.com. Neither the information on this website, nor the information on the websites of any of our brands and businesses, is incorporated by reference into this annual report, or into any other filings with, or into any other information furnished or submitted to, the U.S. Securities and Exchange Commission (“SEC”).
We also make available, free of charge through our website, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K (including related amendments) as soon as reasonably practicable after they have been electronically filed with (or furnished to) the SEC.
Code of Ethics. Ethics
Our code of ethics applies to all of our employees (including our principal executive officer, principal financial officer and principal accounting officer) and directors and is posted on our website at http://ir.angihomservices.comir.angi.com under the heading “Code of Ethics.” This code of ethics complies withincludes provisions enumerated in Item 406 of SEC Regulation S-K and the rules of The Nasdaq Stock Market LLC. Any changes to this code of ethics that affect the provisions required by Item 406 of Regulation S-K and(and any waivers of such provisions of the code of ethics for our executive officers, senior financial officers or directors,directors) will also be disclosed on our website.
RELATIONSHIP WITH IAC
Equity Ownership and Vote
We have two classes of capital stock outstanding, Class A common stock and Class B common stock, with one vote and ten votes per share, respectively. Our shares of Class B common stock are convertible into shares of Class A common stock on a share for share basis. As of February 2, 2018,December 31, 2021, IAC owned 415,186,297all of our outstanding shares of Class B common stock, representing 100% of ourand 2,588,180 outstanding Class B common stock, and did not own any shares of ourthe Company’s Class A common stock. As of that date, IAC’s Class B common stock, holdings representedin total representing approximately 86.8%84.5% of our total outstanding shares of capital stock and approximately 98.5%98.2%of the total combined voting power of our outstanding capital stock.
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Intercompany Agreements
In connection with the Combination, we and IAC entered into certain agreements to govern our relationship following the Combination. These agreements include the following:
Contribution Agreement
The contribution agreement sets forth the agreements between us and IAC regarding the principal transactions necessary for IAC to separate its HomeAdvisor business from its other businesses and to cause the HomeAdvisor business to be transferred to us prior to the Combination, as well as governs certain aspects of our relationship with IAC following the Combination. Under the contribution agreement: (i) we agreed to assume all of the assets and liabilities related to the

HomeAdvisor business and indemnify IAC against any losses arising out of any breach by us of the contribution agreement or any other transaction related agreement described below and (ii) IAC agreed to indemnify us against losses arising out of any breach by IAC of the contribution agreement or any other transaction related agreement described below.
Investor Rights Agreement
Under the investor rights agreement, IAC has certain registration, preemptive and governance rights related to us and the shares of our capital stock it holds. The investor rights agreement also provides certain governance rights for the benefit of stockholders other than IAC.
Services Agreement
The services agreement currently governs services that IAC has agreed to provide to us through September 29, 2018,2021, with automatic renewal for successive one-year terms, subject to IAC’s continued ownership of a majority of the total combined voting power of our voting stock and any subsequent extension(s) or truncation(s) agreed to by us and IAC. The services agreement has been renewed through September 29, 2022. Services currently provided to us by IAC pursuant this agreement include: (i) assistance with certain legal, M&A, human resources, finance, risk management, internal audit and treasury functions, health and welfare benefits, information security services and insurance and tax affairs, including assistance with certain public company and unclaimed property reporting obligations; (ii) accounting, controllership and payroll processing services; (iii) investor relations services and (iv) tax compliance services. The scope, nature and extent of services may be changed from time to time as we and IAC may agree.
Tax Sharing Agreement
The tax sharing agreement governs our and IAC’s rights, responsibilities and obligations with respect to tax liabilities and benefits, entitlements to refunds, preparation of tax returns, tax contests and other tax matters regarding U.S. federal, state, local and foreign income taxes. Under the tax sharing agreement, we are generally responsible and required to indemnify IAC for: (i) all taxes imposed with respect to any consolidated, combined or unitary tax return of IAC or its subsidiaries that includes us or any of our subsidiaries (to the extent attributable to us or any of our subsidiaries, as determined under the tax sharing agreement) and (ii) all taxes imposed with respect to any consolidated, combined, unitary or separate tax returns of us or our subsidiaries.
Employee Matters Agreement
The employee matters agreement addresses certain compensation and benefit issues related to the allocation of liabilities associated with: (i) employment or termination of employment; (ii) employee benefit plans and (iii) equity awards. Under the employee matters agreement, our employees participate in IAC’s U.S. health and welfare plans, 401(k) plan and flexible benefits plan and we reimburse IAC for the costs of such participation. In the event IAC no longer retains shares representing at least 80% of the aggregate voting power of shares entitled to vote in the election of our board of directors, we will no longer participate in IAC’s employee benefit plans, but will establish our own employee benefit plans that will be substantially similar to the plans sponsored by IAC.
In addition, under the employee matters agreement, we are required to reimburse IAC for the cost of any IAC equity awards held by our current and former employees, with IAC electing to receive payment either in cash or shares of our Class B common stock. This agreement also provides that IAC may require stock appreciation rights granted prior the closing of the Combination and equity awards in our subsidiaries to be settled in either shares of our Class A common stock or IAC common stock. To the extent shares of IAC common stock are issued in settlement of these awards, we are obligated to reimburse IAC for the cost of those shares by issuing shares of our Class A common stock in the case of stock appreciation rights granted prior to the closing of the Combination and shares of our Class B common stock in the case of equity awards in our subsidiaries.
Lastly, pursuant to the employee matters agreement, in the event of a distribution of Angi Inc. capital stock to IAC stockholders in a transaction intended to qualify as tax-free for U.S. federal income tax purposes, the Compensation Committee of the IAC board of directors has the exclusive authority to determine the treatment of outstanding IAC equity awards. Such authority includes (but is not limited to) the ability to convert all of part of IAC equity awards outstanding immediately prior to the distribution into equity awards denominated in shares of Angi Inc. Class A Common Stock, which Angi Inc. would be obligated to assume and which would be dilutive to Angi's stockholders.
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Item 1A.    Risk Factors
Cautionary Statement Regarding Forward-Looking Information
This annual report on Form 10-K contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. The use of words such as “anticipates,” “estimates,” “expects,”“anticipates”, “estimates”, “expects”, “plans”, “intends”, “will continue”, “may”, “could” and “believes,”“believes”, among others,similar expressions, generally identify forward-looking statements. These forward-looking statements include, among others, statements relating to: our future business, financial condition, results of operations and financial performance, our business strategy, trends in the home services industry expected synergies and other benefits to be realized by us following the Combination and

other similar matters. These forward-looking statements are based on the expectations and assumptions of our management about future events as of the date of this annual report, which are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict.
Actual results could differ materially from those contained in these forward-looking statements for a variety of reasons, including, among others, the risk factors set forth below. Other unknown or unpredictable factors that could also adversely affect our business, financial condition and results of operations may arise from time to time. In light of these risks and uncertainties, the forward-looking statements discussed in this annual report may not prove to be accurate. Accordingly, you should not place undue reliance on these forward-looking statements, which only reflect the views of our management as of the date of this annual report. We do not undertake to update these forward-looking statements.
Risk Factors
Risks Related to Our Business and Industry
The home services industry isOur brands and businesses operate in an especially competitive with a consistent and growing stream of new products, services and entrants and low switching costs. Innovation by our competitors could adversely affect our business, financial condition and results of operations.evolving industry.
The home services industry is competitive, with a consistent and growing stream of new products, services and entrants. Some of our competitors may enjoy better competitive positions in certain geographical areas, and/or with certain consumer and service professional demographics and/or in other key areas that we currently serve or may serve in the future. In addition, some of our competitors, givenGenerally, we compete with search engines, online marketplaces and social media platforms that have the primary business in which they engage, canability to market their products and services online in a more prominent and cost-effective manner than we can.can, as well as better tailor their products and services to individual users. Any of these advantages could enable ourthese competitors to offer products and services that are more appealing to consumers and service professionals than our products and services, and/or respond more quickly and/or cost effectively than we do to evolving market opportunities and trends. For example, search engine providers continue to expand their offerings into non-search-related categories, including home services. Search engine providers can and maytrends, and/or display their own integrated or related home services products and services in search results and elsewhere in a more prominent manner than our products and services. Thisservices, which could result in a substantial decrease in freeadversely affect our business, financial condition and paid traffic to our platforms and, in turn, increased marketing expenditures (particularly if free traffic is replaced with paid traffic).results of operations.
In addition, since we offer most of ourhome services products and services are offered to consumers for free, consumers can easily switch among home products and services offerings (or use multiple home services offerings simultaneously) at no cost to them. In the case ofAnd while service professionals while they may incur additional or duplicative near termnear-term costs, the costs for switching to a competing platform over the long term are generally not prohibitive. Low switching costs, coupled with the propensity of consumers to try new products and services generally, will most likely result in the continued emergence of new products and services, entrants and business models in the home services industry. Our inability to continue to innovate and compete effectively against current or future competitors and new products, services and services that may emergecompetitors could result in decreases in the size and level of engagement of our consumer and service professional bases, any of which could adversely affect our business, financial condition and results of operations.
Our success will depend, in substantial part, on the continued migration of the home services market online.
We believe that the digital penetration of the home services market remains low, with the vast majority of consumers continuing to search for, select and hire service professionals offline. While many consumer demographicsconsumers have historically been (and remain) averse to finding service professionals online, others have demonstrated a greater willingness to embrace the online shift (for example, millennials).shift. Service professionals must also continue to embrace the online shift, which will depend, in substantial part, on whether online products and services help them to better connect and engage with consumers relative to traditional offline efforts. The speed and ultimate outcome of the shift of the home services market online for consumers and service professionals is uncertain and may not occur as quickly as we expect, or at all. The failure or delay of a meaningful number of consumers and/or service professionals to migrate online and/or the return of a meaningful number of existing participants in the online home services market to offline solutions, could adversely affect our business, financial condition and results of operations.
GeneralOur brands and businesses are sensitive to general economic events orand trends, particularly those that adversely impact consumer confidence and spending behavior, could harm our business, financial condition and results of operations.behavior.
We have historically been, and will continue to be, particularly sensitive to events and trends that adversely affectresult in consumers delaying or foregoing home services projects and/or service professionals being less likely to pay for consumer confidencematches and spending behavior. For
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subscriptions. Any such event or trend (for example, in the event of a general economic downturn or sudden disruption in business conditions, consumer confidence, spending levels and access to credit could be adversely affected. The occurrence

of any of these events or trends could result in consumers delaying or foregoing home services projects, whichcredit) could result in decreases in Marketplace service requests, pre-priced bookings and related fees paid by Marketplace service professionals for consumer matches, which could adversely affect our business, financial condition and results of operations.
In addition, because a significant number of service professionals across our brands and businesses are sole proprietorships and small businesses, they may be particularly impacted by events and trends that adversely impact consumer confidence, spending behavior and access to credit. If so, they may be less likely to pay for Marketplace membership and/or advertising, which could result in turnover at the Marketplace and/or any of our directories.directory searches. Any significant and/or recurring turnover over a prolonged periodsuch decreases could adversely impact the number and quality of service professionals in the Marketplaceat Angi Leads and Angi Services and at our directories as well asand/or adversely impact the reach of (and breadthbreath of services offered through) the MarketplaceAngi Leads and Angi Services and our directories, any or all of which could result in a decrease in traffic to our various brands and businesses and increased costs, all of which could adversely affect our business, financial condition and results of operations.
Lastly, we have historically been, and will continue to be, sensitive to events and trends that could result in decreased marketing and advertising expenditures by service professionals. Adverse economic conditions and trends could result in service professionals decreasing and/or delaying membership subscriptions, fees paid for consumer matches, pre-priced bookings, membership subscriptions and/or time-based advertising spend, any or all of which would result in decreased revenue and could adversely affect our business, financial condition and results of operations.
WeThe expansion of our pre-priced booking services, while balancing the overall mix of our service request and directory services on our platforms, is critical to our business, financial condition and results of operations.
For our Angi Services offerings, we contract with a service professional to perform a specific task for a consumer at a contracted price. Pre-priced booking services potentially offer higher margin opportunities, but also involve greater financial risk because we bear the impact of cost overruns, which could result in increased costs and expenses. An increase in the percentage of pre-priced booking services may also reduce service professional’s level of participation in our Angi Ads and Angi Leads offerings. As we expand our pre-priced booking services, we expect our mix of pre-priced booking services will needbe increasing over time, which could increase the risk that we suffer losses if we underestimate the level of effort or costs required to establish and maintain relationshipsperform the consumer’s task. Our profits could be adversely affected if our costs exceed the assumptions we used in offering the contracted task. For example, we may miscalculate the costs, materials, or time needed to complete a task or we might be provided with quality service professionals.
To succeed, we will need to continue to attract, retain and growinaccurate information by the number of skilled and reliable service professionals who can provide services thatconsumer, which could result in us charging consumers wanttoo little for contracted tasks, which in a timely manner across our various brands and businesses. To do so, we must continue to offer innovative products and services that resonate with consumers and service professionals generally, as well provide service professionals with an attractive return on their marketing and advertising investments. If we fail to provide compelling products and services across our various brands and businesses, Marketplace service professionals may leave (or fail to join) the Marketplace and certified service professionals may leave (of fail to join) the Angie’s List nationwide online directory, one or both of whichturn would result in a less attractive overall digital marketplaceus having to absorb the actual, higher cost for consumers seeking quality service professionals. Any decrease in qualitycontracted tasks or risk not being able to find service professionals (orto perform contracted tasks at the lackcontracted rate. Our business, financial condition and results of new quality service professionals) would resultoperations could be adversely affected if our actual costs exceed the assumptions we used in a smalleroffering the contracted task in our pre-priced booking service.
COVID-19 and less diverse Marketplace and smaller and less diverse directories, which could adversely impact the consumer experience and, in turn, result in decreases in service requests and directory searches, whichother similar outbreaks could adversely affect our business, financial condition and results of operations.
Our successThe COVID-19 pandemic has caused a widespread global health crisis, resulting in significant disruption and has had (and is likely to continue to have) an adverse effect on economic conditions generally, as well as on consumer confidence and spending, all of which could have an adverse effect on our businesses, financial condition and results of operations. When COVID-19 first impacted North America and Europe in the early spring of 2020, we experienced 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 the second half of 2020 and through early 2021, service requests did start to decline in May 2021 compared to the comparable months of 2020 as a result of the surge in 2020 and due to impacts of our brand integration initiative that we commenced in March 2021. Moreover, many service professionals’ businesses have been adversely impacted by labor and material constraints and many service professionals have limited capacity to take on new business, which negatively impacted our ability to monetize the increased level of service requests through the first quarter of 2021. Although our ability to monetize service requests rebounded modestly in the second half of 2021, we still have not returned to levels we experienced pre-COVID-19. No assurances can be provided that we will continue to be able to improve monetization, or that service professionals’ businesses will not be adversely impacted in the future.
The extent to which developments related to the COVID-19 pandemic and measures designed to curb its spread continue to impact our 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.
In addition, in response to the COVID-19 outbreak and government-imposed measures to control its spread, our ability to conduct ordinary course business activities has been (and may continue to be) impaired for an indefinite period of time. For example, we have taken several precautions that could adversely impact employee productivity, such as requiring employees to work remotely, as well as imposing travel restrictions and temporarily closing office locations. While we have found that our employees (including call center and sales employees) have transitioned to working remotely with limited disruption to date, no assurances can be provided that their productivity and efficiency will remain at pre-pandemic levels, particularly if they are required to continue working remotely for an extended period of time. Also, working remotely may involve increased operational risks, such as increased risks of “phishing,” other cybersecurity attacks or the unauthorized dissemination of personally identifiable information or proprietary and confidential information. Lastly, moving employees back to the office
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may introduce distraction that could have a temporary negative impact on the Company’s productivity, and in turn, revenue. We may also experience increased operating costs as we gradually resume normal operations and enhance preventative measures, including with respect to real estate, compliance and insurance-related expenses. Moreover, we may also experience business disruption if the ordinary course operations of our contractors, vendors or business partners are adversely affected. Any of these measures or impairments could adversely affect our business, financial condition and results of operations.
Success depends, in substantial part, on our ability to maintain and/or enhance our brands, which could be negatively impacted by various brands.factors.
We own and operate two of the leading home services brands in the United States (Angie’s List(Angi and HomeAdvisor), as well as leading brands in several foreign jurisdictions. Brand recognition isIn March 2021, we updated one of our leading websites and brands, Angie’s List, to Angi, and concentrated our marketing investment in the Angi brand in order to focus our marketing, sales, and branding efforts on a key differentiating factor among providers of online services generally, and wesingle brand.

We believe that our success will depend,depends, in substantial part, on our continued ability to build awareness and loyalty to our Angi brand, maintain and enhance our established brands, as well as build awareness of (and loyalty to) new and emerging brands. Events that could negatively impact our brands by consumers and service professionals alike.
Our various brands could be negatively impacted by several factors, includingbrand-building efforts include (among others): product and service quality concerns,concerns; service professional quality concerns,concerns; consumer and service professional complaints actions brought by consumers and lawsuits; lack of awareness of our policies or confusion about how the policies are applied; a failure to respond to feedback from our service professionals fraudulent and consumers; ineffective advertising; inappropriate and/or otherwise unlawful acts perpetrated by consumersservice professionals and service professionals,consumers; actions or proceedings commenced by governmental or regulatory authorities, privacyauthorities; and inadequate data protection and security breaches andincluding related bad publicity. In particular,Any factors that negatively impact the Angie’s ListAngi and/or HomeAdvisor brand(s) could materially and adversely affect our business, financial condition and results of operations.
In addition, trust in the integrity and objective, unbiased nature of the ratings and reviews found across our various brands (particularly in the case of Angie’s List) contributes significantly to public perception of these brands and their ability to attract new consumers and service professionals. If consumers perceive that consumer reviews are perceived as not authentic in general, the reputation and strength of the relevant brand could be materially and adversely affected. While we use, and will continue to use, filters (among other processes) to detect fraudulent reviews, the accuracy of consumer reviews cannot be guaranteed. If fraudulent or inaccurate reviews (positive or negative) increase and we are unable to effectively identify and remove such reviews, the overall quality of the ratings and reviews across our various brands could decrease and the reputation of affected brands might be harmed. This could deter consumers and service professionals from using our products and services, which in turn could adversely affect our business, financial condition and results of operations.

Our Angi brand integration initiative may involve substantial costs, including as a result of a continued negative impact on our organic search placement, and may not be favorably received by customers and service professionals.


Lastly,We have incurred and may continue to incur substantial costs as discussed in the risk factors below, the successa result of our brand-buildingbrand integration initiative that we commenced in March 2021, and we may not be able to achieve or maintain brand name recognition or status that is comparable to the recognition and status previously enjoyed by Angie’s List, and our customers and service professionals may be confused as we transition and focus on the Angi brand. Our Company relies heavily on free and paid search engine marketing efforts to drive traffic to our platforms. Our brand initiative has adversely affected the placement and ranking of Angi Inc. websites, particularly Angi.com, in organic search results as Angi does not have the same domain history as Angie’s List. In addition, we shifted marketing to support the Angi brand, away from the HomeAdvisor brand, which has negatively affected the efficiency of our search engine marketing efforts.

Since the beginning of the integration process, these efforts have had a pronounced negative impact on service requests from organic search results and via our mobile applications, which in turn has resulted in increased paid search engine marketing to generate service requests. These factors have increased marketing spend and reduced revenue during the year ended December 31, 2021, materially more than expected at the launch of the brand initiative in March 2021. We expect the pronounced negative impact to organic search results, increased paid search engine marketing and reduced monetization from our mobile applicationswill also dependcontinue until such time as the new brand establishes search engine optimization ranking and consumer awareness is more established. Any or all of these impacts could continue to increase our marketing costs (particularly to the extent free traffic is replaced with paid traffic) and adversely affect the effectiveness of our marketing efforts overall. Finally, as we align and focus the organization around a single brand, we could experience financial and operational challenges and reduced service professional participation across our various product lines. Depending on market acceptance, our brand integration initiative could adversely affect our ability to attract and retain customers and service professionals, which could cause us not to realize some or all of the anticipated benefits contemplated by the brand integration initiative.

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Our success depends, in substantial part, on our ability to market our productsestablish and services successfully (and/or in a cost-effective manner), communicatemaintain relationships with consumersquality and trustworthy service professionals.
We must continue to attract, retain and grow the number of skilled and reliable service professionals via email, develop and introduce new and enhancedwho can provide services across our platforms. If we do not offer innovative products and services that resonate with consumers and service professionals and/or adapt quickly enough (and/orgenerally, as well as provide service professionals with an attractive return on their marketing and advertising investments, the number of service professionals affiliated with our platforms would decrease. Any such decrease would result in a cost-effective manner) to evolving changessmaller and less diverse networks and directories of service professionals, and in the Internetturn, decreases in service requests, pre-priced bookings and related technologies, applications and devices. If our brand-building efforts are not successful,directory searches, which could adversely impact our business, financial condition and results of operationsoperations.
In addition to skill and reliability, consumers want to work with service professionals whom they can trust to work in their homes and with whom they can feel safe. While we maintain screening processes (which generally include certain, limited background checks) to try and prevent unsuitable service professionals from joining our platforms, these processes have limitations and, even with these safety measures, no assurances can be provided regarding the future behavior of any service provider on our platforms. Inappropriate and/or unlawful behavior of service professionals generally (particularly any such behavior that compromises the trustworthiness of service providers and/or of the safety of consumers), could beresult in decreases in service requests, bad publicity and related damage to our reputation, brands and brand-building efforts and/or actions by governmental and regulatory authorities, criminal proceedings and/or litigation. The occurrence or any of these events could, in turn, adversely affected.affect our business, financial condition and results of operations.

Marketing efforts designed to drive traffic to our brands and businesses may not be successful or cost-effective.
Attracting consumers and service professionals to our brands and businesses involves considerable expenditures for online and offline marketing. We have made, and expect to continue to make, significant marketing expenditures, primarily for digital marketing (primarily paid search engine marketing, display advertising and third partythird-party affiliate agreements) and traditional offline marketing (national television and radio campaigns). These efforts may not be successful or cost-effective. Historically, we have had to increase marketing expenditures over time to attract and retain consumers and service professionals and sustain our growth.
With respectOur ability to market our onlinebrands on any given property or channel is subject to the policies of the relevant third-party seller, publisher of advertising (including search engines and social media platforms with extraordinarily high levels of traffic and numbers of users) or marketing efforts,affiliate. As a result, we cannot assure you that these parties will not limit or prohibit us from purchasing certain types of advertising (including the purchase by Angi of advertising with preferential placement), advertising certain of our products and services, and/or using one or more current or prospective marketing channels in the future. If a significant marketing channel took such an action generally, for a significant period of time and/or on a recurring basis, our business, financial condition and results of operations could be adversely affected. In addition, if we fail to comply with the policies of third-party sellers, publishers of advertising and/or marketing affiliates, our advertisements could be removed without notice and/or our accounts could be suspended or terminated, any of which could adversely affect our business, financial condition and results of operations.
In addition, our failure to respond to rapid and frequent changes in the pricing and operating dynamics of search engines, as well as changing policies and guidelines applicable to keyword advertising (which may unilaterally be updated by search engines without advance notice), could adversely affect our paid search engine marketing efforts and(and free search engine traffic.traffic). Such changes could adversely affect paid listings (both their placement and pricing), as well as the ranking of our brands and businesses within paid and organic search results, any or all of which could increase our marketing expenditures (particularly if free traffic is replaced with paid traffic). Any or all of these events could adversely affect our business, financial condition and results of operations.
In addition, evolvingEvolving consumer behavior (specifically, increased consumption of media through digital means) can also affect the availability of profitable marketing opportunities. For example, as traditional television viewership declines and media is increasingly consumed through various digital means, the reach of traditional advertising channels is contracting and the number of digital advertising channels is expanding. To continue to reach and engage with consumers and service professionals and grow in this environment, we will need to continue to identify and devote more of our overall marketing expenditures to newer digital advertising channels (such as online video and other digital platforms), as well as target consumers and service professionals via these channels. Generally, the opportunities in (and the sophistication of)Since newer advertising channels are undeveloped and unproven relative to traditional channels which(such as television), it could make itbe difficult for us to assess returns on our marketing investmentinvestments in newer channels. Additionally, as we increasingly depend on newer digital channels, for traffic, these efforts will involve challengeswhich could adversely affect our business, financial condition and risks similar to those we face in connection with our search engine marketing efforts.results of operations.
Lastly, we also enter into various arrangements with third party affiliate agreements in an effortparties to drive trafficvisitors to our various brands and businesses.Angi platforms. These arrangements are generally more cost-effective than traditional marketing efforts. If we are unable to renew existing (and enter into new) arrangements of this nature, sales and marketing costs as a percentage of revenue couldwould increase over the long-term.long-term, which could adversely affect our business, financial condition and results of operations. In addition, the quality and convertibility of traffic and leads generated through third-party arrangements are dependent on many factors, most of which are
No assurances can be provided that we will be able to continue to appropriately manage
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outside our control. If the quality and/or convertibility of traffic and fine-tuneleads do not meet the expectations of our marketing effortsusers and/or Angi Leads service professionals, they could leave our network and/or decrease their budgets for consumer matches or participation in response topre-priced booking services, any or all of the events and trends discussed above and the failure to do sowhich could adversely affect our business, financial condition and results of operations.
Communicating with consumers and service professionals via email is criticalWe rely on Internet search engines to drive traffic to our success,various properties. Certain operators of search services offer products and services that compete directly with our products and services. If links to websites offering our products and services are not displayed prominently in search results, traffic to our properties could decline and our business could be adversely affected.
In addition to paid marketing, we rely heavily on Internet search engines, such as Google, to drive traffic to our properties through their unpaid search results. Although search results have allowed us to attract a large audience with low organic traffic acquisition costs in the past, if they fail to continue to drive sufficient traffic to our properties, we may need to increase our marketing spend to acquire additional traffic. We cannot assure you that the value we ultimately derive from any such additional traffic would exceed the cost of acquisition, and any erosionincrease in marketing expense may in turn harm our operating results.
The amount of traffic we attract from search engines is due in large part to how and where information about our brands (and links to websites offering our products and services) are displayed on search engine results pages. The display, including rankings, of unpaid search results can be affected by a number of factors, many of which are not in our direct control, and may change frequently. Search engines have made changes in the past to their ranking algorithms, methodologies and design layouts that have reduced the prominence of links to websites offering our products and services, and negatively impacted traffic to such websites, and we expect that search engines will continue to make such changes from time to time in the future.
However, we may not know how (or otherwise be in a position) to influence actions of this nature taken by search engines. With respect to search results in particular, even when search engines announce the details of their methodologies, their parameters may change from time to time, be poorly defined or be inconsistently interpreted.
In addition, in some instances, search engines may change their displays or rankings in order to promote their own competing products or services, or the products or services of one or more of our competitors. Any such action could negatively impact the search rankings of links to websites offering our products and services, or the prominence with which such links appear in search results. Our success depends on the ability of our products and services to communicatemaintain a prominent position in this fashionsearch results, and in the event operators of search engines promote their own competing products in the future in a manner that is not sufficiently replaced by other means could adversely affecthas the effect of reducing the prominence or ranking of our products and services, our business, financial condition and results of operations.operations could be adversely affected.
Our ability to communicate with consumers and service professionals via e-mail (or other sufficient means) is critical to our success.
Historically, one of our primary means of communicating with consumers and service professionals and keeping them engaged with our products and services has been via emaile-mail communication. Through email,e-mail, we can provide consumers with service request updates and service professionals with updates regarding membershipsservice request and consumer matches,pre-priced booking service updates, as well as present or suggest new products and services (among other things) to such consumers and service professionals and market our products and services to new consumers and service professionals in a cost-effective manner. As consumer habits evolve in the era ofconsumers increasingly communicate via mobile and other digital devices and messaging and social networkingmedia apps, usage of email, particularlye-mail (particularly among younger consumers,consumers) has declined and we expect this trend to continue. In addition, deliverability and other restrictions imposed by third party email providers and/or applicable law could limit or prevent our ability to send emailse-mails to consumers and service professionals. A continued and significant erosion in our ability to communicate successfully with consumers and service professionals via emaile-mail could have an adverseadversely impact on the consumer and service professionaloverall user experience, levels of consumer and service professional engagement levels and the rate atconversion rates, which consumers become members and service professionals join the Marketplace or purchase advertising.

While we continually work to find new means of communicating and connecting with consumers and service professionals (for example, through push notifications), there is no assurance that such alternative means of communication will be as effective as email has been historically. Any failure to develop or take advantage of new means of communication and/or any limitation on such means (whether imposed by applicable law, mobile and other digital device manufacturers or otherwise) could adversely affect on our business, financial condition and results of operations. We cannot assure you that any alternative means of communication (for example, push notifications and text messaging) will be as effective as e-mail has been historically.
Our success depends, in part, on our ability to introduce newaccess, collect and enhanceduse personal data about consumers.
We depend on search engines, digital app stores and social media platforms, in particular, those operated by Google, Apple and Facebook, to market, distribute and monetize our products and services. Consumers engage with these platforms directly, and as a result, these platforms may receive personal data about consumers that we would otherwise receive if we transacted with them directly. Certain of these platforms have restricted our access to personal data about users of our products and services obtained through their platforms. If these platforms limit or increasingly limit, eliminate or otherwise interfere with our ability to access, collect and use personal data about users of our products and services that resonatethey have collected, our ability to identify and communicate with consumersa meaningful portion of our user base may be adversely impacted. If so, our customer relationship management efforts, our ability to identify, target and service professionalsreach new segments of our user base and the population generally, and the efficiency of our paid marketing efforts could be adversely affected. We cannot assure you that search engines, digital app stores and social media platforms upon which we are able to effectively monetize will be critical to our success.
Werely will not succeed unless welimit or increasingly limit, eliminate or otherwise interfere with our ability to access, collect and use personal data about users of our products and services that they
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have collected. To the extent that any or all of them do so, our business, financial condition and results of operations could be adversely affected.
Our success depends, in part, on our ability to continue to develop and introduce new and enhancedmonetize versions of our products and services in response to evolving trendsfor mobile and technologies and provide quality products and services that otherwise resonate withother digital devices.
As consumers and service professionals. There is intense competition to operate leading digital marketplaces for home services (and for all consumer products and services generally), and digital marketplaces have historically been, and are expected to continue to be, subject to rapid technological change. Generally, the development of new and enhanced products and services, as well as the identification of new business opportunities in a constantly evolving business and technological environment, requires significant time and resources. We may not be able to adapt quickly enough to digital trends and/or trends in the home services market generally (including changes in consumer and service professional preferences and needs), appropriately time the introduction of new and enhanced products and services (and effectively monetize such products and services) and/or identify new business opportunities in a timely manner.
For example, as consumers and service professionals increasingly access our products and services through mobile and other digital devices (including through digital voice assistants), we will need to continue to devote significant time and resources to ensure that our products and services are accessible across these platforms (and across multiple platforms generally). Despite these efforts,If we maydo not be able to keep pace with evolving online, market and industry trends including the introduction of new and enhanced digital trends and/or trendsdevices and changes in the home services market generally (including changes in consumerpreferences and needs of consumers and service professional preferences and needs). Even if we do,professionals generally, offer new and/or enhanced products and services in response to such trends that we offer may not resonate with consumers and service professionals, (and, in turn, fail to generate sufficient traffic to our brands and businesses), could be more costly than anticipated or could require partnership or distribution arrangements with third party providers. Moreover, we may not be able to monetize products and services for mobile and other digital devices as effectively as we have been able to monetize our traditional products and services.services and/or maintain related systems, technology and infrastructure in an efficient and cost-effective manner, our business, financial condition and results of operations could be adversely affected.
In addition, the success of our mobile and other digital applications is dependentproducts and services depends on their interoperability with various third partythird-party operating systems, technology, infrastructure and standards, over which we have no control and anycontrol. Any changes to any of these things that compromise the quality or functionality of our mobile and other digital applicationsproducts and services could adversely affect their usage levels and in turn,and/or our ability to attract consumers and service professionals. Our failure or inability to successfully respond to changes to these third party systems, technology, infrastructure and standardsprofessionals, which could adversely affect our business, financial condition and results of operations.

There may be adverse tax, legal and other consequences if the contractor classification or employment status of the service professionals who use our platform is challenged.
Any failureWe are particularly sensitive to respondthe adoption of worker classification laws, specifically, laws that could effectively require us to evolving trendschange our classification of certain of our service professionals from independent contractors to employees, as well as changes to state and technologies appropriatelylocal laws or judicial decisions related to the definition and/or classification of independent contractors. For example, in 2019, California passed a cost-effective manner could adversely affectworker classification statute (AB 5), which effectively narrowed the definition of an independent contractor by requiring hiring entities to use a stricter test to determine a given worker’s classification placed the burden of proof for classifying workers as independent contractors on the hiring entity, and provided enforcement powers to the state and certain cities. AB 5 has been the subject of widespread national discussion and it is possible that other jurisdictions may enact similar laws. Since we currently treat service professionals who provide services through our business financial conditionas independent contractors for all purposes, we do not withhold federal, state and results of operations.
We may not realizelocal income or other employment related taxes, make federal or state unemployment tax or Federal Insurance Contributions Act payments or provide workers’ compensation insurance with respect to these individuals. If we are required as the expected benefits of the Combination within the anticipated time frames or at all.
We expect to realize several substantial strategic and financial benefits as a result of the Combination. Anynew laws, interpretations or all oforders to reclassify these individuals as employees, we could be exposed to various liabilities and additional costs, including exposure (for prior and future periods) under federal, state and local tax laws, and workers’ compensation, unemployment benefits, may not be realizedlabor, and employment laws, as expected or may not be achieved within the anticipated time frames or at all. Our ability to realize these benefits will depend, in large part, on our ability to effect ongoing integration efforts in a manner that facilitates growth opportunities, realizes anticipated synergieswell as potential liability for penalties and achieves related projected cost savings and revenue growth.
Our management must continue to devote significant attention and resources to ongoing integration efforts, which could disrupt our business, cause a loss of momentum in our activities and may otherwise adversely affect our business, financial condition and results of operations. Ongoing integration efforts could also result in unanticipated problems, expenses, liabilities, responses from competitors, loss of customer and other business relationships and the diversion of management attention. f we are not able to efficiently and successfully effect ongoing integration efforts, any or all the benefits we expect to realize as a result of the Combination may not be realized fully or at all, or may take longer to realize than expected, which would adversely affect our business, financial condition and results of operations.
Even if our integration efforts are successful, any or all of these benefits may not be realized, including expected synergies, cost savings and growth opportunities, due to competitive pressures, changes in general market or economic conditions or other factors. Moreover, additional unanticipated costs may be incurred in connection with the integration. Any or all of these factors could adversely affect our business, financial condition and results of operations.

Our success will depend, in part, on the integrity, efficiency and scalability of our technology systems and infrastructures and on our ability to enhance, expand and adapt these systems and infrastructures in a timely and cost-effective manner.
For us to succeed, our technology systems and infrastructures must perform well on a consistent basis. From time to time, we may experience system interruptions that make some or all of our systems, products, services and/or data unavailable and prevent our products and services from functioning properly. Technology system and infrastructure interruptions could arise for any number of reasons. Moreover, our technology systems and infrastructures will be vulnerable to damage from fire, power loss, telecommunications failures and similar events. While we have backup systems in place for certain aspects of our operations, our technology systems and infrastructures will not be fully redundant, disaster recovery planning will not be sufficient for all eventualities and property and business interruption insurance coverage may not be adequate to compensate us fully for any losses that we may suffer. Any technology system or infrastructure interruptions or outages, regardless of the cause, could adversely affect the consumer and service professional experience, tarnish the reputation of our various brands and businesses and decrease demand for our products and services,interest, any or all of which could adversely affect our business, financial condition and results of operations. We are involved in various legal proceedings and investigations challenging the classification of these individuals as independent contractors, and may become involved in other proceedings and investigations in the future.
Our success will also dependWe may not be able to protect our systems, technology and infrastructure from cyberattacks and cyberattacks experienced by third parties may adversely affect us.
We are regularly under attack by perpetrators of malicious technology-related events, such as the use of botnets, malware or other destructive or disruptive software, distributed denial of service attacks, phishing, attempts to misappropriate user information and account login credentials and other similar malicious activities. The incidence of events of this nature (or any combination thereof) is on the rise worldwide. We continuously develop and maintain systems designed to detect and prevent events of this nature from impacting our systems, technology, infrastructure, products, services and users. We have invested (and continue to invest) heavily in these efforts and related personnel and training and deploy data minimization strategies (where appropriate), but these efforts are costly and require ongoing monitoring and updating as technologies change and efforts to overcome preventative security measures become more sophisticated. Despite these efforts, some of our systems have experienced past security incidents, none of which had a material adverse effect on our continued ability to expandbusiness, financial condition and enhanceresults of operations, and we could experience significant events of this nature in the efficiencyfuture.
Any event of this nature that we experience could damage our systems, technology and scalabilityinfrastructure and/or those of our technology systems and infrastructures to improve the consumer and service professional experience, accommodate substantial increases in traffic across our various platforms, ensure acceptable page load times forusers, prevent us from providing our products and services, and keep pace with changes in technology, industry trends and consumer and service professional preferences and needs. Any failure to do so in a timely and cost-effective manner could adversely affectcompromise the consumer and service professional experience, which could adversely impact demand forintegrity of our products and services, damage our reputation, erode our brands and/or be costly to remedy, as well as subject us to investigations by regulatory authorities, fines and/or litigation that could result in liability to third parties. Even if we do not experience such events firsthand, the impact of any such events experienced by third parties could have a similar effect. We may not have adequate insurance coverage to compensate for losses resulting from any of these events. If we (or any third-party with whom we do business or otherwise rely upon) experience(s) an event of this nature, our business, financial condition and increaseresults of operations could be adversely affected.
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If personal, confidential or sensitive user information that we maintain and store is breached or otherwise accessed by unauthorized persons, it may be costly to mitigate and our reputation could be harmed.
We receive, process, store and transmit a significant amount of personal, confidential or sensitive user information and, in certain cases, enable users to share their personal information with each other. While we continuously develop and maintain systems designed to protect the security, integrity and confidentiality of this information, we cannot guarantee that inadvertent or unauthorized use or disclosure will not occur or that third parties will not gain unauthorized access to this information. When such events occur, we may not be able to remedy them, we may be required by law to notify regulators and impacted individuals, and it may be costly to mitigate the impact of such events and to develop and implement protections to prevent future events of this nature from occurring. When breaches of security (ours or that of any third-party we engage to store information) occur, we could face governmental enforcement actions, significant fines, litigation (including consumer class actions) and the reputation of our brands and business could be harmed, which could adversely affect our business, financial condition and results of operations. In addition, if any of the search engines, digital app stores or social media platforms through which we market, distribute and monetize our products and services were to experience a breach, third parties could gain unauthorized access to personal data about our users and subscribers, which could harm the reputation of our brands and businesses and in turn, adversely affect our business, financial condition and results of operations.
The processing, storage, use and disclosure of personal data could give rise to liabilities and increased costs.
We receive, transmit and store a large volume of personal information in connection with the provision of our products and services. The manner in which we share, store, use, disclose and protect this information is determined by the respective privacy and data security policies of our various businesses, as well as federal, state and foreign laws and regulations and evolving industry standards and practices, which are changing, and in some cases, inconsistent and conflicting and subject to differing interpretations. In addition, new laws, regulations, standards and practices of this nature are proposed and adopted from time to time.
For example, a comprehensive European Union privacy and data protection reform, the General Data Protection Regulation (the “GDPR”), became effective in May 2018. The GDPR, which applies to companies that are organized in the European Union or otherwise provide services to (or monitor) consumers who reside in the European Union, imposes significant penalties (monetary and otherwise) for non-compliance, as well as provides a private right of action for individual claimants. The GDPR will continue to be interpreted by European Union Data protection regulators, which may require that we make changes to our business practices and could generate additional risks and liabilities. Data protection regulators in European union member states have taken a strict view of cookie consent requirements after the enactment of the GDPR and enforcement actions are on the rise.
Also, the exit from the European Union by the United Kingdom could result in the application of new and conflicting data privacy and protection laws and standards to our operations in the United Kingdom and our handling of personal data of users located in the United Kingdom.
Moreover, multiple legislative proposals concerning privacy and the protection of user information are being considered by the U.S. Congress and various state legislatures. Other U.S. state legislatures have already enacted privacy legislation, one of the strictest and most comprehensive of which is the California Consumer Privacy Act of 2018, which became effective January 1, 2020 (the “CCPA”). The CCPA provides data privacy rights for California consumers, including the right to know what personal information is being collected about them and how it is being used, as well as significant rights over the use of their personal information and operational requirements for businesses. The CCPA restricts the ability of our businesses to use personal California user and subscriber information in connection with our various products, services and operations, which could adversely affect our business, financial condition and results of operations. The CCPA also provides consumers with a private right of action for security breaches, as well as provides for statutory damages of up to $750 per violation, with the California Attorney General maintaining authority to enforce the CCPA and seek civil penalties for intentional violations of up to $7,500 per violation. In addition, California Privacy Rights Act (“CPRA”) will take effect on January 1, 2023, and will revise and significantly expand the scope of the CCPA. The CPRA also creates a new California data protection agency authorized to implement and enforce the CCPA and the CPRA, which could result in increased privacy and information security enforcement. This could further restrict the ability of our businesses to use personal California user and subscriber information in connection with our various products, services and operations and/or impose additional operational requirements on our businesses, which could adversely affect our business, financial condition and results of operations. Virginia and Colorado also passed comprehensive privacy legislation in 2021. These state laws have similar requirements to those under the CCPA and penalties that range up to $7,500 per violation. Both laws take effect in 2023 could restrict the ability of our businesses to use personal user and subscriber information of Virginia and Colorado users in connection with our various products, services, and operations and/or impose additional operational requirements on our business, which could adversely affect our business, financial condition, and results of operations. Lastly, the Federal Trade Commission has also increased its focus on privacy and data security practices and we anticipate this focus to continue.
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We could be subject to claims of non-compliance with applicable privacy and data protection policies, laws and regulations and industry standards and practices that we may not be able to successfully defend and/or significant fines and penalties. Moreover, any non-compliance or perceived non-compliance by us (or any third-party we engage to store or process information) or any compromise of security that results in unauthorized access to (or use or transmission of) personal information could result in a variety of claims against us, including governmental enforcement actions, significant fines, litigation (including consumer class actions), claims of breach of contract and indemnity by third parties and adverse publicity. When such events occur, our reputation could be harmed and the competitive positions of our various brands and businesses could be diminished, which could adversely affect our business, financial condition and results of operations. Additionally, to the extent multiple U.S. state-level (or European Union member-state level) laws are introduced with inconsistent or conflicting standards and there is no federal or European Union regulation to preempt such laws, compliance could be even more difficult to achieve and our potential exposure to the risks discussed above could increase.
Lastly, ongoing compliance with existing (and compliance with future) privacy and data protection laws worldwide could be costly. The devotion of significant costs to compliance (versus the development of products and services) could result in delays in the development of new products and services, us ceasing to provide problematic products and services in existing jurisdictions and us being prevented from introducing products and services in new and existing jurisdictions, which could adversely affect our business, financial condition and results of operations.
Credit card data security breaches or fraud could adversely affect our business, financial condition and results of operations.
We accept payments (including recurring payments) from service professionals and consumers, primarily through credit and debit card transactions. The ability to access payment information on a real-time basis without having to proactively reach out to service professionals and consumers to process payments is critical to our success.
When third parties (including credit card processing companies, as well as any business that offers products and services online or offline) experience a data security breach involving credit card information, affected cardholders will often cancel their credit cards. The more sizable a given affected third-party’s customer base, the greater the number of accounts impacted and the more likely it will be that our service professionals and consumers would be impacted by such a breach. If such a breach were to impact our service professionals and consumers, we would need to contact affected service professionals and consumers to obtain new payment information. It is likely that we would not be able to reach all affected service professionals and consumers, and even if we could, new payment information for some may not be obtained and pending payments may not be processed, which could adversely affect our business, financial condition and results of operations.
Even if our service professionals and consumers are not directly impacted by a given data security breach, they may lose confidence in the ability of providers of online products and services to protect their personal information generally. As a result, they may stop using their credit cards online and choose alternative payment methods that are not as convenient for us or restrict our ability to process payments without significant effort, which could adversely affect our business, financial condition and results of operations.
Our success will depend,depends, in part, on the integrity, quality, efficiency and scalability of our systems, technology and infrastructure, and those of third party systems and infrastructures.parties.
We rely on third parties, primarilyour systems, technology and infrastructure to perform well on a consistent basis. From time to time in the past we have experienced (and in the future we may experience) occasional interruptions that make some or all of this framework and related information unavailable or that prevent us from providing products and services; any such interruption could arise for any number of reasons. We also rely on third-party data center service providers and cloud-based, hosted web service providers, as well as third partythird-party computer systems broadband and other communicationa variety of communications systems and service providers in connection with the provision of our products and services generally, as well as to facilitate and process certain payment and other transactions with consumers and service professionals.users. We have limited or no control over any of these third parties andor their operations.
Problems experienced by third party data center service providers upon whom we may rely, third party computer system, broadbandThe framework described above could be damaged or interrupted at any time due to fire, power loss, telecommunications failure, natural disasters, acts of war or terrorism, acts of God and other communications systems and service providers with whom we contract or with the systems through which these providers allocate capacity among their customers could also adversely affect us. Any changes in service levels at our data centers or any interruptions, outages or delays in third party technology systems and infrastructures upon which we rely or deterioration in the performance of these systems, could impair our ability to provide our products and services and/or process transactions with consumers and service professionals, which would adversely impact our business, financial condition and results of operations.
We may not be able to protect our information technology systems and infrastructures from cyberattacks and may be adversely affected by cyberattacks experienced by third parties.
In connection with our day-to-day operations, we rely extensively on the secure processing, storage and transmission of confidential and other information in our information technology systems and infrastructures. We may be subject to attacks by perpetrators of malicious technology-related events, such as cyberattacks, computer viruses, worms or other destructive or disruptive software, distributed denial of service attacks and attempts to misappropriate consumer or service professional information (including credit card information), personal information and confidential business information. While we invest, and will continue to invest, in the protection of our information technology systems and infrastructures and related training, there can be no assurances that these efforts will prevent significant breaches or other similar events from occurring. As malicious cyber activity escalates, so do risks relating to the processing, storage and transmissionor disruptions. Any event of data both within and outside of our technology systems and infrastructures, including through third party service providers. Any cyber or similar attack we experiencethis nature could damage our technology systems and infrastructures, prevent us from providing our products and services erode our reputation and those of our various brands and businesses, lead to the termination of advantageous contracts, result in inaccurate reporting of financial information,at all (or result in the disclosureprovision of confidential consumerour products and service professional information, expose us to significant liabilities for the violation of data privacy laws,services on a delayed or intermittent basis) and/or result in the disclosureloss of confidentialcritical data. While we and sensitive business information or intellectual property, result in claims or litigation against us and/or otherwise be costly to mitigate or remedy. In addition, although we have insurance to mitigate some of these risks, such policies may not cover the particular cyber or similar attack experienced and, even if the risk is covered, such insurance coverage may not be adequate to compensate for related losses.

The impact of cybersecurity events experienced by third parties with whom we do business (or upon whom we otherwise rely have certain backup systems in connection withplace for certain aspects of our day-to-day operations) couldrespective frameworks, none of our frameworks are fully redundant and disaster recovery planning is not sufficient for all eventualities. In addition, we may not have similar effects on us. Moreover, even cyberadequate insurance coverage to compensate us for losses from a major interruption. When such damages, interruptions or similar attacks that do not directly affect us or third parties with whom we do business may result in a loss of consumer confidence in online and/or technology-reliant businesses generally, which could make consumers and service professionals less likely to use or continue to useoutages occur, our products and services. The occurrence of any of these events could adversely affect our business, financial condition and results of operations.
Unauthorized access to personal data could give rise to liabilities as a result of governmental regulations and legal requirements, and compliance with laws designed to prevent unauthorized access of personal datareputation could be costly.
Security breaches or other unauthorized access to, or the use or transmission of, personal consumer and service professional information could result in a variety of claims against us, including privacy-related claims. There are numerous laws and regulations in the countries in which we operate regarding privacy and the storage, sharing, use, processing, disclosure and protection of personal information. The scope and subject matter of these laws and regulations have changed considerably in the recent past and are expected to continue to evolve, and likely expand, in the future. For example, the European Commission has adopted the General Data Protection Regulation, a comprehensive European Union privacy and data protection reform that is expected to become effective in May 2018. In addition, the potential exit from the European Union by the United Kingdom could result in the application of new data privacy and protection laws and standards to our operations in the United Kingdom and the handling of personal data of consumers and service professionals located in the United Kingdom. At the same time, various regulations and legislative proposals concerning privacy and the protection of consumer information are pending before the U.S. Congress and various U.S. state legislatures.
Any failure or perceived failure by us (or by third parties with whom we contract to store personal information) to comply with applicable privacy and security laws, policies or related contractual obligations or any compromise of security that results in unauthorized access, use or disclosure to/of personal information could result in governmental enforcement actions, significant fines, litigation, claims of breach of contract and indemnity by third parties and adverse publicity. In the case of such an event, our reputation and those of our various brands and businesses could be harmed we could lose consumers and service professionals and the competitive positions of our various brands and businesses could be diminished, any or all of which could adversely affect our business, financial condition and results of operations.
Lastly, compliance with lawsWe also continually work to expand and regulations regarding privacyenhance the efficiency and scalability of our framework to improve the storage, sharing, use, processing, disclosureconsumer and protection of personal dataservice professional experience, accommodate substantial increases in the foreign jurisdictions in which we operate could be costly, particularly if, as expected, such laws and regulations continuenumber of visitors to evolve and become more comprehensive in scope or require changes to information technology systems and infrastructures, as well as our various platforms,
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ensure acceptable load times for our various products and services.services, and keep up with changes in technology and user preferences. If these costs are significant,we do not do so in a timely and cost-effective manner, the user experience and demand across our business, financial conditionbrands and results of operationsbusinesses could be adversely affected.
We are subject to several risks related to credit card payments, including data security breaches and fraud that we or third parties may experience, as well as additional regulations, any ofaffected, which could adversely affect our business, financial condition and results of operations.
We accept payments (including recurring payments) from service professionalsmay experience risks related to acquisitions.
We have made numerous acquisitions in the past and members, primarilywe continue to seek to identify potential acquisition candidates to expand our business generally in the future. If we do not identify suitable acquisition candidates or complete acquisitions on satisfactory pricing or other terms, our growth could be adversely affected. Even if we complete what we believe to be suitable acquisitions, we may experience related operational and financial risks. As a result, to the extent that we continue to grow through creditacquisitions, we will need to:
properly value prospective acquisitions, especially those with limited operating histories;
successfully integrate the operations, as well as the various functions and debit card transactions. The ability to access payment informationsystems, of acquired businesses with our existing operations, functions and systems;
successfully identify and realize potential synergies among acquired and existing businesses;
retain or hire senior management and other key personnel at acquired businesses; and
successfully manage acquisition-related strain on a real-time basis without having to proactively reach out to service professionalsour management, operations and members to process payments is critical to our success.financial resources.
When weWe may not be successful in addressing these challenges or third parties experience a data security breach involving credit card information, affected cardholders will often cancel their credit cards.any other problems encountered in connection with historical and future acquisitions. In addition, the caseanticipated benefits of a breach experienced by a third party,one or more acquisitions may not be realized. Also, future acquisitions could result in increased operating losses, dilutive issuances of equity securities and/or the more sizableassumption of contingent liabilities. Lastly, the third party’s customer basevalue of goodwill and the greater the number of credit card accounts impacted, the more likely it is that users of our products and services wouldother intangible assets acquired could be impacted by such a breach. To the extent our service professionals and members are ever affected by such a breach, we may need to contact affected users to obtain new payment information and process any pending payments. It is likely that we would not be able to reach all affected service professionals and members, and even if we could, some new payment information may not be obtained and some pending payments may not be processed,one or more continuing unfavorable events and/or trends, which could adversely affectresult in significant impairment charges. The occurrence of any these events could have an adverse effects on our business, financial condition and results of operations.
Even if service professionalsWe face additional risks in connection with our international operations.
We currently operate businesses under various regional brands in Canada, France, Germany, Austria, the United Kingdom, the Netherlands and members are not directly impactedItaly and intend to seek to expand our international presence, both through acquisitions and organic growth.
Operating abroad, particularly in jurisdictions where we have limited experience, exposes us to additional risks, including:
operational and compliance challenges caused by a given data security breach, they may lose confidencedistance, language barriers and cultural differences;
difficulties in the abilitystaffing and managing international operations;
differing levels (or lack) of social and technological acceptance of online service providersservices generally, as well as online home services offerings specifically;
foreign currency fluctuations;
restrictions on the transfer of funds among countries and back to protect their personal information generally, which could cause them to stop using their credit cards onlinethe United States and choose alternative payment methods that are not as convenient for us or restrict our ability to process payments without significant cooperation from service professionals or members.related repatriation costs;


Our ability to access credit card information on a real-time basis without having to proactively reach out to service professionalsdiffering and members could also be adversely impacted by increases in various fees charged by credit card companiespotentially complex laws and processors (such as transaction, interchange, chargeback and/or other fees), the malfunction of credit card billing systems and software and non-compliance with applicable payment card association operating rules, certification requirements and rules governing electronic funds transfers,regulations, including the Payment Card Industry Data Security Standard ("PCI DSS"), a security standard with which companies that collect, store or transmit certain data related to credittax, data privacy, cybersecurity and debit cards, creditdata protection, and debit card holdersrelated compliance challenges;
competitive environments that favor local businesses;
limitations on the level of intellectual property protection; and credit
trade sanctions, political unrest, terrorism, war and debit card transactions are required to comply. If we fail to adequately prevent fraudulent credit card transactions and comply withepidemics or the PCI DSS, we could face litigation, fines, governmental enforcement action, civil liability, diminished public perceptionthreat of our security measures, significantly higher credit card-related costs and substantial remediation costs, any of whichthese events.
The occurrence of any or all of the events described above could adversely affect our business, financial conditioninternational operations, and results of operations.
Finally, the passage or adoption of any new legislation or regulations affecting our ability to periodically charge service professionals and members for recurring fees could adversely affectin turn, our business, financial condition and results of operations.
We may fail to adequately protect our intellectual property rights or may be accused of infringing the intellectual property rights of third parties.
We rely heavily upon our trademarks, trade dress and related domain names and logos to market our brands and businesses and to build and maintain brand loyalty and recognition, as well as upon trade secrets and patents. We have generally registered, and to the extent we believe it will be beneficial and cost-effective, will continue to apply to reserve, register and renew domain names where appropriate, as well as register and renew, or secure by contract where appropriate, trademarks and service marks as they are developed and used. Not every variation of a domain name may be available or be registered, even if available. Similarly, effective trademark and service mark protection may not be available or may not be sought in every country in which our products and services are made available, and contractual disputes may affect the use of marks governed by private contracts.
We rely on a combination of laws and contractual restrictions on access to and use of proprietary information with employees, customers, suppliers, affiliates and others to establish and protect our and their various intellectual property rights rights. For example, we have generally registered and employeescontinue to apply to register and contractorsrenew, or secure by contract where appropriate, trademarks and service marks as they are developed and used, and reserve, register and renew domain names as we deem appropriate. We also subject to invention assignment provisions.
We have one patent issued in the United States, four patent applications currently pending in the United States and certain jurisdictions abroad and to the extent we believe it will be beneficial and cost-effective, maygenerally seek to apply for patents or for other similar statutory protections where appropriate.as and if we deem appropriate, based
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on then current facts and circumstances, and will continue to do so in the future. No assurances can be given that any existingthese efforts will result in adequate trademark and service mark protection, adequate domain name rights and protections, the issuance of a patent or future patents will afford adequate patent protection against our competitors and similar technologies or that any patent application that any of our businesses have filed or that we may file will result in a patent being issued. In addition, no assurances can be given that thirdtechnologies. Third parties will notcould also create new intellectual propertyproducts or methods that achievesachieve similar results without infringing upon our patents.patents we own.
Despite these measures, challenges to our intellectual property rights maycould still not be protected in a meaningful manner, challenges to contractual rights could arise, or third parties could copy or otherwise obtain and use the intellectual property without authorization and/or laws regarding the enforceability of our various brands and businesses without authorization.existing intellectual property rights could change in an adverse manner. The occurrence of any of these events could result in the erosion of our various brands and limitations on our ability to control marketing online using our various domain names, as well as impede our ability to effectively compete against competitors with similar technologies, any of which could adversely affect our business, financial condition and results of operations. The occurrence of any of these events (particularly those involving our Angie’s List and HomeAdvisor brands), could have an adverse effect on our business, financial condition and results of operations.
We will face several risks in connection with our international operations.
We operate businesses in Canada, France, Germany, Austria, the United Kingdom, the Netherlands and Italy under various regional brands. We intend to seek to establish market leadership for these brands through significant investments in marketing, sales forces and product innovation, which may not be successful or cost-effective. We also intend to seek to expand into additional European and select other jurisdictions in the future, both through acquisitions and organic growth.
Acquiring, operating and building brands and businesses abroad, particularly in jurisdictions where we have limited experience, will involve several additional risks, including:
operational and compliance challenges caused by distance, language and cultural differences;
difficulties in staffing and managing international operations;

differing levels of social and technological acceptance of online services (or lack of acceptance of them) generally, as well as home services offerings specifically;
foreign currency fluctuations;
restrictions on the transfer of funds among countries and back to the United States and costs associated with repatriating funds to the United States;
differing and potentially adverse tax laws;
multiple, conflicting and changing laws, rules and regulations (particularly in the case of privacy and data security) and difficulties understanding and ensuring compliance with such laws, rules and regulations by employees and business partners over whom we will have no control;
competitive environments that favor local businesses;
limitations on the level of intellectual property protection; and
trade sanctions, political unrest, terrorism, war and epidemics or the threat of any of these events.
The occurrence of any or all of the events described above could adversely affect our business, financial condition and results of operations.
We face operational and financial risks in connection with acquisitions.
Our HomeAdvisor business has made numerous acquisitions in the past and we expect to seek potential acquisition candidates to expand our business generally in the future. We may experience operational and financial challenges in connection with historical and future acquisitions if we are unable to:
properly value prospective acquisitions, especially those with limited operating histories;
successfully integrate the operations, as well as the accounting, financial controls, management information, technology, human resources and other administrative systems, of acquired businesses with existing operations and systems;
successfully identify and realize potential synergies among acquired and existing business;
retain or hire senior management and other key personnel at acquired businesses; and
successfully manage acquisition-related strain on our management, operations and financial resources.
Furthermore, we may not be successful in addressing other challenges that we may encounter in connection with acquisitions. The anticipated benefits of one or more historical and/or future acquisitions may not be realized or the value of goodwill and other intangible assets acquired could be impacted by one or more continuing unfavorable events or trends, which could result in significant impairment charges. The occurrence of any these events could adversely affect our business, financial condition and results of operations.
We depend on our key personnel.
Our future success depends upon our ability to identify, hire, develop, motivate and retain highly skilled, diverse individuals, withparticularly in the contributionscase of our senior management being especially critical to our success.and executive management. Competition for well-qualified employees across our various businesses is intense and our abilitywe must attract new (and retain existing) employees to compete effectively will depend, in part, upon our ability to attract new employees and retain existing employees.effectively. While we have established programs, we may not be able to continue to attract new employees(and retain existing) key and provide incentives to retain existing employees, particularly our senior management, no assurances can be provided that we will be able to attract new employees or retain the services of our senior management or any other key employees in the future. Effective succession planning is also important to our future, success. Ifespecially in the technical fields of engineering and product development. In addition, if we fail todo not ensure the effective transfer of senior management knowledge and smooth transitions involving(particularly in the case of senior managementand executive management) across our various businesses, our ability to execute short- and long-term strategic, financial and operating goals, as well as our business, financial condition and results of operations, generally, could be adversely affected.

We will continueFailure to incur some increased costsobtain and devote substantial management time as a result of operating as a relatively new public company.
The obligations of being a relatively new public company will continuemaintain required licenses or to require new expenditures, place new demands on our senior management and require the hiring of additional personnel. While IAC continues to provide uscomply with certain corporate and shared services related to corporate functions for negotiated fees, we also expect that we will need to continue to implement additional systems and hire additional personnel, primarily related to public reporting obligations, to adequately function as a mature public company. We cannot precisely predict the amount and timing of these significant expenditures. See “-Risks Related to Our Ongoing Relationship with IAC-The services that IAC provides to us may not be sufficient to meet our needs, which may result in increased costs and otherwiseapplicable regulations could adversely affect our business.”
We may be subject to litigation, and adverse outcomes in such litigation could have an adverse effect on our business, financial condition and results of operations.
We may from timebe required under certain state and local government regulations to time become subjectobtain and maintain licenses to litigationperform pre-priced booking services on our platforms. Typically, licenses must be renewed annually and various legal proceedings, including litigationmay be revoked or suspended for cause at any time. In some jurisdictions, the loss of a license for cause may lead to the loss of licenses in other jurisdictions and proceedings relatedcould make it more difficult to intellectual property matters, privacy and consumer protection laws, as well as stockholder derivative suits, class action lawsuits andobtain additional licenses. The failure to receive or retain a license, or any other matters, that involve claimsrequired permit, in a particular location, or to continue to qualify for, substantialor renew licenses, could negatively impact our business. We may also spend significant amounts of money or for other relief or that might necessitate changesand effort to our businessobtain licenses and continued compliance with applicable regulations. If we fail to comply with such licensing and permit regulations, we may be subject to various sanctions and/or operations. The defense of these actionspenalties and fines or may be both time consuming and expensive. We will evaluate these litigation claims and legal proceedingsrequired to assess the likelihood of unfavorable outcomes and to estimate, if possible, the amount of potential losses. Based on these assessments and estimates,cease operations in such location until we may establish reserves and/or disclose the relevant litigation claims or legal proceedings, as and when required or appropriate. These assessments and estimates will be based on information available to our management at the time of such assessment or estimation and will involve a significant amount of judgment. As a result, actual outcomes or losses could differ materially from initial assessments and estimates. Our failure to successfully defend or settle any litigation claim or other legal proceeding could result in liability that, to the extent not covered by its insurance,achieve compliance, which could have an adverse effect on our business, financial condition and results of operations.
Risks Related to Our Relationship with IAC
IAC controls our company and will have the ability to control the direction of our business.
As of February 2, 2018,December 31, 2021, IAC owned all of our outstanding shares of Class B common stock, and 2,588,180 outstanding shares of the Company’s Class A common stock, in total representing approximately 86.8%84.5% of our total outstanding shares of capital stock and approximately 98.5% 98.2%of the total combined voting power of our outstanding capital stock. For so long as IAC owns shares of our capital stock that represent a majority of the combined voting power of our outstanding capital stock, it will be able to control any corporate action that requires a stockholder vote, regardless of the vote of any other stockholder (subject to certain limited exceptions for certain class votes). As a result, IAC has (and we expect will continue to have) the ability to control significant corporate activities, including:
the election of our board of directors (subject to certain provisions of the investor rights agreement between us and IAC) and, through our board of directors, decision-making with respect to our business direction and policies, including the appointment and removal of our officers;
acquisitions or dispositions of businesses or assets, mergers or other business combinations;
issuances of shares of our Class A common stock, Class B common stock and Class C common stock and our capital structure generally;
corporate opportunities that may be suitable for us and IAC, subject to the corporate opportunity provisions in our amended and restated certificate of incorporation (as described below);
stock repurchases;
our financing activities, including the issuance of debt securities and/or the incurrence of other indebtedness generally;
stock repurchases or the payment of one-time or recurring dividends; and
the number of shares available for issuance under our equity incentive plans.


This voting control will limit the ability of other stockholders to influence corporate matters and, as a result, we may take actions that stockholders other than IAC do not view as beneficial. This voting control may also discourage transactions
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involving a change of control of our company, including transactions in which holders of shares of our Class A common stock might otherwise receive a premium for their shares.
Even if IAC owns shares of our capital stock representing less than a majority of the total combined voting power of our outstanding capital stock, so long as IAC owns shares representing a significant percentage of our total combined voting power, IAC will have the ability to substantially influence these significant corporate activities.
In addition, pursuant to the investor rights agreement between us and IAC, IAC has the right to maintain its level of ownership in us to the extent we issue additional shares of our capital stock in the future and, pursuant to the employee matters agreement between us and IAC, IAC may receive payment for certain compensation expenses through the receipt of additional shares of our capital stock. For a more complete summary of our various agreements with IAC, see “Note 14-RelatedNote 14-Related Party Transactions with IAC”IAC to the consolidated and combined financial statements included in “ItemItem 8-Consolidated and Combined Financial Statements and Supplementary Data.
Until such time as IAC no longer controls or has the ability to substantially influence us, we will continue to face the risks described in this "Risk Factors"“Risk Factors” section relating to IAC'sIAC’s control of us and the potential conflicts of interest between us and IAC.
Our amended and restated certificate of incorporation could prevent us from benefiting from certain corporate opportunities that might otherwise have been available to us.opportunities.
Our amended and restated certificate of incorporation has a “corporate opportunity” provision that requires us to renounce any interests or expectancy in corporate opportunities for both us and IAC. This provision also includes a disclaimer that states that we recognize that: (i) any of our directors or officers who are also officers, directors, employees or other affiliates of IAC or its affiliates (except that we and our subsidiaries are not considered affiliates of IAC or its affiliates for purposes of this provision) and (ii) IAC itself, will have no duty to offer or communicate information regarding such corporate opportunities to us. Generally, neither IAC nor any of our officers or directors who are also officers or directors of IAC or its affiliates will be liable to us or any of our stockholders for breach of any fiduciary duty by reason of the fact that any such person pursues or acquires any corporate opportunity for the account of IAC or any of its affiliates, directs or transfers such corporate opportunity to IAC or any of its affiliates or does not communicate information regarding such corporate opportunity to us. This corporate opportunity provision may exacerbate conflicts of interest between us and IAC because the provision effectively permits any of our directors or officers who also serves as a director or officer of IAC to choose to direct a corporate opportunity to IAC instead of us.
IAC'sIAC’s interests may conflict with our interests and the interests of our other stockholders. Conflicts of interest between us and IAC could be resolved in a manner unfavorable to us and our other stockholders.
Various conflicts of interest between us and IAC could arise. As of the date of this report, four of our tentwelve directors are current directors or executive officers of IAC. Ownership interests of these individuals and IAC in our capital stock and ownership interests of our directors and officers in IAC capital stock, or service by an individual as either a director and/or officer of both companies, could create or appear to create potential conflicts of interest when such individuals are faced with decisions relating to us. These decisions could include:
corporate opportunities;
the impact that operating or capital decisions (including the incurrence of indebtedness) relating to our business may have on IAC's consolidated financial statements and/or current or future indebtedness (including related covenants);
business combinations involving us;
our dividend and stock repurchase policies;
management stock ownership; and
the intercompany agreements and services between us and IAC.


Potential conflicts of interest could also arise if we decide to enter into new commercial arrangements with IAC in the future or in connection with IAC'sIAC’s desire to enter into new commercial arrangements with third parties. Additionally, IAC may be constrained by the terms of agreements relating to its indebtedness from taking actions, or permitting us to take actions, that may be in our best interest.
Furthermore, disputes may arise between us and IAC relating to our past and ongoing relationships, and these potential conflicts of interest may make it more difficult for us to favorably resolve such disputes, including those related to:
tax, employee benefit, indemnification and other matters arising from the Combination;
the nature, quality and pricing of services IAC agrees to provide to us;
sales or other disposals by IAC of all or a portion of its ownership interest in us; and
business combinations involving us.
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We may not be able to resolve any potential conflicts, and even if we do, the resolution may be less favorable to us than if we were dealing with an unaffiliated third party.third-party. While we are controlled by IAC, we may not have the leverage to negotiate amendments to our various agreements with IAC (if required) on terms as favorable to us as those we would negotiate with an unaffiliated third party.third-party.
We rely on exemptions from certain NASDAQNasdaq corporate governance requirements that would otherwise provide protection to our stockholders.stockholders of other companies.
Because IAC owns more than 50% of the combined voting power of our outstanding capital stock, we are a “controlled company” under the Marketplace Rules of The Nasdaq Stock Market, LLC (the “Marketplace Rules”). As a “controlled company,” we are exempt from compliance with certain Marketplace Rules related to corporate governance, including the following requirements:
that a majority of our board of directors consists of “independent directors” (as defined in the Marketplace Rules); and
that we have a nominating/governance committee composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities.
Accordingly, for so long as we are a “controlled company” and avail ourselves of these exemptions, our stockholders will not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of the Marketplace Rules.
In orderIAC’s desire to preserve IAC’smaintain flexibility with respect to its ability to distribute the shares of our capital stock it holds on a tax-free basis to its stockholders, weand its desire to preserve the ability to maintain tax consolidation for U.S. federal income tax purposes, may be preventedprevent us from pursuing opportunities to raise capital, acquire other businesses or provide equity incentives to our employees, which could hurtor otherwise impact our ability to grow.manage our capital structure.
Under current laws, IAC must retain beneficial ownership of at least 80% of our combined voting power and 80% of each class of our non-voting capital stock (if any is outstanding) in order to effect a tax-free distribution of our shares held by IAC to its stockholders. IAC has advised us that it does not have any present intention or plans to undertake such a tax-free distribution. However, IAC does currently intend to use its majority voting interest to retain its ability to engage in such a transaction. This intentionIn addition, IAC must maintain ownership of at least 80% of our outstanding capital stock in order to maintain tax consolidation with us for U.S. federal income tax purposes. IAC has advised us that it currently intends to take such actions, or cause the Company to take such actions, as may be necessary in order to preserve tax consolidation. Each of these intentions may cause IAC not to support transactions that we wish to pursue that involve issuing shares of our capital stock, including for capital-raising purposes, as consideration for an acquisition or as equity incentives to our employees.employees, or otherwise impact our overall capital management strategy. Our inability to pursue such transactions, or any reduced flexibility in the management of our capital structure, may adversely affect our business, financial condition and results of operations.
Our agreements with IAC will require us to indemnify IAC for certain tax liabilities and may limit our ability to engage in desirable strategic or capital-raising transactions, including following any distribution by IAC of our capital stock to its stockholders.transactions.
Pursuant to our tax sharing agreement with IAC, we generally will be responsible and will be required to indemnify IAC for: (i) all taxes imposed with respect to any consolidated, combined or unitary tax return of IAC or its subsidiaries that includes us or any of our subsidiaries to the extent attributable to us or any of our subsidiaries (excluding certain taxes attributable to Angie's ListAngi and its subsidiaries for taxable periods (or portions thereof) ending on or before the completion of

the Combination), as determined under the tax sharing agreement, and (ii) all taxes imposed with respect to any consolidated, combined, unitary or separate tax returns of ours or any of our subsidiaries. To the extent IAC fails to pay taxes imposed with respect to any consolidated, combined or unitary tax return of IAC or one of its subsidiaries that includes us or any of our subsidiaries, the relevant taxing authority could seek to collect such taxes (including taxes for which IAC is responsible under the tax sharing agreement) from us or our subsidiaries.
IAC does not have a present plan or intention to undertake a tax-free spin-off of its interest in us. Under the tax sharing agreement, we generally will be responsible for any taxes and related amounts imposed on IAC or us (or our respective subsidiaries) that arise from the failure of a future spin-off of IAC’s retained interest in us to qualify as a transaction that is generally tax-free for U.S. federal income tax purposes under Section 368(a)(1)(D) and/or Section 355 of the Internal Revenue Code of 1986, as amended (the “Code”), to the extent that the failure to so qualify is attributable to: (i) a breach of the relevant representations and covenants made by us in the tax sharing agreement (or any representation letter provided in support of any tax opinion or ruling obtained by IAC with respect to the U.S. federal income tax treatment of such spin-off), (ii) an acquisition of our equity securities or assets or (iii) any other action or inaction by us after any such spin-off.
To preserve the tax-free treatment of any potential future spin-off by IAC of its interest in us, the tax sharing agreement restricts us and our subsidiaries, for the two-year period following any such spin-off (except in specific circumstances), from: (i) entering into any transaction pursuant to which shares of our capital stock would be acquired above a certain threshold, (ii) merging, consolidating or liquidating, (iii) selling or transferring assets above certain thresholds, (iv) redeeming or repurchasing stock (with certain exceptions), (v) altering the voting rights of our capital stock, (vi)  actions and inactions that
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are inconsistent with representations or covenants in any tax opinion or private letter ruling document or (vii) ceasing to engage in any active trade or business as defined in the Code. The indemnity obligations and other limitations under the tax sharing agreement could have an adverse effect on our business, financial condition and results of operations.
Future sales or distributions of shares of our capital stock by IAC could depress the price of our Class A common stock.
IAC has the right to sell or distribute to its stockholders all or a portion of the shares of our capital stock that it holds. Although as of the date of this report IAC has advised us that it does not have any present intention or plans to undertake such a sale or distribution, sales by IAC in the public market or distributions to its stockholders of substantial amounts of our capital stock (shares of Class B common stock or Class A common stock), or the filing by us of a registration statement relating to a sale or other disposition by IAC of a substantial amount of our capital stock, could depress the price of our Class A common stock.
In addition, IAC has the right, subject to certain conditions, to require us to file registration statements covering the sale of the shares of our capital stock it holds or to include such shares in other registration statements that we may file. If IAC exercises these registration rights and sells all or a portion of the shares of our capital stock it holds, the price of our Class A common stock could decline.
The services that IAC provides to us may not be sufficient to meet our needs, which may result in increased costs and otherwise adversely affect our business.needs.
We expect IAC to continue to provide us with significant corporate and shared services related to corporate functions, such as executive oversight, risk management, information technology, accounting, audit, legal, investor relations, tax, treasury and other services in exchange for the fees specified in the services agreement between us and IAC. Since the services agreement automatically renews for one (1) year periods for as long as IAC is not obligated to provide these services inholds a manner that differs from the naturemajority of the services provided to the HomeAdvisor business during the twelve-month period prior to the Combination, and thusoutstanding shares of our common stock, we may not be able to modify these services in a manner desirable to us as a standalone public company. Further, ifAlthough we no longer receive these services from IAC dueintend to the terminationreplace portions of the services agreement or otherwise,currently provided by IAC, we may not be able to perform these services ourselves and/or find appropriate third party arrangementsparties to do so at a reasonable cost (and any such(or at costs may be higher thanat or below those charged by IAC)., which could adversely affect our business, financial condition and results of operations.
Risks Related to Our Indebtedness
Our indebtedness may affect our ability to operate our business, which could have a material adverse effect on our financial condition and results of operations. We and our subsidiaries may incur additional indebtedness.
As of December 31, 2017, we had total debt of $275 million outstanding under our term loan agreement. This indebtedness is guaranteed by our wholly-owned material domestic subsidiaries and secured by substantially all of our assets and those of our guarantors, subject to certain exceptions. Our term loan agreement contains several covenants that impose significant operating and financial restrictions on us, including restrictions on our ability to, among other things:

create liens on certain assets;
incur additional debt;
make certain investments and acquisitions;
consolidate, merge, sell or otherwise dispose of all or substantially all of our assets;
sell certain assets;
pay dividends on (or make distributions in respect of) our capital stock or make restricted payments or stock repurchases;
enter into certain transactions with our affiliates; and
place restrictions on distributions from subsidiaries.
Any of these restrictions could limit our ability to plan for or react to market conditions and could otherwise restrict corporate activities. Any failure to comply with these covenants could result in a default under the term loan agreement. Upon a default, unless waived, the lenders under our term loan agreement could foreclose on our assets pledged to such lenders to secure our obligations under our term loan agreement and force us into bankruptcy or liquidation. In addition, a default under our term loan agreement could trigger a cross default under other agreements, including any agreements governing future indebtedness of ours of certain of our subsidiaries. Our operating results may not be sufficient to meet our debt service obligations or to fund other expenditures and we may not be able to obtain financing to meet these requirements.
In addition to the restrictions that limit our flexibility in operating our business, the terms of our indebtedness could:
limit our ability to obtain additional financing to fund our working capital needs, acquisitions, capital expenditures or for other purposes;
limit our ability to use operating cash flow in other areas of our business because we must dedicate a substantial portion of these funds to service this indebtedness;
limit our ability to compete with other companies who are not as highly leveraged, as we may be less capable of responding to adverse economic and industry conditions;
restrict us from making strategic acquisitions, developing properties or exploiting business opportunities; and
limit our ability to react to changing market conditions in the home and local services industries.
Lastly, we and our subsidiaries may incur significant additional indebtedness, including unsecured and additional secured indebtedness. While our term loan agreement contains restrictions on the incurrence of additional indebtedness, these restrictions are subject to several qualifications and exceptions, and additional indebtedness incurred in compliance with these restrictions could be significant. If we or our subsidiaries incur additional indebtedness, the risks described above could increase.
We may not be able to generate sufficient cash to service all of our indebtedness and may be forced to take other actions to service our debt service obligations, which may not be successful.indebtedness.
Our ability to satisfy theour debt service obligations under our term loan agreement will depend upon, among other things:
things, our future financial and operating performance, which will be affected by then prevailing economic conditions and financial, business, regulatory and other factors, many of which are beyond our control; and
our future ability to secure additional financing or otherwise raise capital in the future and/or restructure or refinance our debt, which will largely depend on market and other factors beyond our control, as well as whether we are in compliance with the covenants in our term loan agreement (and/or any other then existing agreement governing our indebtedness).

control.
We cannot assure you that our business willmay not be able to generate sufficient cash flow from our operations or thatto meet our scheduled debt obligations. If so, we will be able to secure additional financing or otherwise raise capital and/or restructure or refinance our indebtedness, in an amount and/or manner sufficient to fund our liquidity needs.
If our cash flows and capital resources are insufficient to service our indebtedness, we maycould be forced to reduce or delay capital expenditures, sell assets or seek additional capital in a manner that complies with the terms (including certain restrictions and limitations) of our current indebtedness. If these efforts do not generate sufficient funds to meet our scheduled debt obligations, we would need to seek additional financing and/or otherwise raise capital,negotiate with our bondholders to restructure or refinance our indebtedness or sell assets. These alternative measures may not be successful and may not permit us to meet our debt service obligations.indebtedness. Our ability to secure additional financing or otherwise raise capital and/or restructure or refinance our indebtedness willdo so would depend on the condition of the capital markets and our financial condition at such time. And new indebtedness debtAny such financing, restructuring or refinancing of existing indebtedness could be at higher interest rateson less favorable terms than those governing our current indebtedness and may require uswould need to comply with more onerous covenants, which could further restrict our business operations. In addition, the terms (including certain restrictions and limitations) of agreements governingour existing or future indebtedness may restrict us from adopting some of these alternatives.
In the absence of these resources, we could face substantial liquidity problems and might be required to dispose of material assets or operations or sell equity in order to meet our debt service obligations. We may not be able to consummate those dispositions for fair market value or at all, and our term loan agreement may restrict, or market or business conditions may limit, our ability to avail ourselves of some or all of these options. Furthermore, any proceeds realized from any such dispositions may not be adequate to meet our debt service obligations.
Variable rate indebtedness under our term loan agreement will subject us to interest rate risk, which could cause our debt service obligations to increase significantly.
We currently have $275 million of indebtedness outstanding under our term loan, which bears interest at variable rates. Indebtedness that bears interest at variable rates exposes us to interest rate risk. At December 31, 2017, our term loan bore interest at LIBOR plus 2.00%, which was 3.38% at December 31, 2017. If LIBOR were to increase or decrease by 100 basis points, then the annual interest expense on the outstanding indebtedness under our term loan would increase or decrease by $2.8 million. See also “Item 7A-Quantitative and Qualitative Disclosures About Market Risk.”indebtedness.
Risks Related to Ownership of Our Class A Common Stock
The multiclass structure of our capital stock has the effect of concentrating voting control with IAC the holder of all of our outstanding shares of Class B common stock, and limiting the ability of holders of our Class A common stock to influence corporate matters.
Each share of our Class B common stock has ten votes per share and each share of our Class A common stock has one vote per share. As of February 2, 2018,December 31, 2021, IAC heldowned all of our outstanding shares of Class B common stock, and 2,588,180 outstanding shares of the Company’s Class A common stock, in total representing economicapproximately 84.5% of our total outstanding shares of capital stock and approximately 98.2%of the total combined voting interests in uspower of approximately 86.8% and 98.5%, respectively.
our outstanding capital stock. Due to the ten-to-one voting ratio between our Class B common stock and Class A common stock, IAC as the holder(and any future holders of all of our shares of outstanding Class B common stock, collectively) will continue to control a substantial majority of the combined voting power of our capital stock. Similarly, any holder(s) of shares of our Class B common stock in the future may continue to control a majority of the combined voting power of our capital stock, even if and when such shares represent a small minority of our total outstanding capital stock. This concentrated control will significantly limit the ability of holders of our Class A common stock to influence corporate matters.matters submitted to our stockholders for approval.
The difference in the voting rights of our Class B common stock and Class A common stock may harm the value and liquidity of our Class A common stock.
Holders ofThis difference in voting rights between our Class B common stock and Class A common stock are entitled to ten votes and one vote per share, respectively. This difference in voting rights could harm the value of our Class A common stock to the extent that any investor or potential future purchaser of our Class A common stock ascribes value to the right of the holders of our Class B common stock to ten votes per share. The existence of two classes of common stock with different voting rights could result in less liquidity for our Class A common stock than if there were only one class of common stock.




The price of our Class A common stock, has been and may continue to be volatile or may decline regardless of our operating performance.
During 2017, our Class A common stock traded as high as $13.74 and as low as $10.24 and on March 13, 2018, the closing price of our Class A common stock was $15.17. The price of our Class A common stock has been and may continue to be subject to wide fluctuations in response to various factors, many of which are beyond our control and may not be related to our operating performance. These fluctuations could cause our stockholders to lose all or part of their investment. Factors that could cause fluctuations in the market price of our Class A common stock include the following:
price and volume fluctuations in the overall stock market from time to time;
volatility in the market prices and trading volumes of technology stocks generally, or those in our industry;
changes in operating performance and stock market valuations of other technology companies generally, or those in our industry;
volatility inadversely affect the price of our Class A common stock due to the limited numberstock.
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Table of shares of our Class A common stock held by the public;Contents
sales of shares of our capital stock by us and/or our directors, executive officers, employees and stockholders;
the failure of analysts to maintain coverage of us, changes in financial estimates by analysts who cover us and/or our failure to meet analyst estimates or investor expectations;
financial projections that we may provide to the public, any changes to such projections or our failure to meet such projections;
announcements of new brands, products or services by us or our competitors;
public reaction to our earnings releases, other public announcements and filings with the SEC;
rumors and market speculation involving us or other companies in our industry;
actual or anticipated changes in our operating results or fluctuations in our operating results;
actual or anticipated developments in our business (or those of our competitors) or the competitive landscape generally;
litigation involving us, our industry or both, or regulatory investigations involving our operations or those of our competitors;
developments or disputes concerning our intellectual property or other proprietary rights;
announced or completed acquisitions by us or our competitors;
new laws or regulations or new interpretations of (or changes to) existing laws or regulations applicable to our business;
changes in accounting standards, policies, guidelines, interpretations or principles;
any significant change in our management; and
general economic conditions and slow or negative growth in any of our significant markets.
In addition, in the past, following periods of volatility in the overall market and the market price of a particular company’s securities, securities class action litigation has often been instituted against these companies. Securities litigation against us, could result in substantial costs and a diversion of our management's attention and resources. This type of litigation, if instituted against us, could result in substantial costs and a diversion of our management's attention and resources.

We do not expect to pay any cash dividends in the foreseeable future.
We have never declared or paid cash dividends and we currently have no current plans to pay cash dividends on our Class A common stock andand/or Class B common stock, andstock. Instead, we currently anticipate that all of our future earnings will be retained to support our operations and finance the growth and development of our business. Any future determination relating to our dividend policy will be made by our board of directors and will depend on a number of factors, including:
our historic and projected financial condition, liquidity and results of operations;
our capital levels and needs;
tax considerations;
any acquisitions that we may consider;
statutory and regulatory prohibitions and other limitations;
the terms of any credit agreement or other borrowing arrangements that restrict our ability to pay cash dividends, including our term loan agreement;
dividends; general economic conditions; and
other factors deemed relevant by our board of directors.
We are not obligated to pay dividends on our Class A common stock or Class B common stock. Consequently, investors may need to rely on sales on their Class A common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investment.
The DGCLDelaware General Corporation Law and certain provisions in our amended and restated certificate of incorporation and bylaws may discourage, delay or prevent a change of control of our company and/or changes in our management, which could cause the price of our Class A common stock to decline.management.
The DGCLDelaware General Corporation Law (the “DGCL”) and our amended and restated certificate of incorporation and bylaws contain provisions that could discourage, delay or prevent a change in control of our company Company and/or changes in our management that our stockholders may deem advantageous, including provisions which:
that: (i) authorize the issuance of “blank check” preferred stock, thatwhich our board of directors could issue to increase the number of outstanding shares and to discourage a takeover attempt;
(ii) limit the ability of our stockholders to call special meetings of stockholders;
provide that certain litigation against our company can only be brought in Delaware; and
(iii) provide that our board of directors is expressly authorized to make, alter or repeal our bylaws.
Any provision of the DGCL or our amended and restated certificate of incorporation and bylaws that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a related premium for their Class A common stock and could also affect the price that some investors are willing to pay for our Class A common stock.
OurThe choice of forum provision in our amended and restated bylaws provide that a state or federal court within Delaware will be the sole and exclusive forum for certain disputes between us and our stockholders, which could limit the ability of our stockholders to obtain the judicial forum of their choice for disputes with us or our current or former directors, officers or employees.certain disputes.
Our amended and restedrestated bylaws provide that unless we consent in writing to the selection of an alternative forum, a state court within the State of Delaware (or, if no state court located within Delaware has jurisdiction, the federal district court for the District of Delaware) will be the sole and exclusive forum for all of the following actions: (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim for or(or based on breach ofof) fiduciary duty owed by any of our current or former directors, officers or other employees to us or to our stockholders, (iii) any action asserting a claim against us or any of our current or former directors, officers or other employees pursuant to the Delaware General Corporation Law (the

“DGCL”),DGCL, our certificate of incorporation or our bylaws, (iv) any action asserting a claim relating to or involving us that is governed by the internal affairs doctrine or (v) any action asserting an “internal corporate claim” (as defined under the DGCL).
The This choice of forum provision may limit the ability of our stockholders to bring claims in a judicial forum that they find favorable for disputes with us or our current or former directors, officers or other employees, which may discourage such lawsuits. Alternatively, if a court were to find our choice of forum provision to be inapplicable or unenforceable in an action, we could incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, results of operations, and financial condition.
Given the multiclass structure of our capital stock, ourOur Class A common stock is currently ineligible for inclusion in certain stock market indices including the S&P Composite 1500 (and its three component indices) and all indices managed by FTSE Russell. Exclusion from these (and potentially other) stock market indices could reduce the liquidity of and demand for our Class A common stock, which in turn couldmay adversely affect the price oftrading market for our Class A common stock.
Policies adopted by certain operators of U.S. stock market indices exclude equity securities of companies with multiple classes of outstanding publicly traded equity securities and/or companies with outstanding classes of publicly traded equity securities that have no voting rights (or “low” voting rights relative to another outstanding class of equity securities) from their stock indices. For example, the S&P Dow Jones Indices exclude companies with multiple share class structures from being added to the S&P Composite 1500 (and its three component indices)indices and FTSE Russell, which manages multiple stock market indices (including many in the United States), excludes from the indices it manages any company with 5% or less of its voting rights (aggregated across all of its equity securities, including those that are not listed or trading) held by “unrestricted (free-float) shareholders” (as defined by FTSE Russell). Similarsimilar policies may be announced or implemented in the future by other operators of stock market indices.indices in the future. Given the multiclass structure of our capital stock and IAC’s control over us, our Class A common stock is not currently eligible for inclusion in the S&P Composite 1500 (and its three component indices) and any indices managed by FTSE Russell.Russell and, as a result, mutual funds, exchange-traded funds and other investment vehicles that attempt to passively track these indices will not be investing in our stock. Exclusion from these stock market indices (and any others in the future) could reduce the liquidity of and demand formake our Class A common stock less attractive which in turn could adversely affect the market price of our Class A common stock.
Item 1B.    Unresolved Staff Comments
Not applicable.
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Item 2.    Properties
We believe that the facilities for our management and operations are generally adequate for our current and near-term future needs. Our facilities, most of which are leased, in the United States and abroad, consist of executive and administrative offices, sales offices and data centers. We do not anticipate any future problems renewing or obtaining suitable leases for us or any of our businesses. We currently lease approximately 127,000152,000 square feet of office for our corporate headquarters, Angi business and administrative and sales force personnel in Golden, Colorado, which also houses offices for our Marketplace business.Denver, Colorado.
Item 3.    Legal Proceedings
Overview
In the ordinary course of business, the Company and its subsidiaries are (or may become) parties to litigationclaims, suits, regulatory and government investigations, and other proceedings involving property, personal injury, contract, intellectual property, privacy, tax, labor and employment, competition, commercial disputes, consumer protection and other claims, as well as stockholder derivative actions, class action lawsuits and other matters. Such claims, suits, regulatory and government investigations, and other proceedings could result in fines, civil or criminal penalties, or other adverse consequences. The amounts that may be recovered in such matters may be subject to insurance coverage. Although the results of legal proceedings and claims cannot be predicted with certainty, neither the Company nor any of its subsidiaries is currently a party to any legal proceedings the outcome of which, we believe, if determined adversely to us, would individually or in the aggregate have a material adverse effect on our business, financial condition or results of operations. However, the outcome of such matters is inherently unpredictable and subject to significant uncertainties.
Rules of the Securities and Exchange Commission require the description of material pending legal proceedings (other than ordinary, routine litigation incident to the registrant’s business) and advise that proceedings ordinarily need not be described if they primarily involve damages claims for amounts (exclusive of interest and costs) not exceeding 10% of the current assets of the registrant and its subsidiaries on a consolidated basis. In the judgment of Company management, none of the pending litigation matters which we are defending, including the one described below, involves or is likely to involve amounts of that magnitude. The litigation matter and the investigationdescribed below involves issues or claims that may be of particular interest to

our stockholders, regardless of whether this matter may be material to our financial position or operations based upon the standard set forth in the rules of the Securities and Exchange Commission.

FTC Investigation of Certain HomeAdvisor Business Practices

On April 19, 2021, the staff of the Federal Trade Commission (“FTC”) informed HomeAdvisor that upon investigation it believes that certain of HomeAdvisor’s business practices relating to leads provided to service professionals and its mHelpDesk product are unfair or deceptive in violation of the FTC Act. The Company and FTC have been engaged in discussions about the staff’s beliefs, and those discussions are ongoing. While HomeAdvisor believes that any such claims would be without merit and is prepared to defend vigorously against any enforcement proceeding, it is continuing a dialogue with the FTC to discuss the matter and cannot currently predict the outcome of this investigation and related discussions.

Service Professional Class Action Litigation against HomeAdvisor
In July 2016, a putative class action, Airquip, Inc. et al. v. HomeAdvisor, Inc. et al., No. l:1:16-cv-1849, was filed in the U.S. District Court for the District of Colorado. The complaint, as amended in November 2016, alleges that our HomeAdvisor business engages in certain deceptive practices affecting the service professionals who join its network, including charging them for substandard customer leads orand failing to disclose certain charges. The complaint seeks certification of a nationwide class consisting of all HomeAdvisor service professionals since October 2012, asserts claims offor fraud, breach of implied contract, unjust enrichment and violation of the federal RICO statute and the Colorado Consumer Protection Act ("CCPA"(“CCPA”) and the federal RICO statute, and seeks injunctive relief and damages in an unspecified amount.

In December 2016, HomeAdvisorJuly 2018, the plaintiffs’ counsel filed a separate putative class action in the U.S. District Court for the District of Colorado, Costello et al. v. HomeAdvisor, Inc. et al., No. 1:18-cv-1802, on behalf of the same nine proposed new plaintiffs in the Airquip case, naming as defendants HomeAdvisor, Angi and IAC (as well as an unrelated company), and asserting 45 claims largely duplicative of those asserted in the proposed second amended complaint in the Airquip case. In November 2018, the judge presiding over the Airquip case issued an order consolidating the two cases to proceed before him under the caption In re HomeAdvisor, Inc. Litigation.

In January 2019, the plaintiffs renewed their motion for leave to dismissfile a consolidated second amended complaint, naming as defendants, in addition to HomeAdvisor, Angi and IAC, CraftJack, Inc. (a wholly-owned subsidiary of the RICOCompany and CCPA claims.thus, an entity affiliated with HomeAdvisor) and two unrelated entities. In February 2019, the defendants opposed the motion on
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various grounds. In September 2017,2019, the court issued an order granting the motion and dismissing those claims.plaintiffs’ motion. In October 2017,and December 2019, the four defendants affiliated with HomeAdvisor filed an answer denying the material allegations of the remainingmotions to dismiss certain claims in the amended complaint. On September 29, 2020, the court issued an order granting in part and denying in part the defendants’ motions to dismiss. Discovery is under way andin the case will close during 2022, after which the parties will begin litigating the issue of class certification remains to be litigated. certification.
The Company believes that the allegations in this lawsuit are without merit and will continue to defend vigorously against them.
Item 4.    Mine Safety Disclosures
Not applicable.
PART II
Item 5. Market for Registrant'sRegistrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market for Registrant'sRegistrant’s Common Equity and Related Stockholder Matters

Our Class A common stock is quoted on The Nasdaq Global Select Market ("NASDAQ"(“NASDAQ”) under the ticker symbol "ANGI." Our Class A common stock commenced trading on NASDAQ on October 2, 2017. Prior to October 2, 2017, there was no established trading market for our Class A common stock and there“ANGI.” There is no established public trading market for our Class B common stock. For the period from October 2, 2017 to December 31, 2017, the high and low sales prices per share for our Class A common stock as reported on NASDAQ were $13.74 and $10.24, respectively. On March 13, 2018, the closing price of our Class A common stock on NASDAQ was $15.17.

As of February 2, 2018,11, 2022, there were 440 holders of record of our Class A common stock. Because the substantial majority of the outstanding shares of our Class A common stock are held by brokers and other institutions on behalf of shareholders, we are not able to estimate the total number of beneficial shareholders represented by these record holders. As of February 2, 2018,11, 2022, there was one holder of record and beneficial shareholder of our Class B common stock.

Dividend Policy

Dividends
We have no current plansdo not currently expect that any cash or other dividends will be paid to pay dividends onholders of our Class A common stock or Class B common stock and, we currently anticipate that all of our future earnings will be retained to support our operations and to financein the growth and development of our business.near future. Any future cash dividend or other dividend declarations are subject to the determination relating to our dividend policy will be made by our board of directors and will depend on a numberthe Company’s Board of factors, including our financial condition, earnings, capital requirements, covenants associated with our debt obligations, legal requirements, regulatory constraints, general economic conditions and other factors deemed relevant by our board of directors.

Directors.
Unregistered Sales of Equity Securities

The Employee Matters Agreement dated as of September 29, 2017, by and between us and IAC (the “Employee Matters Agreement”), provides, among other things, that we will reimburse IAC for the cost of any IAC equity awards held by our current and former employees and that IAC may elect to receive payment either in cash or sharesThere were no unregistered sales of our Class B common stock.

Pursuant tocapital stock during the Employee Matters Agreement, 432,682 shares of Class B common stock were issued to IAC onquarter ended December 31, 2017 as reimbursement for shares of IAC common stock issued in connection with the exercise of IAC stock options held by our employees. This issuance did not involve any underwriters or public offerings and we believe that such issuance was

exempt from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"), pursuant to Section 4(a)(2) of such act.


2021.
Issuer Purchases of Equity Securities

The Company did not purchase any shares of its Class A common stock during the quarter ended December 31, 2017.2021. As of that date, 16.1 million shares of ANGI Class A common stock remained available for repurchase under the Company's previously announced March 2020 repurchase authorization. The Company may repurchase shares pursuant to this repurchase authorization over an indefinite period of time in the open market and in privately negotiated transactions, depending on those factors Company management deems relevant at any particular time, including, without limitation, market conditions, share price and future outlook. From January 1, 2022 through February 11, 2022, the Company repurchased approximately 1.0 million shares at an average price of $7.80 per share. As of February 11, 2022, there were approximately 15.0 million shares remaining in the March 2020 share repurchase authorization.

Item 6.    Selected Financial DataReserved
The consolidated and combined statement of operations data set forth in the table below for the years ended December 31, 2017, 2016, 2015 and 2014 and the consolidated and combined balance sheet data as of December 31, 2017, 2016 and 2015 have been derived from our audited consolidated and combined financial statements. The combined statement of operations data for the year ended December 31, 2013 and the combined balance sheet data as of December 31, 2014 and 2013 have been derived from the consolidated financial statements and accounting records of IAC/ InterActiveCorp. This selected financial data should be read in conjunction with the consolidated and combined financial statements and accompanying notes included herein.
 Years Ended December 31,
 2017 2016 2015 2014 2013
         (unaudited)
 (In thousands, except per share data)
Statement of Operations Data:(a)
         
Revenue$736,386
 $498,890
 $361,201
 $283,541
 $239,471
Net (loss) earnings(104,527) 10,631
 (3,996) (2,220) (8,663)
Net loss attributable to noncontrolling interests1,409
 2,497
 2,671
 457
 200
Net (loss) earnings attributable to ANGI Homeservices Inc. shareholders(103,118) 13,128
 (1,325) (1,763) (8,463)
Per share information attributable to ANGI Homeservices Inc. shareholders:    
Basic (loss) earnings per share$(0.24) $0.03
 $(0.00) $(0.00) $(0.02)
Diluted (loss) earnings per share$(0.24) $0.03
 $(0.00) $(0.00) $(0.02)
 December 31,
 2017 2016 2015 2014 2013
       (unaudited) (unaudited)
 (In thousands)
Balance Sheet Data:         
Total assets$1,467,262
 $295,517
 $203,576
 $200,630
 $190,631
Long-term debt:         
Current portion of long-term debt13,750
 
 
 
 
Long-term debt, net258,312
 
 
 
 
Long-term debt—related party, including current portion2,813
 49,838
 16,350
 16,350
 16,350

(a)
We recognized items that affected the comparability of results for the years 2017, 2016 and 2015, see "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations."


Item 7.    Management'sManagement’s Discussion and Analysis of Financial Condition and Results of Operations
GENERAL
Management Overview
Angi Inc., formerly ANGI Homeservices, Inc. ("ANGI Homeservices,", (“Angi,” the "Company," "we," "our,"“Company,” “we,” “our,” or "us"“us”) is the world's largest digital marketplace for home services, connecting millions of homeowners across the globe withconnects quality home service professionals. ANGI Homeservices operates leadingprofessionals with consumers across more than 500 different categories, from repairing and remodeling homes to cleaning and landscaping. As of December 31, 2021, Angi had a network of approximately 240,000 transacting service professionals, each of whom paid for consumer matches and/or performed a job sourced or booked through Angi Ads and
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Leads and/or Angi Services. Collectively, this service professional network provided services in more than 175 categories, ranging from cleaning and installation services to simple home repairs and larger home remodeling projects, and 64 discrete geographic areas in the United States. Additionally, consumers turned to at least one of our brands in eight countries, including HomeAdvisor® and Angie's List® (United States), HomeStars (Canada), Travaux.com (France), MyHammer (Germany and Austria), MyBuilder (UK), Werkspot (Netherlands) and Instapro (Italy).to find a professional for approximately 33 million projects during the year ended December 31, 2021.
The Company ownshas 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 (formerly Angie’s List) brand, Angi Leads operates primarily under the HomeAdvisor, digital marketplace inpowered by Angi brand, and Angi Services operates primarily under the United States (the “Marketplace”), which connects consumers withHandy and Angi Roofing brands.
Angi Ads provides service professionals nationwide for home repair, maintenancethe capability to engage with potential customers, including quote, invoicing, and improvement projects. The Marketplacepayment services. Angi Leads 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. Angi Services allows consumers to browse and buy common household services at set prices directly from Angi, rather than requesting quotes from vetted service professionals, as well as instantly book appointments online for household services (primarily cleaning and handyman services) with those professionals online top-quality, pre-screened independent service professionals. Consumers can request and pay for household services directly through the Angi platform and Angi fulfills the request through the use of independently established home services providers engaged in a trade, occupation and/or connect with them by telephone. Effective September 29, 2017,business that customarily provides such services. The matching and pre-priced booking services and related tools and directories are provided to consumers free of charge. Angi Services also includes roof replacement services fulfilled via the Angi Roofing, LLC business.

In the U.S., the Company also owns and operates Angie’s List, which connects consumers with service professionals for local services through a nationwide online directory of service professionals in over 700 service categories and provides consumers with valuable tools, services and content, including more than ten million verified reviews of local service professionals, to help them research, shop and hire for local services. We also own and operate mHelpDesk, CraftJack and Felix.
As of December 31, 2017, the Company had a network of approximately 181,000 Marketplace Paying Service Professionals providing services in more than 500 categories and 400 discrete markets in the United States, ranging from simple home repairs to larger home remodeling projects. The Company generated approximately 18.1 million Marketplace Service Requests from consumers during the year ended December 31, 2017. As of December 31, 2017, the Company also had approximately 45,000 Angie's List Advertising Service Professionals. See "Operating Metrics" section below.
The Company has two operating segments: (i) North America, which primarily includes HomeAdvisor's operations in the United States, Angie's List, mHelpDesk and HomeStars, and (ii) Europe, which includes Travaux.com, MyHammer, MyBuilder, Werkspot and Instapro.
The Company markets its services to consumers through search engine marketing, television advertising, and affiliate agreements with third parties. Pursuant to these affiliate agreements, third parties agree to advertise and promote Marketplace products and services and those of Marketplace service professionals on their platforms. In exchange for these efforts, the Company generally pays these third parties a fixed fee when visitors from their platforms click through to one of our platforms and submit a valid service request through the Marketplace, or when visitors submit a valid service request on the affiliate platform and the affiliate transmits the service request to the Marketplace. The Company also markets its services to consumers through email, digital display advertisements, partnerships with other contextually related websites and, to a lesser extent, through relationships with certain retailers, direct mail and radio advertising. The Company markets subscription packages and time-based advertising to service professionals primarily through its sales force, as well as through search engine marketing, digital media advertising, and direct relationships with trade associations and manufacturers. We have made, and expect to continue to make, substantial investments in digital and traditional advertising (with continued expansion into new and existing digital platforms) to consumers and service professionals to promote our products and services and to drive traffic to our various platforms and service professionals.
Combination
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Defined Terms and AcquisitionsOperating Metrics:
On September 29, 2017, IAC's HomeAdvisor business and Angie's List Inc. ("Angie's List") combined under a new publicly traded company called ANGI Homeservices Inc. (the "Combination"). At December 31, 2017, IAC owned 86.9% and 98.5% ofUnless otherwise indicated or as the economic and voting interest, respectively, of ANGI Homeservices. See "Note 4—Business Combinations" tocontext otherwise requires, certain terms, which include the consolidated and combined financial statements included in "Item 8. Consolidated and Combined Financial Statements and Supplementary Data" for additional information related to the Combination. During the year ended December 31, 2017, the Company incurred $44.1 million in costs related to this transaction (including severance, retention, transaction and integration related costs) as well as deferred revenue write-offs of $7.8 million. The Company expects the remaining aggregate amount of transaction-related expenses, including deferred revenue write-offs, during 2018 to be in the range of $10 million to $20 million. The Company also incurred $122.1 million in stock-based compensation expense during 2017 related to the modification of previously issued HomeAdvisor vested and unvested equity awards, which were converted into ANGI Homeservices' equity awards, the expense related to previously issued Angie's List equity awards and the acceleration of certain Angie's List equity awards resulting from the termination of employees in connection with the Combination. Stock-

based compensation expense arising from the Combination is expected to be approximately $70 million in 2018. On November 1, 2017, the Company borrowed $275 million under a five-year term loan facility.
On March 24, 2017, the Company acquired a controlling interest in MyBuilder Limited (“MyBuilder”), a leading home services platform in the United Kingdom, which is included in our Europe segment.
On February 8, 2017, the Company acquired a controlling interest in HomeStars Inc. (“HomeStars”), a leading home services platform in Canada, which is included in our North America segment.
On November 3, 2016, the Company acquired a controlling interest in MyHammer Holding AG (“MyHammer”), the leading home services marketplace in Germany, which is included in our Europe segment.
Operating Metrics
In connection with the management of our businesses we identify, measure and assess a variety ofprincipal operating metrics. The principal metrics we use in managing our business, are set forthdefined below:
Marketplace (formerly Domestic)Angi Ads and Leads Revenue includes primarily reflects domestic ads and leads revenue, from the HomeAdvisor domestic marketplace service, including consumer connection revenue for consumer matches, and membership subscription revenue from service professionals. It excludes other operating subsidiaries within the North America segment.
Advertising & OtherRevenue includes Angie’s List revenue (revenue from service professionals under contract for advertising and membership subscription fees from consumers) as well as revenue from mHelpDesk, HomeStarsservice professionals and Felix.
consumers.

Marketplace (formerly Domestic)Angi Services Revenue primarily reflects domestic revenue from pre-priced offerings by which the consumer purchases services directly from the Company and the Company engages a service professional to perform the service and includes revenue from Total Home Roofing, Inc. (“Angi Roofing”), which was acquired on July 1, 2021.

Angi Service Requests (“Service Requests”) are fully completed and submitted domestic customer service requests on HomeAdvisor.
and includes Angi Services requests in the period.
Angi Monetized Transactions are fully completed and submitted domestic customer service requests that were matched to and paid for by a service professional and includes completed and in-process Angi Services jobs in the period.
Marketplace (formerly Domestic) PayingAngi Transacting Service Professionals (or “Marketplace Paying(“Transacting SPs”) are the number of HomeAdvisor domestic service professionals that had an active membership and/or paid for consumer matches inthrough Angi Leads or performed an Angi Services job during the last month of the period.
most recent quarter.
Angie's ListAngi Advertising Service Professionals (“Advertising SPs”) are the total number of Angie’s List service professionals under contract for advertising at the end of the period.
Senior Notes - On August 20, 2020, ANGI Group, LLC (“ANGI Group”), a direct wholly-owned subsidiary of the Company, issued $500.0 million of its 3.875% Senior Notes due August 15, 2028, with interest payable February 15 and August 15 of each year, commencing February 15, 2021.

Components of Results of Operations
Sources of Revenue
MarketplaceAngi Ads and Leads Revenue is primarily derived from (i) advertising revenue, which includes revenue from service professionals under contract for advertising, (ii) consumer connection revenue, which includesis comprised of fees paid by service professionals for consumer matches (regardless of whether the service professional ultimately provides the requested service), and (ii)(iii) membership subscription fees paid byrevenue from service professionals.professionals and consumers. Consumer connection revenue varies based upon several factors, including the service requested, type of match (such as Instant Booking, Instant Connect, Same Day Service or Next Day Service)product experience offered, and geographic location of service. The Company’s consumer connection revenueAngi Services is generated and recognized when an in-network service professional is delivered a consumer match. Membership subscription revenue is generated through subscription sales to service professionals and is deferred and recognized over the termprimarily comprised of the applicable membership. Membership agreements can be one month, three months, or one year.
Effective with the Combination, revenue is also derived from Angie's List (i) sales of time-based advertising to service professionals and (ii) membership subscription fees from consumers. Angie's List Advertising 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. These contracts include an early termination penalty. Angie's List revenue from jobs (i) sourced through the sale“Book Now” feature which lets consumers complete booking the entire transaction digitally for work that is completed physically, (ii) under managed projects (including Angi Roofing) which are larger home improvement projects, and (iii) through retail partnerships for installation of website, mobilefurniture or other household items.
29


Operating Costs and call center advertising is recognized ratably over the period during which the advertisements run. Revenue from the sale of advertising in the Angie’s ListMagazine is recognized in the period in which the publication is published and distributed. Angie's List prepaid consumer membership subscription fees are recognized as revenue ratably over the term of the associated subscription, which is typically one year.Expenses:
Deferred revenue is $64.1 million and $18.8 million at December 31, 2017 and 2016, respectively. The balance at December 31, 2017 includes Angie's List deferred revenue of $37.7 million.

Cost of revenue
Cost of revenue -consists primarily of traffic acquisition costs,payments made to independent service professionals who perform work contracted under Angi Services arrangements, credit card processing fees, hosting fees, and hosting fees. Traffic acquisitionroofing materials costs include amounts based on revenue share arrangements.associated with Angi Roofing.
Selling and marketing expense
Selling and marketing expense - consists primarily of advertising expenditures, which include online marketing, including fees paid to search engines,engines; offline marketing, which is primarily television advertising,advertising; and partner-related payments to those who direct traffic to our brands, andbrands; compensation expense (including stock-based compensation expense) and other employee-related costs for personnel engaged in sellingour sales force and marketing personnel; and sales support.facilities costs.
General and administrative expense
General and administrative expense - consists primarily of compensation expense (including stock-based compensation expense) and other employee-related costs for personnel engaged in executive management, finance, legal, tax, human resources and customer service functions, fees for professional services bad debt expense, facilities(including transaction-related costs andrelated to acquisitions), provision for credit losses, software license and maintenance costs, and facilities costs. Our customer service function includes personnel who provide support to our service professionals and consumers.
Product development expense
Product development expense - consists primarily of compensation expense (including stock-based compensation expense) and other employee-related costs that are not capitalized for personnel engaged in the design, development, testing and enhancement of product offerings and related technology.technology, software license and maintenance costs, and facilities costs.
Non-GAAP financial measure
Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”) is a non-GAAP financial measure. See “Principles of Financial Reporting” for the definition of Adjusted EBITDA.EBITDA and a reconciliation of net loss attributable to Angi Inc. shareholders to operating loss to consolidated Adjusted EBITDA for the years ended December 31, 2021 and 2020.

ResultsThe following discussion should be read in conjunction with Item 8. Consolidated Financial Statements and Supplementary Data. For a discussion regarding our financial condition and results of operations for the Years Ended December 31, 2017, 2016 and 2015
Revenue
 Years Ended December 31,
 2017 $ Change % Change 2016 $ Change % Change 2015
 (Amounts in thousands)
Revenue:             
Marketplace:             
Consumer connection revenue$521,481
 $139,015
 36% $382,466
 $113,157
 42 % $269,309
Membership subscription revenue56,135
 12,562
 29% 43,573
 19,409
 80 % 24,164
Other revenue3,798
 971
 34% 2,827
 (596) (17)% 3,423
Total Marketplace Revenue581,414
 152,548
 36% 428,866
 131,970
 44 % 296,896
Advertising & Other Revenue97,483
 64,502
 196% 32,981
 10
  % 32,971
North America678,897
 217,050
 47% 461,847
 131,980
 40% 329,867
Europe57,489
 20,446
 55% 37,043
 5,709
 18% 31,334
Total Revenue$736,386
 $237,496
 48% $498,890
 $137,689
 38% $361,201
              
Percentage of Total Revenue:             
North America92%     93%     91%
Europe8%     7%     9%
Total Revenue100%     100%     100%
              
Operating metrics:

             
Marketplace Service Requests18,129
 4,921
 37% 13,208
 3,377
 34 % 9,831
Marketplace Paying SPs181
 38
 26% 143
 42
 41 % 102
Angie's List Advertising Service Professionals45
 NA
 NA
 
 NA
 NA
 
________________________
NA = Not applicable
For the year ended December 31, 20172020 compared to the year ended December 31, 20162019, please refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, filed with the SEC on February 16, 2021.
Brand Integration Initiative
In March 2021, the Company changed its name to Angi Inc. and updated one of its leading websites and brands, Angie’s List, to Angi, and since then, has concentrated its marketing investment in the Angi brand in order to focus its marketing, sales, and branding efforts on a single brand.
We rely heavily on free, or organic, search results from search engine optimization, and paid search engine marketing to drive traffic to our websites. Our brand integration initiative has adversely affected the placement and ranking of Angi Inc. websites, particularly Angi.com, in organic search results as Angi does not have the same domain history as Angie’s List. In addition, we shifted marketing to support Angi, away from HomeAdvisor, which has negatively affected the efficiency of our search engine marketing efforts.
Since the beginning of the integration process, these efforts have had a pronounced negative impact on service requests from organic search results and via our mobile applications, which in turn has resulted in increased paid search engine marketing to generate service requests. These factors have increased marketing spend and reduced revenue during the year ended December 31, 2021, materially more than expected at the launch of the brand initiative in March 2021. We expect the pronounced negative impact to organic search results, the increased paid search engine marketing costs and the reduced monetization from our mobile applications to continue until such time as the new brand establishes search engine optimization ranking and consumer awareness is established.
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Angi Services Investment

Angi Services was launched in August 2019 and we have invested significantly in Angi Services and expect to continue to do so going forward. We expect significant future revenue growth as we expand the business, refine the overall experience, and increase penetration in certain geographies and service categories. This increased investment in Angi Services has contributed to losses for the Company for the year ended December 31, 2021 and this investment is expected to continue through at least 2023.
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.
As previously disclosed, the impact of COVID-19 on the Company 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 the second half of 2020 and through early 2021, service requests did start to decline in May 2021 compared to the comparable months of 2020 as a result of the surge in 2020 and due to impacts of the Brand Integration Initiative described above. Moreover, many service professionals’ businesses have been adversely impacted by labor and material constraints and many service professionals have limited capacity to take on new business, which continues to negatively impact our ability to monetize the slightly increased level of service requests. Although our ability to monetize service requests rebounded modestly in the second half of 2021, we still have not returned to levels we 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 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.
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Table of Contents
Results of Operations for the Years Ended December 31, 2021 and 2020
Revenue
Years Ended December 31,
2021$ Change% Change2020
(Dollars in thousands)
North America
Angi Ads and Leads:
Consumer connection revenue$896,711 $(2,464)—%$899,175 
Advertising revenue252,010 25,505 11%226,505 
Membership revenue68,062 (6,011)(8)%74,073 
Other revenue27,812 (5,324)(16)%33,136 
Total Angi Ads and Leads revenue1,244,595 11,706 1%1,232,889 
Angi Services revenue357,976 195,437 120%162,539 
Total North America revenue1,602,571 207,143 15%1,395,428 
Europe82,867 10,370 14%72,497 
Total revenue$1,685,438 $217,513 15%$1,467,925 
Percentage of Total Revenue:
North America95 %95 %
Europe%%
Total revenue100 %100 %
Years Ended December 31,
2021Change% Change2020
(In thousands, rounding differences may occur)
Operating metrics:
Service Requests32,730 318 1%32,412 
Monetized Transactions17,942 1,270 8%16,672 
Transacting SPs(a)
206 (2)(1)%208 
Advertising SPs38 (2)(4)%39 

(a)Angi Transacting Service Professionals (“Transacting SPs”) are the number of service professionals that paid for consumer matches through Angi Leads or performed an Angi Services job during the most recent quarter.

North America revenue increased $217.1$207.1 million, or 47%15%, due todriven by increases in Angi Services revenue of $152.5$195.4 million, or 36%120%, in Marketplace Revenue and $64.5Angi Ads and Leads revenue of $11.7 million, or 196%, in Advertising & Other Revenue.1%. The increase in Marketplace RevenueAngi Services revenue is due to an increase of $139.0 million, or 36%, in consumer connection revenue, which was driven by a 37% increase in Marketplace Service Requests to 18.1 million and an increase of $12.6 million, or 29%, in membership subscription revenue due to a 26% increase in Marketplace Paying SPs to 181,000. Advertising & Other Revenue in 2017 includes $58.9 million from Angie's List since the date of the Combination, which reflects a reduction in revenue of $7.8 million due to the write-off of deferred revenue related to the Combination.
Europe revenue grew $20.4 million, or 55%, driven by the acquisitions of controlling interests in MyHammer on November 3, 2016 and MyBuilder on March 24, 2017, as well as organic growth across other regions.
For the year ended December 31, 2016 compared to the year ended December 31, 2015
North America revenue increased $132.0 million, or 40%, due to an increase of $132.0 million, or 44%, in Marketplace Revenue. The increase in Marketplace Revenue is due to an increase of $113.2 million, or 42%, in consumer connection revenue, which was driven by a 34% increase in Marketplace Service Requests to 13.2 million and an increase of $19.4 million, or 80%, in membership subscription revenue due to a 41% increase in Marketplace Paying SPs to 143,000.

Europe revenue grew $5.7 million, or 18%, driven by an increase of $4.8 million, or 21%, in consumer connection revenue due primarily to organic growth and, to a lesser extent from Angi Roofing, acquired July 1, 2021. The increase in Angi Ads and Leads revenue is due primarily to an increase in Advertising revenue of $25.5 million, or 11%.
Europe revenue increased $10.4 million, or 14%, due to growth across all regions, as well asits markets from increased consumer demand and the acquisitionfavorable impact of a controlling interest in MyHammer.the weakening of the U.S dollar relative to the Euro and the British Pound.

Cost of revenue (exclusive of depreciation)
Years Ended December 31,
2021$ Change% Change2020
(Dollars in thousands)
Cost of revenue (exclusive of depreciation shown separately below)$325,880 $152,599 88%$173,281 
As a percentage of revenue19%12%
 Years Ended December 31,
 2017 $ Change % Change 2016 $ Change % Change 2015
 (Dollars in thousands)
Cost of revenue$34,073 $8,215 32% $25,858 $2,922 13% $22,936
Percentage of revenue5%     5%     6%
For the year ended December 31, 2017 compared to the year ended December 31, 2016
North America cost of revenue increased $7.2$152.6 million, or 28%89%, driven by increasesand increased as a percentage of $4.2 revenue, due primarily to the organic growth of Angi Services resulting in increased payments to third-party professional service providers and $51.2
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million in credit card processing fees, dueof costs attributable to higher Marketplace Revenue and, $1.4 million from the inclusion of Angie's List,Angi Roofing acquired July 1, 2021, primarily for roofing materials and $2.1 million in hosting fees, of which $1.3 million was from the inclusion of Angie's List, partially offset by a reduction in traffic acquisition costs of $0.4 million.
Europe cost of revenue increased $1.0 million, or 383%, driven by an increase of $0.9 million in hosting fees.
For the year ended December 31, 2016 compared to the year ended December 31, 2015
North America cost of revenue increased $2.8 million, or 12%, driven by increases of $1.9 million in credit card processing fees due to higher revenue and $0.6 million in traffic acquisition costs.third-party contractors.
Selling and marketing expense
Years Ended December 31,
2021$ Change% Change2020
(Dollars in thousands)
Selling and marketing expense$883,643 $121,053 16%$762,590 
As a percentage of revenue52%52%
 Years Ended December 31,
 2017 $ Change % Change 2016 $ Change % Change 2015
 (Dollars in thousands)
Selling and marketing expense$464,040 $157,327 51% $306,713 $80,837 36% $225,876
Percentage of revenue63%     61%     63%
For the year ended December 31, 2017 compared to the year ended December 31, 2016
North America selling and marketing expense increased $142.8$122.5 million, or 50%17%, driven by increases in advertising expense of $63.6 million, compensation expense of $36.9 million, consulting costs of $11.1 million, and $14.0 million in expense from the inclusion of Angi Roofing. The increase in advertising expense was due primarily to increases of $52.8 million in online marketing spend and $9.6 million in television spend. The increase in online marketing spend was attributable to the brand integration initiative described above under “Brand Integration Initiative.” The increase in television spend in 2021 reflects the return to historical spending levels as compared to the cost cutting initiatives during 2020 due to the impact of COVID-19. The increase in compensation expense was due primarily to increased commission expense, in addition to an increase in sales force headcount, net of an equity based compensation capitalization increase. The increase in consulting costs was due primarily to various sales initiatives at Angi Services.
Europe selling and marketing expense decreased $1.5 million, or 4%, driven by a decrease in compensation expense of $3.7 million, partially offset by an increase in online and offline marketingadvertising expense of $73.3 million, of which $5.3 million was from the inclusion of Angie's List, an increase of $62.4 million$2.6 million. The decrease in compensation expense of which $24.4 million was from the inclusion of Angie's List, as well as $2.5 million of expense from the acquisition of HomeStars.primarily due to severance costs recorded in 2020 associated with headcount reductions in France and lower headcount in 2021. The increase in marketing isadvertising expense was due, primarilyin part, to increased organic investment including television spend. Compensationdecreased advertising expense in 2020 to mitigate the negative impact of COVID-19 on revenue.

General and administrative expense
Years Ended December 31,
2021$ Change% Change2020
(Dollars in thousands)
General and administrative expense$405,819 $31,723 8%$374,096 
As a percentage of revenue24%25%
North America general and administrative expense increased $24.5 million, or 7%, due primarily to an increase of $24.9$25.5 million in professional fees, $10.8 million of expense from the inclusion of Angi Roofing, $9.6 million in one-time costs related to the Company reducing its real estate footprint in 2021, increases of $7.5 million in the provision for credit losses, and $6.9 million in software license and maintenance costs, offset by a decrease of $42.4 million in compensation expense. The increase in professional fees is due primarily to an increase in outsourced personnel costs, and to a lesser extent, legal fees, recruiting fees, and consulting costs. The increase in outsourced personnel costs is due primarily to an increase in call volume related to our customer booking assistance function. The real estate related costs are the result of impairments of right-of-use lease assets, leasehold improvements and furniture and equipment associated with office space we vacated. The increase in the provision for credit losses is primarily due to higher Angi Services revenue as the provision for credit losses as a percentage of revenue has remained relatively flat. The increase in software license and maintenance expense is due primarily to increased investment in software to support our customer service function. The decrease in compensation expense was due primarily to a decrease of stock-based compensation expense of which $9.8$54.1 million, was from the inclusion of Angie's List,partially offset by an increase in the sales force and the inclusion of $7.4$11.4 million in severancewage related expenses resulting primarily from annual wage increases and retention costs relateda certain departments’ headcount now being aligned to general and administrative functions under the Combination.brand integration initiative, contributing $5.8 million of the increase. The increasedecrease in stock-based compensation expense was due primarily to $30.8 million in stock appreciation rights expense recognized during the modificationtwelve months ended December 31, 2020, which was not incurred in 2021 as the awards became fully vested in 2020, and a net decrease of $7.7 million due to the reversal of previously issued HomeAdvisor vested and unvested equity awards, which were converted into ANGI Homeservices' equity awards, therecognized expense related to previously issued Angie's Listunvested awards that were forfeited due to management departures in the first quarter of 2021, partially offset by the issuance of new equity awards and the acceleration of certain Angie's List equity awards resulting from the termination of employees in connection with the Combination.
Europe selling and marketing expense increased $14.5 million, or 65%, driven by organic growth of $4.9 million in online and offline marketing and $2.5 million in compensation expense due, in part, to an increase in the sales force, as well as $7.0 million of expense from the acquisitions of MyHammer and MyBuilder.
For the year ended December 31, 2016 compared to the year ended December 31, 2015
North America selling and marketing expense increased $76.2 million, or 37%, due primarily to an increase in online and offline marketing of $48.5 million and an increase of $25.9 million in compensation expense due primarily to an increase in the sales force.

Europe selling and marketing expense increased $4.6 million, or 26%, due primarily to an increase in online marketing of $2.5 million and an increase of $2.0 million in compensation expense due primarily to an increase in the sales force.
General and administrative expense
 Years Ended December 31,
 2017 $ Change % Change 2016 $ Change % Change 2015
 (Dollars in thousands)
General and administrative expense$300,433 $190,340 173% $110,093 $23,406 27% $86,687
Percentage of revenue41%     22%     24%
For the year ended December 31, 2017 compared to the year ended December 31, 2016
North America general and administrative expense increased $181.8 million, or 200%, due primarily to higher compensation expense of $129.4 million, of which $38.4 million was from the inclusion of Angie's List, and $24.3 million in costs related to the Combination including transaction related costs of $14.3 million and integration related costs of $10.0 million. The increase in compensation expense is due principally to an increase of $100.7 million in stock-based compensation expense, of which $18.0 million was from the inclusion of Angie's List, an increase in headcount from business growth and the inclusion of $11.8 million in severance and retention costs in 2017 related to the Combination. The increase in stock-based compensation expense was due principally to the modification of previously issued HomeAdvisor vested and unvested equity awards, which were converted into ANGI Homeservices' equity awards, the expense related to previously issued Angie's List equity awards and the acceleration of certain Angie's List equity awards resulting from the termination of employees in connection with the Combination as well as a modification charge related to a HomeAdvisor equity award in 2017. North America general and administrative expense also includes increases of $9.3 million in bad debt expense due to higher Marketplace Revenue, $3.9 million in outsourced customer service expense and $3.1 million in software license and maintenance costs, as well as $2.5 million of expense from the acquisition of HomeStars.since 2020.
Europe general and administrative expense increased $8.5$7.2 million, or 45%25%, due primarily to $7.3 milliona charge of expense from the acquisitions of MyHammer and MyBuilder and an increase of $1.3$7.0 million in compensation expense due, in part,expenses related to increased headcount.
For the year ended December 31, 2016 compared to the year ended December 31, 2015
North America general and administrative expense increased $17.2 million, or 23%, due primarily to higher compensation expense of $8.2 million due, in part, to increased headcount, and increases of $4.7 million in bad debt expense due to higher revenue and $1.3 million in software license and maintenance costs.
Europe general and administrative expense increased $6.2 million, or 48%, due primarily to higher compensation expense of $2.6 million due, in part, to increased headcount including from the acquisition of MyHammer, as well as an additional 25% interest in our MyBuilder business at a premium to fair value and a $1.7 million increase in professional fees related to corporate restructuring, partially offset by a $2.6 million decrease in compensation expense driven by severance costs recorded in 2020 associated with headcount reductions in France.

33

Table of $2.1 million in transaction-related costs in 2016.Contents
Product development expense
Years Ended December 31,
2021$ Change% Change2020
(Dollars in thousands)
Product development expense$70,933 $2,130 3%$68,803 
As a percentage of revenue4%5%
 Years Ended December 31,
 2017 $ Change % Change 2016 $ Change % Change 2015
 (Dollars in thousands)
Product development expense$47,907 $27,311 133% $20,596 $3,754 22% $16,842
Percentage of revenue7%     4%     5%
For the year ended December 31, 2017 compared to the year ended December 31, 2016
North America product development expense increased $25.6decreased $3.5 million, or 142%6%, due primarily to decreases in compensation expense of $4.9 million and lease expense of $1.0 million, partially offset by an increase in software license and maintenance expense of $1.4 million. The decrease in compensation expense is due to certain departments’ headcount that were previously included within product development now being aligned to general and administrative functions under the brand integration initiative described above under “Brand Integration Initiative.”.
Europe product and development expense increased $5.6 million, or 49%, due to an increase in compensation expense of $23.2$5.3 million of which $6.8 million was from the inclusion of Angie's List,due primarily to higher headcount and $1.0 million of expense from the acquisition of HomeStars. The increase in compensation expense is due principally to an increase of $14.5 million in stock-based compensation expense due to the modification of previously issued HomeAdvisor vested and unvested equity awards, which were converted into ANGI Homeservices' equity awards in connection with the Combination and increased headcount.fewer software development projects being capitalized.

Depreciation
Europe product development expense increased $1.7 million, or 66%, due to an increase of $1.9 million in compensation expense from the acquisitions of MyHammer and MyBuilder.
Years Ended December 31,
2021$ Change% Change2020
(Dollars in thousands)
Depreciation$59,246 $6,625 13%$52,621 
As a percentage of revenue4%4%
For the year ended December 31, 2016 compared to the year ended December 31, 2015
North America product development expenseand Europe depreciation in 2021 increased $4.2 million, or 31%, driven by an increase of $3.0 million in compensation and other employee-related costsfrom 2020 due primarily to increased headcount.
Europe product development expense decreased $0.5 million, or 15%, driven by a decrease of $0.4 millioninvestments in compensation expense resulting from a higher number of capitalized projects in 2016 versus 2015.
Depreciation
 Years Ended December 31,
 2017 $ Change % Change 2016 $ Change % Change 2015
 (Dollars in thousands)
Depreciation$14,543 $6,124 73% $8,419 $1,826 28% $6,593
Percentage of revenue2%     2%     2%
For the year ended December 31, 2017 comparedsoftware to the year ended December 31, 2016
North America depreciation increased $5.2 million, or 66%,support our products and Europe depreciation increased $0.9 million, or 207%, due primarily to increased depreciation related to continued corporate growth, including acquisitions.
For the year ended December 31, 2016 compared to the year ended December 31, 2015
North America depreciation increased $2.2 million, or 39%, due primarily to increased depreciation associated with capital expenditures related to a new sales center and an increase in internally developed software.
Europe depreciation decreased $0.4 million, or 49%, due primarily to certain fixed assets becoming fully depreciated.services.
Operating (loss) income
 Years Ended December 31,
 2017 $ Change % Change 2016 $ Change % Change 2015
 (Dollars in thousands)
Operating (loss) income$(147,871) $(171,929) NM $24,058 $25,626 NM $(1,568)
Percentage of revenue(20)%     5%     —%
Years Ended December 31,
2021$ Change% Change2020
(Dollars in thousands)
North America$(63,316)$(68,127)NM$4,811 
Europe(13,197)(2,018)(18)%(11,179)
Total$(76,513)$(70,145)NM$(6,368)
As a percentage of revenue(5)%—%
________________________
NM = Not meaningful
For the year ended December 31, 2017 compared to the year ended December 31, 2016
North America operating income decreased $160.9$68.1 million to an operatinga loss of $128.5$63.3 million due to a decrease in 2017 versus operating incomeAdjusted EBITDA of $32.5$143.5 million, in 2016, despitedescribed below, and an increase of $0.1$5.3 million in Adjusted EBITDA described below, primarily due to an increasedepreciation, partially offset by decreases of $140.4$54.5 million in stock-based compensation expense an increase of $15.3and $26.2 million in amortization of intangibles and an increase of $5.2 million in depreciation.intangibles. The increase in depreciation was due primarily to the investments in capitalized software to support our products and services. The decrease in the amortization of intangibles was due primarily to certain intangible assets becoming fully amortized during 2020. The decrease in stock-based compensation expense was due primarily to modification$30.8 million in stock appreciation rights expense recognized during the twelve months ended December 31, 2020, which was not incurred in 2021 as the awards became fully vested in 2020, and acceleration chargesa net decrease of $122.1$7.7 million due to the reversal of previously recognized expense related to unvested awards that were forfeited due to management departures in the Combination. The increase in amortizationfirst quarter of intangibles was due principally to2021, partially offset by the Combination.issuance of new equity awards since 2020.

Europe operating loss increased $11.0$2.0 million, or 131%18%, due primarily due to an increase in Adjusted EBITDA loss of $5.5$1.4 million, described below, and an increase of $4.8$1.3 million in depreciation expense, partially offset by decreases of $0.4 million in stock-based compensation expense and $0.3 million in amortization of intangibles and an increaseintangibles.
34

Table of $0.9 million in depreciation, partially offset by a decrease in stock-based compensation expense of $0.1 million.Contents
At December 31, 2017,2021, there was $188.4is $107.7 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 2.42.9 years.

For the year ended December 31, 2016 compared to the year ended December 31, 2015
North America operating income increased $30.2 million, or 1305%, due primarily to the increase of $31.9 million in Adjusted EBITDA described below, and a decrease of $0.8 million in amortization of intangibles, partially offset by increases of $2.2 million in depreciation and $0.4 million in stock-based compensation expense.
Europe operating loss increased $4.5 million, or 117%, due primarily to the increase in Adjusted EBITDA loss of $4.1 million described below, as well as increases of $0.7 million in stock-based compensation expense and $0.2 million in amortization of intangibles, partially offset by a decrease of $0.4 million in depreciation.
Adjusted EBITDA
Years Ended December 31,
2021$ Change% Change2020
(Dollars in thousands)
North America$35,328 $(143,526)(80)%$178,854 
Europe(7,462)(1,412)(23)%(6,050)
Total$27,866 $(144,938)(84)%$172,804 
 As a percentage of revenue2%12%
 Years Ended December 31,
 2017 $ Change % Change 2016 $ Change % Change 2015
 (Dollars in thousands)
Adjusted EBITDA$39,163 $(5,383) (12)% $44,546 $27,833 167% $16,713
Percentage of revenue5%     9%     5%
For a reconciliation of net loss attributable to Angi Inc. shareholders to operating loss to consolidated Adjusted EBITDA, see “Principles of Financial Reporting.” For a reconciliation of operating (loss) income for the Company's reportable segments and net (loss) earnings attributable to ANGI Homeservices Inc.'s shareholders to Adjusted EBITDA for the Company’s reportable segments, see "Note 12—11Segment Information" to the consolidated and combined financial statements included in "Item 8.8. Consolidated and Combined Financial Statements and Supplementary Data."
For the year ended December 31, 2017 compared to the year ended December 31, 2016
North America Adjusted EBITDA increased $0.1decreased $143.5 million, or 80%, to $35.3 million, and decreased as a percentage of revenue, despite the significant increasehigher revenue of $217.1$207.1 million, in revenue, due primarily to increased investmentan increase in onlineselling and offline marketing expense of $73.3$122.5 million higher compensation expense due, in part, to increased headcount, the inclusion in 2017as well as growth of $44.1 million in costs related to the Combination (including severance, retention, transaction and integration related costs) and increases of $9.3 million in bad debt expenseAngi Services due to higherfactors described above in the cost of revenue $3.9 million in outsourced customer service expense and $3.1 million in software licenseselling and maintenance costs. Adjusted EBITDA in 2017 was further impacted by write-offs of deferred revenue related to the Combination of $7.8 million and the acquisition of HomeStars of $0.7 million.marketing discussions.
Europe Adjusted EBITDA loss increased $5.5decreased $1.4 million, or 99%, driven primarily by our European expansion strategy including increased investment in online and offline marketing of $10.7 million and higher compensation expense of $10.5 million both due primarily to the acquisitions of MyHammer and MyBuilder. The increase in compensation expense was also due to increased organic headcount.
For the year ended December 31, 2016 compared to the year ended December 31, 2015
North America Adjusted EBITDA grew $31.9 million, or 175%23%, due primarily to an increase of $132.0$10.4 million in revenue, partiallylargely offset by increased investment in online and offline marketing of $48.5 million. Adjusted EBITDA was further impacted by higher compensation expense due, in part, to increased headcount and anthe increase in bad debtgeneral and administrative expense due to higher revenue.
Europe Adjusted EBITDA loss increased $4.1of $6.7 million or 277%(excluding stock-based compensation expense), despite an increasewhich included a charge of $5.7$7.0 million in revenue, due primarily to increased investment in online marketing of $2.5 million, transaction-related costs of $2.1 million and higher compensation expense due primarily to increased headcount. Adjusted EBITDA was further impacted by a $0.5 million write-off of deferred revenue related to the acquisition of MyHammer.an additional 25% interest in MyBuilder at a premium to fair value, and the increase in product development expense of $5.6 million.


Interest expense

 Years Ended December 31,
 2017 $ Change % Change 2016 $ Change % Change 2015
 (Dollars in thousands)
Interest expense—third party$(1,765) $(1,765) NA $— $— NA $—
Interest expense—related party(5,971) (5,077) 568% (894) (622) 229% (272)
Interest expense—third partyexpense relates to interest on the $275 millionANGI Group Senior Notes, ANGI Group Term Loan, which commencedand commitment fees on November 1, 2017.the ANGI Group Revolving Facility. As of May 6, 2021, the outstanding balance of the ANGI Group Term Loan was repaid in its entirety. The ANGI Group Revolving Facility was terminated effective August 3, 2021. No amounts were ever drawn under the ANGI Group Revolving Facility prior to its termination.
Interest expense—related party includes interest charged by IAC and its subsidiaries on related party notes, which are primarily related to acquisitions.
For a detailed description of long-term debt—related party,debt, net, see "Note 15—Related Party Transactions"6—Long-term Debt to the consolidated and combined financial statements included in "Item 8.8. Consolidated and Combined Financial Statements and Supplementary Data."
Years Ended December 31,
2021$ Change% Change2020
(In thousands)
Interest expense$23,485 $9,307 66%$14,178 
Interest expense increased due primarily to the issuance of the ANGI Group Senior Notes in August 2020 and the write-off of deferred debt issuance costs associated with the termination of the ANGI Group Revolving Facility, partially offset by a decrease in interest expense due to the repayment of the ANGI Group Term Loan during the second quarter of 2021.
Other (expense) income, (expense), net
Years Ended December 31,
2021$ Change% Change2020
(In thousands)
Other (expense) income, net$(2,509)$(3,727)NM$1,218 
Other expense, net in 2021 primarily includes net foreign currency exchange losses of $1.7 million and the write-off of $1.1 million of deferred debt issuance costs related to the ANGI Group Term Loan which was repaid in its entirety during the second quarter of 2021, partially offset by interest income of $0.2 million.
 Years Ended December 31,
 2017 $ Change % Change 2016 $ Change % Change 2015
 (Dollars in thousands)
Other income (expense), net$1,974 $2,673 NM $(699) $(301) 76% $(398)
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Other income, net in 20172020 primarily includes net foreign currency exchange gains of $0.9 million, related party interest income of $0.7$1.7 million, and third party interest incomepartially offset by a $0.2 million mark-to-market charge for an indemnification claim related to the Handy acquisition that was settled in Angi Inc. shares during the first quarter of $0.5 million.
Other expense, net in 2016 and 2015 principally includes net foreign currency exchange losses.2020.
Income tax benefit (provision)
Years Ended December 31,
2021$ Change% Change2020
(Dollars in thousands)
Income tax benefit$32,013 $16,845 111%$15,168 
Effective income tax rate31%NM
 Years Ended December 31,
 2017 $ Change % Change 2016 $ Change % Change 2015
 (Dollars in thousands)
Income tax benefit (provision)$49,106 $60,940 NM $(11,834) $(10,076) 573% $(1,758)
Effective income tax rate32%     53%     NM
In the fourth quarter of 2017, the Company recorded a tax provision of $33.0 million due to effects of the Tax Cuts and Jobs Act (the “Tax Act”), which was enacted on December 22, 2017. The Tax Act required a remeasurement of the Company’s net deferred tax asset position due to the reduction in the corporate tax rate from 35% to 21% under the Tax Act, resulting in a provision of $33.0 million. The Company was not subject to the one-time transition tax because it has cumulative losses from its international operations. While the Company was able to make a reasonable estimate of the impacts of the Tax Act, certain amounts are provisional as the Company gathers additional data. Any adjustment of the Company’s provisional tax expense will be reflected as a change in estimate in its results in the period in which the change in estimate is made in accordance with Staff Accounting Bulletin No. 118, Income TaxAccounting Implications of the Tax Cuts and Jobs Act. In addition, our estimates may also be impacted and adjusted as the law is clarified and additional guidance is issued at the federal and state levels.
In 2017, the effective income tax rate is lower than the statutory rate of 35% due primarily to the effect of the Tax Cuts and Jobs Act, largely offset by adopting the provisions of the Financial Accounting Standards Board issued Accounting Standards Update ("ASU") No. 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, on January 1, 2017. The Tax Cuts and Jobs Act required a remeasurement of net deferred tax assets from the 35% rate to a 21% rate, resulting in a provision of $33.0 million. Under ASU No. 2016-09, excess tax benefits generated by the settlement or exercise of stock-based awards of $35.8 million for the year December 31, 2017 are recognized as a reduction to the income tax provision rather than as an increase to additional paid-in capital.

In 2016, the effective income tax rate is higher than the statutory rate of 35% due primarily to unbenefited losses in separate jurisdictions and state taxes, partially offset by research credits.
In 2015, the income tax provision is due primarily to an increase in income tax reserves and unbenefited losses in separate jurisdictions, partially offset by research credits.
For further details of income tax matters, see "Note 3—3Income Taxes" to the consolidated and combined financial statements included in "Item 8.8. Consolidated and Combined Financial Statements and Supplementary Data."
Net loss attributable
In 2021, the effective income tax rate was higher than the statutory rate of 21% due primarily to noncontrolling interestsexcess tax benefits generated by the exercise and vesting of stock-based awards and a change in judgement about the valuation allowance at the beginning of the year, partially offset by unbenefited foreign losses.
Noncontrolling interests represent the noncontrolling holders’ percentage share of earnings or losses from the subsidiaries in which
In 2020, the Company holdsrecorded an income tax benefit of $15.2 million. The income tax benefit was due primarily to a majority, but less than 100%, ownership interest and the results of which are included in our consolidated and combined financial statements.
 Years Ended December 31,
 2017 $ Change % Change 2016 $ Change % Change 2015
 (Dollars in thousands)
Net loss attributable to noncontrolling interests

$1,409 $(1,088) (44)% $2,497 $(174) (7)% $2,671
Net loss attributablereduction to noncontrolling interests in 2017 represents the net losses attributabledeferred taxes due to the noncontrolling intereststrue-up of the state tax rate of an indefinite-lived intangible asset, a change in mHelpDesk, MyBuilder, HomeStarsjudgement about the valuation allowance at the beginning of the year, and MyHammer.excess tax benefits generated by the exercise and vesting of stock-based awards.
Net loss attributable to noncontrolling interests in 2016 represents the net losses attributable to the noncontrolling interests in mHelpDesk and MyHammer.
Net loss attributable to noncontrolling interests in 2015 represents the net losses attributable to the noncontrolling interests in mHelpDesk.



Principles
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PRINCIPLES OF FINANCIAL REPORTING
We report Adjusted EBITDA as a supplemental measure to U.S. generally accepted accounting principles ("GAAP"(“GAAP”). This measure is one of the primary metrics by which we evaluate the performance of our businesses, on which our internal budgets are based and by which management is compensated. We believe that investors should have access to, and we are obligated to provide, the same set of tools that we use in analyzing our results. This non-GAAP measure should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP results. We endeavor to compensate for the limitations of the non-GAAP measure presented by providing the comparable GAAP measure with equal or greater prominence and descriptions of the reconciling items, including quantifying such items, to derive the non-GAAP measure. We encourage investors to examine the reconciling adjustments between the GAAP and non-GAAP measure, which we discuss below.
Definition of Non-GAAP Measure
Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("(“Adjusted EBITDA"EBITDA”) is defined as operating income excluding: (1) stock-based compensation expense; (2) depreciation; and (3) acquisition-related items consisting of amortization of intangible assets and impairments of goodwill and intangible assets, if applicable. We believe this measure is useful for analysts and investors as this measure allows a more meaningful comparison between our performance and that of our competitors. Moreover, our management uses this measure internally to evaluate the performance of our business as a whole and our individual business segments, and this measure is one of the primary metrics by which our internal budgets are based and by which management is compensated. The above items are excluded from our Adjusted EBITDA measure because these items are non-cash in nature, and we believe that by excluding these items, Adjusted EBITDA corresponds more closely to the cash operating income generated from our business, from which capital investments are made and debt is serviced. Adjusted EBITDA has certain limitations in thatbecause it does not take into accountexcludes the impact of these expenses.
The following table reconciles net loss attributable to ourAngi Inc. shareholders to operating loss to consolidated and combined statement of operations of certain expenses.Adjusted EBITDA:
 Years Ended December 31,
 20212020
 (In thousands)
Net loss attributable to Angi Inc. shareholders$(71,378)$(6,283)
Add back:
Net earnings attributable to noncontrolling interests884 2,123 
Income tax benefit(32,013)(15,168)
Other expense (income), net2,509 (1,218)
Interest expense23,485 14,178 
Operating loss(76,513)(6,368)
Add back:
Stock-based compensation expense28,702 83,649 
Depreciation59,246 52,621 
Amortization of intangibles16,430 42,902 
Adjusted EBITDA$27,865 $172,804 

For a reconciliation of operating (loss) income by reportable segment and net (loss) earnings attributable to ANGI Homeservices Inc. shareholdersloss to Adjusted EBITDA for the years ended December 31, 2017, 2016, and 2015Company’s reportable segments, see "Note 12—11Segment Information" to the consolidated and combined financial statements included in "Item 8. Consolidated and Combined Financial Statements and Supplementary Data."
Non-cash expenses that are excluded
Non-Cash Expenses That Are Excluded from Our Non-GAAP Measure
Stock-based compensation expense consists principally of expense associated with the grants, including unvested grants assumed in acquisitions, (including the Combination), of stock options, stock appreciation rights, restricted stock units or(“RSUs”), stock options, performance-based RSUs (“PSUs”) and performance-based RSUs.market-based awards. These expenses are not paid in cash and we view the economic costs of stock-based awards to be the dilution to our share base; we also include the related shares in our fully diluted shares outstanding for GAAP earnings per share using the treasury stock method; however, performance-based RSUsmethod. PSUs and market-based awards are included only to the extent the applicable performance or market condition(s) have been met (assuming the end of the reporting period is the end of the contingency period). Upon the exercise of stock options, theThe Company is currently settling all stock-based awards are gross settled or net settled at the election of the award holder, and the exercise of stock appreciation rights and vesting of RSUs and performance-based RSUs, the awards are settled on a net basis with the Company remittingand remits the required tax-withholding amountamounts from its current funds.
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Depreciation is a non-cash expense relating to our propertycapitalized software, leasehold improvements and equipment and is computed using the straight-line method to allocate the cost of depreciable assets to operations over their estimated useful lives, or, in the case of leasehold improvements, the lease term, if shorter.
Amortization of intangible assets and impairments of goodwill and intangible assets are non-cash expenses related primarily to acquisitions (including the Combination).acquisitions. At the time of an acquisition, the identifiable definite-lived intangible assets of the acquired company, such as contractor and service professional relationships, technology, memberships, customer lists and user base, and trade names, are valued and amortized over their estimated lives. Value is also assigned to acquired indefinite-lived intangible assets, which comprise trade names and trademarks, and goodwill that are not subject to amortization. An impairment is recorded when the carrying value of an intangible asset or goodwill exceeds its fair value. We believe that intangible assets represent costs incurred by the acquired company to build value prior to acquisition and the related amortization and impairment chargesimpairments of intangible assets or goodwill, if applicable, are not ongoing costs of doing business.
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FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES

Financial Position Liquidity and Capital Resources
Financial position
December 31, 2021December 31, 2020
(In thousands)
Cash and cash equivalents and marketable debt securities:
United States$404,277 $793,679 
All other countries23,859 19,026 
Total cash and cash equivalents428,136 812,705 
Marketable debt securities (United States)— 49,995 
Total cash and cash equivalents and marketable debt securities$428,136 $862,700 
Long-term debt:
Senior Notes$500,000 $500,000 
Term Loan— 220,000 
Total long-term debt500,000 720,000 
Less: unamortized debt issuance costs5,448 7,723 
Total long-term debt, net$494,552 $712,277 
  December 31,
  2017 2016
  (In thousands)
Cash and cash equivalents:    
United States(a)
 $214,803
 $4
All other countries(b)(c)
 6,718
 36,373
Total cash and cash equivalents $221,521
 $36,377
     
Long-term debt—third party    
Term Loan due November 1, 2022 $275,000
 $
Less: current portion of Term Loan 13,750
 
Less: unamortized debt issuance costs 2,938
 
Total long-term debt—third party, net $258,312
 $
     
Long-term debt—related party    
Promissory note due October 14, 2023 $
 $42,000
Promissory note due August 29, 2018 
 5,000
Other 2,813
 2,838
Total long-term debt—related party 2,813
 49,838
Less: current portion of long-term debt—related party 816
 2,838
Total long-term debt—related party, net $1,997
 $47,000

(a)Domestically, cash equivalents consist of AAA rated government money market funds, certificates of deposit and treasury discount notes. Prior to the Combination, domestically, the Company participated in IAC’s centrally managed U.S. treasury management function in which IAC swept domestic cash of HomeAdvisor (US).
(b)Internationally, there are no cash equivalents at December 31, 2017. At December 31, 2016, cash equivalents consist of AAA rated government money market funds.
(c)If needed for our U.S. operations, the cash and cash equivalents held by the Company's foreign subsidiaries could be repatriated without any significant tax consequences.
For a detailed descriptionAt December 31, 2021, all of long-term debt—third party, see "Note 7—Long-term Debt" and for a detailed description of long-term debt—related party, see "Note 15—Related Party Transactions" to the consolidated and combined financial statements included in "Item 8. Consolidated and Combined Financial Statements and Supplementary Data."Company’s international cash can be repatriated without any significant tax consequences.
Cash flow informationFlow Information
In summary, the Company'sCompany’s cash flows are as follows:
Years Ended December 31,
Years Ended December 31,20212020
2017 2016 2015(In thousands)
(In thousands)
Net cash provided by (used in):     
Net cash provided (used in) by:Net cash provided (used in) by:
Operating activities$41,823
 $47,896
 $17,885
Operating activities$6,209 $188,419 
Investing activities(93,177) (32,309) (10,170)Investing activities$(45,072)$(103,954)
Financing activities235,337
 18,426
 (9,516)Financing activities$(345,168)$337,053 
Net cash provided by operating activities consists of earnings adjusted for non-cash items and the effect of changes in working capital. Non-cash adjustments include stock-based compensation expense, provision for credit losses, amortization of intangibles, bad debtdepreciation, impairment of long-lived and right-of-use assets, non-cash lease expense, depreciation and deferred income taxes.
20172021
Adjustments to earnings consist primarily of $149.2$88.1 million of provision for credit losses, $59.2 million of depreciation, $28.7 million of stock-based compensation expense, $27.5 million of bad debt expense, $23.3$16.4 million of amortization of intangibles, and $14.5$12.9 million of depreciation,non-cash lease expense, $12.7 million of impairment charges on long-lived and right-of-use assets, and $8.6 million of revenue reserves, partially offset by $48.4$36.3 million of deferred income taxes. The deferred income tax benefit primarily relates to the modification charge for the conversion and acceleration of stock-based awards and the net operating loss created by the exercise of HomeAdvisor stock-based awards and the one-time charges related to the Combination. The decrease from changes in working capital consists primarily of an increase of $115.4 million in accounts receivable and a decrease of $33.2$16.8 million in operating lease liabilities, partially offset by an increaseincreases of $14.0 million in deferred revenue of $11.0 million.accounts payable and other liabilities. The increase in accounts receivable is due primarily due to revenue growth, in North America.primarily attributable to Angi Services. The increase in deferred revenueaccounts payable and other liabilities is due primarily to growthincreases in subscription salesaccrued advertising and time-based advertisingrelated payables and accrued roofing material costs related to service professionals.Angi Roofing.
Net cash used in investing activities includes $66.3$70.2 million of cash used for the acquisitions of MyBuilder, Angie's List, and HomeStars, and capital expenditures, of $26.8 million, primarily related to investments in the development of capitalized software to support ourthe Company’s products and services, and computer hardware. The$25.6 million of cash used forprincipally related to the acquisition of Angie's List includes $61.5Angi Roofing, partially offset by proceeds of $50.0 million thatfrom the Company loaned to Angie's List to fund the repaymentmaturities of Angie's Listmarketable debt outstanding immediately prior to the Combination.securities.
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Net cash provided byused in financing activities includes proceeds from borrowings under$220.0 million for the prepayment of the ANGI Group Term Loan, of $275.0 million, proceeds from borrowings of related party debt of $131.4 million, including $61.5 million in borrowings from IAC used by the Company to fund the repayment of Angie's List debt immediately prior to the Combination, cash transfers of $24.2 million from IAC pursuant to IAC's centrally managed U.S. treasury management function and funds returned from escrow for the MyHammer tender offer of $10.6 million, partially offset by principal paymentswhich otherwise would have matured on related party debt of $181.6 million, the purchase of noncontrolling interests of $12.8 million and $10.1November 5, 2023, $61.9 million for the payment of withholding taxes on behalf of employees for stock-based awards that were net settled. The principal paymentssettled, $35.4 million for the repurchase of 3.2 million shares of Angi Inc. Class A common stock, on related party debt include repaymenta settlement date basis, at an average price of $61.5$11.06 per share, and $27.9 million in borrowings from IAC used byfor the Company to fund the repaymentpurchase of Angie's List debt immediately prior to the Combination.redeemable noncontrolling interests.
20162020
Adjustments to earnings consist primarily of $17.4 million of bad debt expense, $8.9$83.6 million of stock-based compensation expense, $8.4$78.2 million of provision for credit losses, $52.6 million of depreciation, and $3.2$42.9 million of amortization of intangibles, partially offset by $3.7and $13.7 million of deferred income taxes. The deferred income tax benefit primarily relates to stock-based compensationnon-cash lease expense. The increase from changes in working capital consists primarily of an increase of $14.9 million in accounts payable and other current liabilities, an increase in income taxes payable and receivable of $6.9 million, an increase in deferred revenue of $6.9 million, partially offset by an increase in accounts receivable of $23.9 million and an increase in other current assets of $3.0 million. The increase in accounts payable and other current liabilities is due to the timing of payments and an increase in employee-related accruals. The increase in income taxes payable and receivable is due to current year income tax accruals in excess of current year income tax payments. The increase in deferred revenue is due to growth in subscription sales to service professionals. The increase in accounts receivable is primarily due to revenue growth in North America. The increase in other current assets is due to an increase in prepaid marketing.
Net cash used in investing activities includes $15.6 million of cash used for the MyHammer acquisition and capital expenditures of $16.7 million, primarily related to a new sales center and investments in the development of capitalized software to support our products and services.
Net cash provided by financing activities includes $44.8 million in proceeds from borrowings of related party debt principally used to fund the acquisition of MyHammer, partially offset by the refinancing of an $11.4 million promissory note, $10.5 million of funds held in escrow relating to the MyHammer tender offer for the portion of shares publicly held, and cash transfers of $4.3 million to IAC pursuant to IAC’s centrally managed U.S. treasury management function.
2015
Adjustments to earnings consist primarily of $13.2 million of bad debt expense, $7.9 million of stock-based compensation expense, $6.6 million of depreciation and $3.8 million of amortization of intangibles, partially offset by $3.5 million of deferred income taxes. The deferred income tax benefit primarily relates to stock-based compensation expense. The decrease

from changes in working capital consists primarily of an increase in accounts receivable of $16.2$79.8 million, a decrease in operating lease liabilities of $13.4 million, and an increase in other assets of $7.7 million, partially offset by an increase in deferred revenue of $7.2 million and an increase in income taxesaccounts payable and receivableother liabilities of $2.5$30.6 million. The increase in accounts receivable is due primarily due to revenue growth in North America.growth. The increase in deferred revenueaccounts payable and other liabilities is due primarily to an increase in accrued advertising and related payables, and accrued compensation costs due, in part, to the growth in subscription sales to service professionals. The increase in income taxes payable is due to current year incomedeferral of payroll tax accruals in excess of current year income tax payments.payments under the Coronavirus Aid, Relief, and Economic Security Act.
Net cash used in investing activities includes purchases of marketable debt securities of $100.0 million and capital expenditures of $10.2$52.5 million, primarily related to investments in the development of capitalized software to support ourthe Company’s products and services.services, $2.3 million related to the acquisition of a business, partially offset by $50.0 million of proceeds from maturities of marketable debt securities, and $0.7 million of net proceeds received in 2020 related to the December 31, 2018 sale of Felix.
Net cash used inprovided by financing activities includes cash transfers$500.0 million of $9.5proceeds from the issuance of the Senior Notes and a $3.1 million todistribution from IAC pursuant to IAC’s centrally managed U.S. treasury management function.
Liquidity and capital resources
In periods prior to the Combination, we received funding from IAC, including loans from certain IAC foreign subsidiaries, the proceedstax sharing agreement, net of which were primarily used to fund acquisitions.
All outstanding long-term debt—related party amounts due between certain IAC subsidiaries and the HomeAdvisor business were settled prior to the completion of the Combination, with the exception of a promissory note payable to a foreign subsidiary of IAC, which is not part of the HomeAdvisor business, in the amount of €2.4 million ($2.8 million at December 31, 2017).
On September 29, 2017, the Company and IAC entered into two intercompany notes (collectively referred to as "Intercompany Notes") as follows: (i) a Payoff Intercompany Note, which provided the funds necessary to repay the outstanding balance under Angie's List's existing credit agreement, totaling $61.5 million; and (ii) a Working Capital Intercompany Note, which provided the Company with $15$63.7 million for working capital purposes.
On November 1, 2017, the Company borrowed $275repurchase of 8.5 million under a five-year term loan facility ("Term Loan"). The Term Loan is guaranteed by the Company's wholly-owned material domestic subsidiaries and is secured by substantially all assetsshares of the Company and the guarantors, subject to certain exceptions. The Term Loan currently bears interest at LIBOR plus 2.00%, or 3.38% at December 31, 2017, which is subject to change based on ANGI Homeservices' consolidated net leverage ratio. Interest payments are due at least quarterly through the term of the loan and quarterly principal payments of 1.25% of the original principal amount in the first three years, 2.5% in the fourth year and 3.75% in the fifth year are required.Angi Inc. Class A portion of the proceeds from the Term Loan were used to repay in full the Intercompany Notes on November 1, 2017 and the remaining proceeds will be used for general corporate purposes.
In connection with the Combination, previously issued stock appreciation rights that related to common stock, of HomeAdvisor (US) were converted into stock appreciation rights that are settleable in Class A shares of ANGI Homeservices. IAC may require those awards to be settled in either shares of IAC common stock or in Class A shares of the Company's common stock and, to the extent shares of IAC common stock are issued in settlement, the Company will reimburse IAC for the cost of those shares by issuing to IAC additional Class A shares of the Company's common stock. Assuming all vested and unvested stock appreciation rights outstanding on December 31, 2017, which can only be exercised on a netsettlement date basis, were exercised on that date, 16.4at an average price of $7.47 per share, $64.1 million Class A shares of the Company's common stock would have been issued either (i) to IAC as reimbursement if the awards were settled in IAC shares or (ii) directly to award holders if IAC did not exercise its right to settle these awards in IAC shares. In either case, the Company would have remitted $171.3 million in cash in withholding taxes (assuming a 50% withholding rate) on behalf of the employees.
The Company believes its existing cash, cash equivalents and expected positive cash flows generated from operations will be sufficient to fund our normal operating requirements, including capital expenditures, debt service,for the payment of withholding taxes on behalf of employees for net-settled stock-based awards that were net settled, $27.5 million in principal payments on the Term Loan, including the prepayment of the $13.8 million of principal payments that were otherwise due in 2021, $6.5 million for debt issuance costs, and investing and other commitments,$4.3 million for the foreseeable future. purchase of redeemable noncontrolling interests
Liquidity and Capital Resources
Financing Arrangements
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 Angi Roofing, and treasury share repurchases.

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%.

The $250.0 million ANGI Group Revolving Facility, which otherwise would have expired on November 5, 2023, was terminated effective August 3, 2021.No amounts were ever drawn under the ANGI Group Revolving Facility prior to its termination.

Share Repurchase Authorizations and Activity
During the year ended December 31, 2021, the Company repurchased 3.2 million shares, on a trade date basis, of its common stock at an average price of $11.06 per share, or $35.4 million in aggregate. From January 1, 2022 through February 11, 2022, the Company repurchased an additional 1.0 million shares at an average price of $7.80 per share, or $8.1 million in aggregate. Angi Inc. has 15.0 million shares remaining in its share repurchase authorization as of February 11, 2022. The Company may purchase shares over an indefinite period of time on the open market and in privately negotiated transactions, depending on those factors Angi Inc. management deems relevant at any particular time, including, without limitation, market conditions, share price and future outlook.

Outstanding Stock-based Awards
The Company may settle equity awards on a gross or a net basis depending upon factors deemed relevant at the time, and if settledon a net basis, Angi remits withholding taxes on behalf of the employee. At IAC’s option, certain Angi stock appreciation rights can be settled in either Class A shares of Angi or shares of IAC common stock. If settled in IAC common
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stock, the Company reimburses IAC in either cash or through the issuance of Class A shares to IAC. The Company currently settles all equity awards on a net basis.
Pursuant to the employee matters agreement, in the event of a distribution of Angi capital stock to IAC stockholders in a transaction intended to qualify as tax-free for U.S. federal income tax purposes, the Compensation Committee of the IAC Board of Directors has the exclusive authority to determine the treatment of outstanding IAC equity awards. Such authority includes (but is not limited to) the ability to convert all or part of IAC equity awards outstanding immediately prior to the distribution into equity awards denominated in shares of Angi Class A Common Stock for no compensation, which Angi would be obligated to assume and which would be dilutive to Angi’s stockholders.
The following table summarizes the aggregate intrinsic value of all awards outstanding as of February 11, 2022;assuming these awards were net settled on that date, the withholding taxes that would be paid by the Company on behalf of employees upon exercise or vesting that would be payable (assuming these equity awards are net settled with a 50% tax rate), and the shares that would have been issued are as follows:
Aggregate intrinsic value of awards outstandingEstimated withholding taxes payableEstimated shares to be issued
(In thousands)
Stock appreciation rights$5,309 $2,654 308 
Other equity awards(a)(b)
131,743 65,040 7,747 
Total outstanding employee stock-based awards$137,052 $67,694 8,055 
_______________
(a)Includes stock options, RSUs, and subsidiary denominated equity.
(b)The number of shares ultimately needed to settle subsidiary denominated equity awards and the cash withholding tax obligation may vary significantly as a result of the determination of the fair value of the relevant award at the time of exercise. In addition, the number of shares required to settle these awards will be impacted by movement in the Company’s stock price.
Contractual Obligations
The Company enters into various contractual arrangements as a part of its continued operations.Many of these contractual obligations are discussed in the notes to the financial statements included in “Item 8—Consolidated and Combined Financial Statements and Supplementary Data.” As of December 31, 2021, material obligations discussed in the notes included principal and interest payments on the Company's 2018long-term debt discussed above and in “Note 6Long-term Debt,” operating leases discussed in “Note 12—Leases,” and postretirement benefits discussed in “Note 15Benefit Plans.”

In addition, as of December 31, 2021, the Company has material purchase obligations which represent legally binding agreements to purchase goods and services that specify all significant terms. These obligations are discussed in “Note 13—Commitments and Contingencies.”

Capital Expenditures
The Company’s 2022 capital expenditures are expected to be higher than 20172021 capital expenditures of $70.2 million by approximately 70%15% to 20%, driven,due primarily to increased investment in part, by investments in the development of capitalized software to support the development of our products and services and our new corporate headquarters. services.
Liquidity Assessment
The Company'sCompany’s liquidity could be negatively affected by a decrease in demand for ourits products and services. We expect the Tax Actservices due to favorably impact our future liquidity, primarily a result of a reductionCOVID-19 or other factors. As described in the corporate tax rate from 35%“COVID-19 Update” section above, to 21%, which will lower our effective tax ratedate, the COVID-19 outbreak and annual tax liability.measures designed to curb its spread have adversely impacted the Company’s business.
The Company’s indebtedness could limit our ability to: (i) obtain additional financing to fund working capital needs, acquisitions, capital expenditures or debt service or other requirements; and (ii) use operating cash flow to make acquisitions,

capital expenditures, invest in other areas, such as developing business opportunities, in the event a default has occurred or, in certain circumstances, if our leverage ratio (as defined in the Term Loan) exceeds 4.25 to 1.0.
At December 31, 2017,2021, IAC holdsheld all Class B shares of ANGI HomeservicesAngi Inc., which represents 86.9%represent 84.5% of the economic interest and 98.5%98.2% of the voting interest of ANGI Homeservices.the Company. As a result, IAC has the ability to control ANGI Homeservices’Angi Inc.’s financing activities, including the issuance of additional debt and equity securities by ANGI HomeservicesAngi Inc. or any of its subsidiaries, or the incurrence of other indebtedness generally. While ANGI HomeservicesAngi Inc. is expected to have the ability to access debt and equity markets if needed, such transactions may require the approval of IAC due to its control of the majority of the outstanding voting power of ANGI Homeservices’Angi Inc.’s capital stock and its representation on the ANGI HomeservicesAngi Inc. board of directors. Additional financing may not be available on terms
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favorable to usthe Company or at all.

In addition, the Company’s existing indebtedness could limit its ability to obtain additional financing.
Contractual ObligationsThe Company believes its existing cash, cash equivalents, and expected positive cash flows generated from operations will be sufficient to fund its normal operating requirements, including capital expenditures, debt service, the payment of withholding taxes paid on behalf of employees for net-settled stock-based awards, and investing and other commitments, for the foreseeable future.

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  Payments due by period
Contractual Obligations(a)
 Less than
1 year
 1 to 3
years
 3 to 5
years
 More than
5 years
 Total
  (in thousands)
Long-term debt—third party(b)
 $24,455
 $46,194
 $249,262
 $
 $319,911
Long-term debt—related party(c) 
 816
 2,466
 
 
 3,282
Operating leases(d)   
 11,090
 24,587
 17,884
 32,820
 86,381
Purchase obligations(e)   
 831
 650
 
 
 1,481
Total contractual obligations   
 $37,192
 $73,897
 $267,146
 $32,820
 $411,055

(a)
The Company has excluded $1.5 million in unrecognized tax benefits from the table above as we are unable to make a reasonably reliable estimate of the period in which these liabilities might be paid. For additional information on income taxes, see "Note 3—Income Taxes" to the consolidated and combined financial statements included in "Item 8. Consolidated and Combined Financial Statements and Supplementary Data."
(b)
Long-term debt—third party consists of contractual amounts due including interest on a variable rate instrument. Long-term debt—third party at December 31, 2017 consists of a $275 million Term Loan, bearing interest at LIBOR plus 2.00%, or 3.38%, at December 31, 2017. The Term Loan interest rate is subject to change based on the Company's consolidated net leverage ratio. The amount of interest ultimately paid on the variable rate debt may differ based on changes in interest rates. For additional information on long-term debt—third party, see "Note 7—Long-term Debt" to the consolidated and combined financial statements included in "Item 8. Consolidated and Combined Financial Statements and Supplementary Data."
(c)
Long-term debt—related party consists of intercompany notes of €2.4 million ($2.8 million at December 31, 2017) issued to a foreign subsidiary of IAC, which bears interest at a fixed rate. See "Note 15—Related Party Transactions" to the consolidated and combined financial statements included in "Item 8. Consolidated and Combined Financial Statements and Supplementary Data" for additional information on Long-term debt—related party.
(d)We lease office space, data center facilities and equipment used in connection with our operations under various operating leases, the majority of which contain escalation clauses. In March 2017, we entered into a new 10.5-year lease for our call center in New York and a new 10.5-year lease for our corporate headquarters in Denver, Colorado.
(e)Purchase obligations primarily consist of software licenses.
Off-Balance Sheet ArrangementsCRITICAL ACCOUNTING POLICIES AND ESTIMATES
Other than the items described above, we have no significant off-balance sheet arrangements.

Critical Accounting Policies and Estimates
The following disclosure is provided to supplement the descriptions of ANGI Homeservices'Angi’s accounting policies contained in “Note 2—Summary of Significant Accounting Policies” to the consolidated and combined financial statements included "Item 8. Consolidated and Combined Financial Statements and Supplementary Data" in regard to significant areas of judgment. Management of the Company is required to make certain estimates, judgments and assumptions during the preparation of its consolidated and combined financial statements in accordance with GAAP. These estimates, judgments and assumptions impact the reported amount of assets, liabilities, revenue and expenses and the related disclosure of contingent assets and liabilities as of the date of the consolidated and combined financial statements.liabilities. Actual results could differ from these estimates. Because of the size of the financial statement elements to which they relate, some of our accounting policies and estimates have a more significant impact on our consolidated and combined financial statements than others. What follows is a discussion of some of our more significant accounting policies and estimates.
Allowance for doubtful accountsCredit Loss and revenue reservesRevenue Reserves
The Company makes judgments as to its ability to collect outstanding receivables and provides allowancesreserves when it has determined that all or a portion of the receivable will not be collected. The Company determines its allowance by consideringmaintains a credit loss reserve to provide for the estimated amount of accounts receivable that will not be collected. The credit loss reserve is based upon a number of factors, including the length of time accounts receivable are past due, the Company'sCompany’s previous loss history and the specific customer’s ability to pay its obligation to the Company. The Company writes off accounts receivable when they become uncollectible.duration of time between the Company’s issuance of an invoice and payment due date is not significant. The Company also maintains allowances to reservereserves for potential credits issued to customers or other revenue adjustments. The amounts of these reserves are based in part, onprimarily upon historical experience. The carrying value of the allowance for doubtful accountscredit loss and revenue reserves is $9.3$36.4 million and $9.2$27.8 million at December 31, 20172021 and 2016,2020, respectively. Bad debt expenseThe provision for credit losses was $27.5 million, $17.4$88.1 million and $13.2$78.2 million for the years ended December 31, 2017, 20162021 and 2015,2020, respectively.
Business combinationsCombinations
Acquisitions, which are generally referred to in GAAP as business combinations, are an important part of the Company’s growth strategy. The Company invested $819.0$29.2 million (including the value of ANGI Homeservices Class A common stock issued in connection with the Combination) and $19.7$2.7 million in acquisitions for the years ended December 31, 20172021 and 2016,2020, respectively. The purchase price of each acquisition is attributed to the assets acquired and liabilities assumed based on their fair values at the date of acquisition, including identifiable intangible assets that either arise from a contractual or legal right or are separable from goodwill.
Management makes two critical determinations at the time of an acquisition, the reporting unit that will benefit from the acquisition and to which goodwill will be assigned and the allocation of the purchase price of the business to the assets acquired and the liabilities assumed based upon their fair values. The reporting unit determination is important beyond the initial allocation of purchase price because future impairment assessments of goodwill, as described below, are performed at the reporting unit level. At October 1, 2021, the Company has two reporting units: North America and Europe. Historically, when the Company’s acquisitions have been complementary to these reporting units and the goodwill has been assigned to either the North America or Europe reporting unit.
The allocation of purchase price to the assets acquired and liabilities assumed based upon their fair values is complex because of the judgments involved in determining these values. The determination of purchase price and the fair value of thesemonetary assets acquired and liabilities assumed is typically the least complex aspect of the Company’s accounting for business combinations due to management’s experience and the inherently lower level of complexity. Due to the higher degree of complexity associated with the valuation of intangible assets, is based on detailed valuations that use informationthe Company usually obtains the assistance of outside valuation experts in the allocation of purchase price to the identifiable intangible assets acquired, which can be both definite-lived, such as acquired technology, customer and assumptions provided by management.contractor relationships, or indefinite lived, such as acquired trade names and trademarks. While outside valuation experts may be used, management has ultimate responsibility for the valuation methods, models and inputs used and the resulting purchase price allocation. The excess purchase price over the net tangible and identifiable intangible assets is recorded as goodwill and is assigned to the reporting unit(s)unit that is expected to benefit from the business combination as of the acquisition date.
Recoverability of goodwillGoodwill and indefinite-lived intangible assetsIndefinite-Lived Intangible Assets
Goodwill is the Company’s largest asset with aThe carrying value of $770.2goodwill is $916.0 million and $171.0$891.8 million at December 31, 20172021 and 2016,2020, respectively. Indefinite-lived intangible assets, which consist of the Company’s acquired trade names and trademarks, have a carrying value of $153.4$171.4 million and $4.9$171.9 million at December 31, 20172021 and 2016,2020, respectively.
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Goodwill and indefinite-lived intangible assets are assessed annually for impairment as of October 1, or more frequently if an event occurs or circumstances change that would indicate that it is more likely than not reducethat the fair value of a reporting unit or the fair value of an indefinite-lived intangible asset has declined below its carrying value. In performing its annual goodwill impairment assessment, the Company has the option under GAAP to qualitatively assess whether it is more likely than not that the fair value of a reporting unit is less than its carrying value; if the conclusion of the qualitative assessment is that there are no indicators of impairment, the Company does not perform a quantitative test, which would require a valuation of the reporting unit, as of October 1. GAAP provides a not all-inclusive set of examples of macroeconomic, industry, market and company specific factors for entities to consider in performing the qualitative assessment described above; management considers the factors it deems relevant in making its more likely than not assessments. While the Company also has the option under GAAP to qualitatively assess whether it is more likely than not that the fair values of its indefinite-lived intangible assets are less than their carrying values, the Company’s policy is to quantitatively determine the fair value of each of its indefinite-lived intangible assets annually as of October 1, in part, because the level of effort required to perform the quantitative and qualitative assessments is essentially equivalent.
If the conclusion of our qualitative assessment is that there are indicators of impairment and a quantitative test is required, the annual or interim quantitative test of the recovery of goodwill involves a comparison of the estimated fair value of the Company’s reporting unit that is being tested to its carrying value. If the estimated fair value of a reporting unit exceeds its carrying value, goodwill of the reporting unit is not impaired. If the carrying value of a reporting unit exceeds its estimated fair value, a goodwill impairment equal to the excess is recorded.

The Company’s annual assessment of the recovery of goodwill begins with management’s reassessment of its operating segments and reporting units. A reporting unit is an operating segment or one level below an operating segment, which is referred to as a component. This reassessment of reporting units is also made each time the Company changes its operating segments. If the goodwill of a reporting unit is allocated to newly formed reporting units, the allocation is usually made to each reporting unit based upon their relative fair values.

For the Company’s annual goodwill test at October 1, 2017,2021, a qualitative assessment of the North America and Europe reporting units’ goodwill was performed becauseand the Company concluded it was more likely than not that the fair value of these reporting units was in excess of their respective carrying values. In the aggregate, ANGI Homeservices'Angi’s October 1, 20172021 market capitalization of $5.9$6.2 billion exceeded its carrying value by more than 450%.approximately $5.0 billion. The primary factor that the Company considered in its qualitative assessment for its Europe reporting unit was a valuationwere valuations performed during September 2017, which2021 that indicated a fair value in excess of the carrying value. The fair value based on the valuation that was prepared primarily in connection with IAC's contribution of HomeAdvisor International into ANGI Homeservices immediately prior to the Combination. The valuation was prepared timemost proximate to, but not as of, October 1, 2017. The fair value from the September 2017 valuation exceeds2021 exceeded the carrying value of the Europe reporting unit by 60%.$164.2 million. The primary factorsfactor that the Company considered in its qualitative assessment for its North America reporting unit were the strong operating performance of the North America reporting unit andwas the significant excess of the estimated fair value of the North America reporting unit over its carrying value. The fair value of the North America reporting unit was estimated by subtracting the fair

value of the Europe reporting unit, frombased on the September 2017 valuation described above, from the October 1, 20172021 market capitalization of the Company; the estimated fair value of the North America reporting unit exceeded its carrying value by approximately 500%.$4.9 billion.
While the Company has the option to qualitatively assess whether it is more likely than not that theThe fair valuesvalue of its indefinite-lived intangible assets are less than their carrying values, the Company’s policyEurope reporting unit is determined using both an income approach based on discounted cash flows (“DCF”) and a market approach when it tests goodwill for impairment, either on an interim basis or annual basis as of October 1 each year. Determining fair value using a DCF analysis requires the exercise of significant judgment with respect to determineseveral items, including the amount and timing of expected future cash flows and appropriate discount rates. The expected cash flows used in the DCF analyses are based on the Company’s most recent forecast and budget and, for years beyond the budget, the Company’s estimates, which are based, in part, on forecasted growth rates. The discount rates used in the DCF analyses are intended to reflect the risks inherent in the expected future cash flows of the respective reporting units. 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 eachthe Company’s Europe reporting unit was 15% in both 2021 and 2020. Determining fair value using a market approach considers multiples of its indefinite-lived intangible assets annually asfinancial metrics based on both acquisitions and trading multiples of October 1. In 2017,a selected peer group of companies. From the Company did not quantitatively assesscomparable companies, a representative market multiple is determined which is applied to financial metrics to estimate the Angie's List indefinite-lived intangible assets acquired through the Combination given the proximityfair value of the September 29, 2017 transaction date to the October 1, 2017 annual test date. a reporting unit. 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.
The Company determines the fair value of indefinite-lived intangible assets using an avoided royalty discounted cash flow (“DCF”)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. The discount rates used in the DCF analyses are intended to reflect the risks inherent in the expected future cash flows generated by the respective intangible assets. The royalty rates used
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in the DCF analyses are based upon an estimate of the royalty rates that a market participant would pay to license the Company’s trade names and trademarks. The future cash flows are based on the Company's most recent forecast and budget and, for years beyond the budget, the Company’s estimates, which are based, in part, on forecasted growth rates. Assumptions used in the avoided royalty DCF analyses, including the discount rate and royalty rate, are assessed annually based on the actual and projected cash flows related to the asset, as well as macroeconomic and industry specific factors. The discount raterates used in the Company’s annual indefinite-lived impairment assessment ranged from 11.1% to 15.0% in 2021 and 11.5% to 18.5%15.0% in 2017 and was 17% in 2016,2020, and the royalty raterates used ranged from 1%2.0% to 6%5.0% in 20172021 and was 1%2.0% to 5.5% in 2016.2020.
The 2017, 20162021 and 20152020 annual assessments of goodwill and indefinite-lived intangible assets identified no impairments.
Recoverability and estimated useful livesEstimated Useful Lives of long-lived assetsLong-Lived Assets
We review the carrying value of all long-lived assets, comprising propertyof leased right-of-use assets (“ROU assets”), capitalized software, leasehold improvements and equipment and definite-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. The carrying value of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. If the carrying value is deemed not to be recoverable, an impairment loss is recorded equal to the amount by which the carrying value of the long-lived asset exceeds its fair value. In addition, the Company reviews the useful lives of its long-lived assets whenever events or changes in circumstances indicate that these lives may be changed. The carrying value of property and equipment and definite-lived intangiblethese long-lived assets is $228.4$210.5 million and $29.6$234.2 million at December 31, 20172021 and 2016,2020, respectively.
Income taxesTaxes
We accountThe 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 benefithas 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 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. The portion of the December 31, 2021 deferred tax assets that will be payable to IAC pursuant to the tax sharing agreement, upon realization, is $93.9 million.

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. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. A valuation allowance is provided on deferred tax assets if it is determined that it is more likely than not that the deferred tax asset will not be realized. As ofAt December 31, 20172021 and 2016,2020, the balance of the Company’s net deferred tax assetsasset is $45.1$120.8 million and $13.0$84.4 million, respectively.
The Company evaluates and accounts for uncertain tax positions using a two-step approach. Recognition (step one) occurs when the Company concludes that a tax position, based solely on its technical merits, is more-likely-than-not to be sustainable upon examination. Measurement (step two) determines the amount of benefit that is greater than 50% likely to be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. De-recognition of a tax position that was previously recognized would occur when the Company subsequently determines that a tax position no longer meets the more-likely-than-not threshold of being sustained. This measurement step is inherently difficult and requires subjective estimations of such amounts to determine the probability of various possible outcomes. At December 31, 20172021 and 2016, we have2020, the Company has unrecognized tax benefits, including interest, of $1.5$6.3 million and $0.6$5.3 million, respectively. We consider many factors when evaluating and estimating our tax positions and unrecognized tax benefits, which may require periodic adjustmentsadjustment and which may not accurately anticipate actual outcomes. Although management currently believes changes to reservesunrecognized 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 the 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.
The ultimate amount of deferred income tax assets realized and the amounts paid for deferred income tax liabilities and uncertainunrecognized tax positionsbenefits may vary from our estimates due to future changes in income tax law, state income tax apportionment
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or the outcome of any review of our tax returns by the various tax authorities, as well as actual operating results of the Company that vary significantly from anticipated results.

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. As of December 31, 2021, the Company is in a three-year cumulative loss position. The Company’s most significant net deferred tax asset relates to U.S. federal net operating loss (“NOL”) carryforwards of $124.5 million. The Company expects to generate future taxable income of at least $592.9 million prior to the expiration of these NOLs, $372.2 million of which expire between 2030 and 2037, and the remainder of which never expire, to fully realize this deferred tax asset.
Stock-based compensationStock-Based Compensation
Stock-basedThe stock-based compensation expense reflected in our consolidated and combined statementstatements of operations consists ofincludes expense related to the Company'sCompany’s stock options, stock appreciation rights, RSU awards, including those that are linked to the achievement of the Company’s stock optionsprice, known as market-based awards (“MSUs”) and RSUs,those that are linked to the achievement of a performance target, known as performance-based awards (“PSUs”), equity instruments denominated in shares of subsidiaries, and IAC denominated stock options and PSUs held by ANGI Homeservices employees.options.
The Company recorded stock-based compensation expense of $149.2 million, $8.9$28.7 million and $7.9$83.6 million for the years ended December 31, 2017, 20162021 and 2015,2020, respectively. Included in stock-based compensation expense in 2017the years ended December 31, 2021 and 2020 is $122.1$1.0 million and $22.2 million, respectively, related to the modification of previously issued HomeAdvisor vestedequity awards and unvestedAngie’s List equity awards, both of which were converted into ANGI Homeservices'Angi’s equity awards when the businesses combined on September 29, 2017. These modified awards finished vesting in the first quarter of 2021. Additionally, in the first quarter of 2021, the Company recognized a net decrease of $7.7 million due to the reversal of previously recognized expense related to previously issued Angie's List equityunvested awards that were forfeited due to management departures, and, the acceleration of certain Angie's List equity awards resulting from the termination of employees in connection with the Combination.departure of the president and chief operating officer of the Company in December 2020, the Company recognized $14.1 million of expense related to the acceleration of vesting of his unvested stock appreciation rights and RSUs and the extension of the post-termination exercise period for his vested and exercisable stock appreciation rights.
Stock-based compensation at the Company is complex due to our desire to attract, retain, inspire and reward outstanding entrepreneurs and managers at the Company, including recently acquired companies, by allowing them to benefit directly from the value they help to create. We accomplish these objectives, in part, by issuing equity awards denominated in the equity of our subsidiaries as well as in Angi Inc. We further refine this approach by tailoring certain equity awards to the applicable circumstances. For example, we issue certain equity awards for which vesting is linked to the achievement of a performance target such as revenue or profits; these awards are referred to as performance-based awards. In other cases, we link the vesting of equity awards to the achievement of a value target for a subsidiary or Angi Inc.’s stock price, as applicable; these awards are referred to as market-based awards. The nature and variety of these types of equity-based awards creates complexity in our determination of stock-based compensation expense.
In addition, acquisitions are an important part of the Company’s growth strategy. These transactions may result in the modification of equity awards which creates additional complexity and additional stock-based compensation expense. Also, our internal reorganizations can also lead to modifications of equity awards and result in additional complexity and stock-based compensation expense.
Finally, the means by which we settle our equity-based awards also introduces complexity into our financial reporting. We provide a path to liquidity by settling the subsidiary denominated awards in IAC or Angi Inc. shares. In addition, certain former HomeAdvisor (US) awards can be settled in IAC or Angi Inc. awards at IAC’s election. These features increase the complexity of our earnings per share calculations.
There were no stock options or stock appreciation rights granted by the Company for the years ended December 31, 2021, 2020 or 2019. The Company estimates the fair value of newly granted or modified stock appreciation rights (including those modified in connection with the Combination) and stock options, including equity instruments denominated in shares of subsidiaries, using the Black-Scholes option-pricing model. The Black-Scholes option-pricing model requires the use of highly subjective and complex assumptions, the most significant of which include expected term, expected volatility of the underlying shares, risk-free interest rates and the expected dividend yield. In addition, the recognition of stock-based compensation expense is impacted by our estimated forfeiture rates, which are based, in part, on historical forfeiture rates. For stock appreciation rights and stock options, including equity instruments denominated in shares of subsidiaries, the grant date fair value of the award is recognized as an expense on a straight-line basis, net of estimated forfeitures, over the requisite service period, which is the vesting period of the award. The impact on stock-based compensation expense for the year ended December 31, 2017, assuming a 1% increase in the risk-free interest rate, a 10% increase in the volatility factor Company also issues RSUs, PSUs
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and a one-year increase in the weighted average expected term of the outstanding awards would be an increase of $1.3 million, $3.8 million and $1.8 million, respectively.MSUs. For RSUs, the value of the instrument is measured at the grant date as the fair value of the underlying ANGI HomeservicesAngi’s common stock and expensed as stock-based compensation expense over the vesting term.
Prior to For PSUs, the Combination, the majority of stock-based compensation expense related to HomeAdvisor (US) denominated stock appreciation rights and the common stock of certain other entities comprising the HomeAdvisor business. These awards were settleable in shares of IAC common stock having a value equal to the difference between the exercise price and the fair market value of the instrument is measured at the grant date as the fair value of the underlying Angi’s common stock and expensed as stock-based compensation over the vesting term when the performance targets are considered probable of being achieved. For MSUs, a lattice model is used to estimate the value of the relevant entity of the HomeAdvisor business. Upon completion of the Combination, the stock appreciation rights that related to the common stock of HomeAdvisor (US) were converted into awards that are settleable in Class A shares of our common stock, or in shares of IAC common stock at IAC's election. The equity awards that are denominated in the shares of certain subsidiaries comprising the HomeAdvisor business are also settleable in Class A shares of our common stock, or in shares of IAC common stock at IAC’s election. To the extent shares of IAC common stock are issued in settlement of these awards, the Company will reimburse IAC for the cost of those shares by issuing additional Class A shares of its common stock to IAC. For IAC equity awards held by employees of ANGI Homeservices, the Company will reimburse IAC for the cost of those shares by issuing to IAC, at IAC’s election, either cash or additional Class B shares of its common stock.awards.
Recent Accounting Pronouncements
Effective January 1, 2018, the Company adopted Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers. The effect of the adoption of ASU No. 2014-09 on the Company is that sales commissions, which represent the incremental direct costs of obtaining a service professional contract, will be capitalized and amortized over the average life of a service professional. These costs were expensed as incurred prior to January 1, 2018. The current estimate of the cumulative effect of the adoption of ASU No. 2014-09 is the establishment of a current and non-current asset for capitalized sales commissions of approximately $30 million and $5 million, respectively, for the unamortized cost of the sales commissions paid to obtain a service professional and a related deferred tax liability of approximately $10 million, resulting in a net increase to retained earnings of $25 million on January 1, 2018. The estimated impact of ASU No. 2014-09 on the Company's consolidated and combined statement of operations, if January 1, 2017 were the date of adoption, would be a reduction in net loss of approximately $8 million.
For a discussion of other recent accounting pronouncements, see “Note 2—Summary of Significant Accounting Policies” to the consolidated and combined financial statements included in "Item 8. Consolidated and Combined Financial Statements and Supplementary Data."

Item 7A.    Quantitative and Qualitative Disclosures About Market Risk
Interest rateRate Risk
The Company’s exposure to market risk for changes in interest rates relates primarily to the Company’s long-term debt.
At December 31, 2017,2021, the Company's $275principal amount of the Company’s outstanding debt is comprised of $500.0 million Term Loanof ANGI Group Senior Notes, which bears interest at LIBOR plus 2.00%. Asa fixed rate. If market rates decline, the Company runs the risk that the related required payments of December 31, 2017, the rate in effect was 3.38%. If LIBOR were toANGI Group Senior Notes 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 100 basis points, then the annual interest expense on the Term Loan would$28.4 million. Such potential increase or decrease by $2.8 million.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 riskCurrency Exchange Risk
We conduct businessThe Company has operations in certain foreign markets, principallyprimarily in various jurisdictions within the European Union and as a result, are exposed to foreign exchange risk for both the Euro and British Pound ("GBP").
For the years ended December 31, 2017, 2016 and 2015, international revenue accounted for 9%, 8% and 9%, respectively, of our consolidated and combined revenue.United Kingdom. The Company's primaryCompany has exposure to foreign currency exchange risk relatesrelated to investments inits foreign subsidiaries that transact business in a functional currency other than the U.S. dollar. As a result, as foreign currency exchange rates fluctuate, the translation of the statement of operations of the Company'sCompany’s international businesses into U.S. dollars affects year-over-year comparability of operating results. During periods
In addition, certain of a strengtheningthe Company’s U.S. dollar, our net earnings will be reduced when translated into U.S. dollars. The average GBPoperations have customers in international markets. International revenue which is measured based upon where the customer is located, accounted for 6%, 6%, and Euro versus the U.S. dollar exchange rate was approximately 5% higher and 2% lower, respectively, in 2017 compared to 2016.
Foreign currency exchange gains and losses included in the Company's earnings7% for the years ended December 31, 2017, 20162021, 2020 and 20152019, 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 $0.9$1.2 million, $(1.1)$(0.1) million, and $(0.5)$0.6 million for the year ended December 31, 2021, 2020 and 2019, respectively. Historically,
The Company’s exposure to foreign currency exchange gains andor losses have not been material to the Company. As a result, historically, we haveCompany, therefore, the Company has not hedged any foreign currency exposures. Our continuedAny growth and expansion of our international expansionoperations increases our exposure to foreign exchange rate fluctuations. Significant foreign exchange rate fluctuations, and as a result, such fluctuationsin the case of one currency or collectively with other currencies, could have a significant impact on our future results of operations.
47

Table of Contents

Item 8.    Consolidated and Combined Financial Statements and Supplementary Data


Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of ANGI HomeservicesAngi Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated and combined balance sheet of ANGI HomeservicesAngi Inc. and subsidiaries (the Company) as of December 31, 20172021 and 2016, and2020, the related consolidated and combined statements of operations, comprehensive operations, shareholders'shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2017,2021, 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”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 20172021 and 2016,2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2017,2021, in conformity with U.S. generally accepted accounting principles.
As discussedWe also have audited, in Note 2 toaccordance with the consolidatedstandards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial statements,reporting as of December 31, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Company changed its methodCommittee of accounting for stock compensation in 2017 due toSponsoring Organizations of the adoption of ASU No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.Treadway Commission (2013 framework) and our report dated March 1, 2022 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company'sCompany’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB)PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. 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.
48

Table of Contents

Stock-Based Compensation
Description of
the Matter
During the year ended December 31, 2021, the Company recorded stock-based compensation expense of $28.7 million. As disclosed in Note 10 to the consolidated financial statements, the Company issues various types of equity awards, including stock options, restricted stock units, performance-based stock units, market-based awards and equity instruments denominated in the shares of certain subsidiaries.

Auditing the Company’s accounting for stock-based compensation required complex auditor judgment due to the number and the variety of the types of equity awards, the prevalence of modifications, the subjectivity of assumptions used to value stock-based awards, the use of market-based vesting conditions and the existence of awards denominated in the shares of certain subsidiaries.

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 stock-based compensation. For example, we tested controls over the Company’s process to assess the completeness of its share-based awards and for measuring and recording stock-based compensation, including management’s review of the underlying calculations, the significant assumptions used in valuing certain awards and related valuation reports prepared by its specialists.

To test stock-based compensation expense, we performed audit procedures that included, among others, assessing the completeness of the awards granted and evaluating the methodologies used to estimate the fair value of the awards granted and the significant assumptions described above. Our procedures also included, evaluating the key terms and conditions of awards granted to assess the accounting treatment for a sample of awards, testing the clerical accuracy of the calculation of the expense recorded and assessing the Company’s accounting for award modifications. Additionally, for certain awards issued by the Company, we involved our internal valuation specialists to assess the valuation methodologies and assumptions used in estimating the fair value of the awards.
/s/ ERNSTErnst & YOUNGYoung LLP
We have served as the Company’s auditor since 2017.


New York, New York
March 14, 20181, 2022


49

Table of Contents

ANGI HOMESERVICES INC. AND SUBSIDIARIES
CONSOLIDATED AND COMBINED BALANCE SHEET

December 31, 2021December 31, 2020
(In thousands, except par value amounts)
ASSETS
Cash and cash equivalents$428,136 $812,705 
Marketable debt securities— 49,995 
Accounts receivable, net of reserves of $36,360 and $27,839, respectively84,387 43,148 
Other current assets70,548 71,958 
Total current assets583,071 977,806 
Capitalized software, leasehold improvements and equipment, net118,267 108,842 
Goodwill916,039 891,797 
Intangible assets, net193,826 209,717 
Deferred income taxes122,693 85,746 
Other non-current assets, net76,245 94,274 
TOTAL ASSETS$2,010,141 $2,368,182 
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES:
Accounts payable$38,860 $30,805 
Deferred revenue53,834 54,654 
Accrued expenses and other current liabilities183,815 148,219 
Total current liabilities276,509 233,678 
Long-term debt, net494,552 712,277 
Deferred income taxes1,883 1,296 
Other long-term liabilities91,670 111,710 
Redeemable noncontrolling interests— 26,364 
Commitments and contingencies00
SHAREHOLDERS’ EQUITY:
Class A common stock, $0.001 par value; authorized 2,000,000 shares; issued 99,745 and 94,238 shares, respectively, and outstanding 80,578 and 78,333, respectively100 94 
Class B convertible common stock, $0.001 par value; authorized 1,500,000 shares; 422,019 and 421,862 shares issued and outstanding422 422 
Class C common stock, $0.001 par value; authorized 1,500,000 shares; no shares issued and outstanding— — 
Additional paid-in capital1,350,457 1,379,469 
(Accumulated deficit) retained earnings(61,629)9,749 
Accumulated other comprehensive income3,309 4,637 
Treasury stock, 19,167 and 15,905 shares, respectively(158,040)(122,081)
Total Angi Inc. shareholders’ equity1,134,619 1,272,290 
Noncontrolling interests10,908 10,567 
Total shareholders’ equity1,145,527 1,282,857 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY$2,010,141 $2,368,182 
 December 31,
 2017 2016
 (In thousands, except par value amounts)
ASSETS   
Cash and cash equivalents$221,521
 $36,377
Accounts receivable, net of allowance of $9,263 and $9,177, respectively28,085
 18,696
Other current assets12,772
 8,739
Total current assets262,378
 63,812
Property and equipment, net of accumulated depreciation and amortization53,292
 23,645
Goodwill770,226
 170,990
Intangible assets, net of accumulated amortization
 
328,571
 10,792
Deferred income taxes50,723
 15,211
Other non-current assets2,072
 11,067
TOTAL ASSETS   
$1,467,262
 $295,517
LIABILITIES AND SHAREHOLDERS' EQUITY   
LIABILITIES:   
Current portion of long-term debt$13,750
 $
Current portion of long-term debt—related party816
 2,838
Accounts payable18,933
 11,544
Deferred revenue62,371
 18,828
Accrued expenses and other current liabilities75,171
 34,438
Total current liabilities171,041
 67,648
Long-term debt, net258,312
 
Long-term debt—related party, net1,997
 47,000
Deferred income taxes5,626
 2,228
Other long-term liabilities5,892
 2,247
    
Redeemable noncontrolling interests21,300
 13,781
    
Commitments and contingencies

 

    
SHAREHOLDERS' EQUITY:   
Class A common stock, $0.001 par value; authorized 2,000,000 shares; 62,818 shares issued and outstanding63
 
Class B convertible common stock, $0.001 par value; authorized 1,500,000 shares; 415,186 shares issued and outstanding415
 
Class C common stock, $0.001 par value; authorized 1,500,000 shares; no shares issued and outstanding
 
Additional paid-in capital1,112,400
 
Accumulated deficit(121,764) 
Invested capital
 154,852
Accumulated other comprehensive income (loss)2,232
 (1,721)
Total ANGI Homeservices Inc. shareholders' equity and invested capital, respectively993,346
 153,131
Noncontrolling interests9,748
 9,482
Total shareholders' equity1,003,094
 162,613
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   
$1,467,262
 $295,517
The accompanying Notes to Consolidated and Combined Financial Statements are an integral part of these statements.
50

ANGI HOMESERVICES INC. AND SUBSIDIARIES
CONSOLIDATED AND COMBINED STATEMENT OF OPERATIONS

Years Ended December 31,
202120202019
(In thousands, except per share data)
Revenue$1,685,438 $1,467,925 $1,326,205 
Operating costs and expenses:
Cost of revenue (exclusive of depreciation shown separately below)325,880 173,281 46,493 
Selling and marketing expense883,643 762,590 733,223 
General and administrative expense405,819 374,096 348,247 
Product development expense70,933 68,803 64,200 
Depreciation59,246 52,621 39,915 
Amortization of intangibles16,430 42,902 55,482 
Total operating costs and expenses1,761,951 1,474,293 1,287,560 
Operating (loss) income(76,513)(6,368)38,645 
Interest expense(23,485)(14,178)(11,493)
Other (expense) income, net(2,509)1,218 6,494 
(Loss) earnings before income taxes(102,507)(19,328)33,646 
Income tax benefit32,013 15,168 1,668 
Net (loss) earnings(70,494)(4,160)35,314 
Net earnings attributable to noncontrolling interests(884)(2,123)(485)
Net (loss) earnings attributable to Angi Inc. shareholders$(71,378)$(6,283)$34,829 
Per share information attributable to Angi Inc. shareholders:
Basic loss per share$(0.14)$(0.01)$0.07 
Diluted loss per share$(0.14)$(0.01)$0.07 
Stock-based compensation expense by function:
Selling and marketing expense$4,064 $4,662 $3,717 
General and administrative expense19,768 73,846 56,475 
Product development expense4,870 5,141 8,063 
Total stock-based compensation expense$28,702 $83,649 $68,255 
 Years Ended December 31,
 2017 2016 2015
 (In thousands, except per share data)
Revenue$736,386
 $498,890
 $361,201
Operating costs and expenses:     
Cost of revenue (exclusive of depreciation shown separately below)34,073
 25,858
 22,936
Selling and marketing expense464,040
 306,713
 225,876
General and administrative expense300,433
 110,093
 86,687
Product development expense47,907
 20,596
 16,842
Depreciation14,543
 8,419
 6,593
Amortization of intangibles23,261
 3,153
 3,835
Total operating costs and expenses884,257
 474,832
 362,769
Operating (loss) income(147,871) 24,058
 (1,568)
Interest expense—third party(1,765) 
 
Interest expense—related party(5,971) (894) (272)
Other income (expense), net1,974
 (699) (398)
(Loss) earnings before income taxes(153,633) 22,465
 (2,238)
Income tax benefit (provision)49,106
 (11,834) (1,758)
Net (loss) earnings(104,527) 10,631
 (3,996)
Net loss attributable to noncontrolling interests1,409
 2,497
 2,671
Net (loss) earnings attributable to ANGI Homeservices Inc. shareholders$(103,118) $13,128
 $(1,325)
      
Per share information attributable to ANGI Homeservices Inc. shareholders:  
Basic (loss) earnings per share$(0.24) $0.03
 $(0.00)
Diluted (loss) earnings per share$(0.24) $0.03
 $(0.00)
      
Stock-based compensation expense by function:     
Cost of revenue$19
 $
 $
Selling and marketing expense25,763
 863
 545
General and administrative expense107,662
 6,804
 6,137
Product development expense15,786
 1,249
 1,171
Total stock-based compensation expense$149,230
 $8,916
 $7,853


The accompanying Notes to Consolidated and Combined Financial Statements are an integral part of these statements.


51

ANGI HOMESERVICES INC. AND SUBSIDIARIES
CONSOLIDATED AND COMBINED STATEMENT OF COMPREHENSIVE OPERATIONS

Years Ended December 31,
202120202019
(in thousands)
Net (loss) earnings$(70,494)$(4,160)$35,314 
Other comprehensive (loss) income:
Change in foreign currency translation adjustment(1,219)6,827 399 
Change in unrealized gains and losses on available-for-sale marketable debt securities— — (3)
Total other comprehensive (loss) income(1,219)6,827 396 
Comprehensive (loss) income(71,713)2,667 35,710 
Components of comprehensive income attributable to noncontrolling interests:
Net earnings attributable to noncontrolling interests(884)(2,123)(485)
Change in foreign currency translation adjustment attributable to noncontrolling interests(109)(811)86 
Comprehensive income attributable to noncontrolling interests(993)(2,934)(399)
Comprehensive (loss) income attributable to Angi Inc. shareholders$(72,706)$(267)$35,311 
 Years Ended December 31,
 2017 2016 2015
 (In thousands)
Net (loss) earnings$(104,527) $10,631
 $(3,996)
Other comprehensive income (loss):     
Change in foreign currency translation adjustment4,968
 (657) (581)
Total other comprehensive income (loss)4,968
 (657) (581)
Comprehensive (loss) income(99,559) 9,974
 (4,577)
Components of comprehensive loss attributable to noncontrolling interests:     
Net loss attributable to noncontrolling interests1,409
 2,497
 2,671
Change in foreign currency translation adjustment attributable to noncontrolling interests(1,015) 
 
Comprehensive loss attributable to noncontrolling interests394
 2,497
 2,671
Comprehensive (loss) income attributable to ANGI Homeservices Inc. shareholders$(99,165) $12,471
 $(1,906)


The accompanying Notes to Consolidated and Combined Financial Statements are an integral part of these statements.



52

ANGI HOMESERVICES INC. AND SUBSIDIARIES
CONSOLIDATED AND COMBINED STATEMENT OF SHAREHOLDERS' EQUITY
Years Ended December 31, 2017, 20162021, 2020, and 20152019
Angi Inc. Shareholders’ Equity
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 Income (Loss)
Total
Shareholders’
Equity
Redeemable
Noncontrolling
Interests
Additional Paid-in Capital(Accumulated Deficit) Retained EarningsTreasury
 Stock
Noncontrolling
Interests
$Shares$Shares$Shares
(In thousands)
Balance as of December 31, 2018$18,163 $81 80,515 $421 421,118 $— — $1,333,097 $(18,797)$(1,861)$— $1,312,941 $9,046 $1,321,987 
Net earnings142 — — — — — — — 34,829 — — 34,829 343 35,172 
Other comprehensive income (loss)39 — — — — — — — — 482 — 482 (125)357 
Stock-based compensation expense148 — — — — — — 65,815 — — — 65,815 — 65,815 
Issuance of common stock pursuant to stock-based awards, net of withholding taxes— 6,492 — — — — (32,963)— — — (32,957)— (32,957)
Issuance of common stock to IAC pursuant to the employee matters agreement— — — 452 — — (1,766)— — — (1,765)— (1,765)
Purchase of treasury stock— — — — — — — — — — (57,949)(57,949)— (57,949)
Adjustment pursuant to the tax sharing agreement— — — — — — — 1,151 — — — 1,151 — 1,151 
Purchase of redeemable noncontrolling interests(71)— — — — — — — — — — — — — 
Adjustment of redeemable noncontrolling interests to fair value8,242 — — — — — — (8,242)— — — (8,242)— (8,242)
Other— — — — — — — (17)— — — (17)— (17)
Balance as of December 31, 2019$26,663 $87 87,007 $422 421,570 $— — $1,357,075 $16,032 $(1,379)$(57,949)$1,314,288 $9,264 $1,323,552 
Net earnings (loss)767 — — — — — — — (6,283)— — (6,283)1,356 (4,927)
Other comprehensive income439 — — — — — — — — 6,016 — 6,016 372 6,388 
Stock-based compensation expense15 — — — — — — 85,267 — — — 85,267 — 85,267 
Issuance of common stock pursuant to stock-based awards, net of withholding taxes— 7,231 — — — — (62,704)— — — (62,697)— (62,697)
Issuance of common stock to IAC pursuant to the employee matters agreement— — — — 292 — — (1,445)— — — (1,445)— (1,445)
Purchase of treasury stock— — — — — — — — — — (64,132)(64,132)— (64,132)
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 value1,645 — — — — — — (1,645)— — — (1,645)— (1,645)
Purchase of noncontrolling interests— — — — — — — — — — — — — — 
Other— — — — — — — (692)— — — (692)690 (2)
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 
53

ANGI INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
Years Ended December 31, 2021, 2020, and 2019
    ANGI Homeservices Inc. Shareholders' Equity and Invested Capital    
    
Class A
Common Stock
$0.001
Par Value
 
Class B
Common Stock
$0.001
Par Value
 
Class C Common Stock
$0.001
Par Value
         
Total
ANGI Homeservices Inc. Shareholders' Equity and Invested Capital
    
                   
             
Accumulated
Other
Comprehensive
(Loss) Income
    
Total
Shareholders'
Equity
 
Redeemable
Noncontrolling
Interests
              Additional Paid-in Capital Accumulated Deficit 
Invested
Capital
   
Noncontrolling
Interests
 
   $ Shares $ Shares $ Shares       
   (In thousands)  
Balance as of December 31, 2014  
$6,478
  $
 
 $
 
 $
 
 $
 $
 $144,817
 $(483) $144,334
 $
 $144,334
Net loss(2,671)  
 
 
 
 
 
 
 
 (1,325) 
 (1,325) 
 (1,325)
Other comprehensive loss
  
 
 
 
 
 
 
 
 
 (581) (581) 
 (581)
Adjustment of redeemable noncontrolling interests to fair value12,170
  
 
 
 
 
 
 
 
 (12,170) 
 (12,170) 
 (12,170)
Net decrease in IAC/InterActiveCorp’s investment in HomeAdvisor
  
 
 
 
 
 
 
 
 (3,008) 
 (3,008) 
 (3,008)
Other1,657
  
 
 
 
 
 
 
 
 
 
 
 
 
Balance as of December 31, 2015   
$17,634
  $
 
 $
 
 $
 
 $
 $
 $128,314
 $(1,064) $127,250
 $
 $127,250
Net (loss) earnings(2,377)  
 
 
 
 
 
 
 
 13,128
 
 13,128
 (120) 13,008
Other comprehensive loss
  
 
 
 
 
 
 
 
 
 (657) (657) 
 (657)
Noncontrolling interests created in an acquisition
  
 
 
 
 
 
 
 
 
 
 
 9,811
 9,811
Purchase of noncontrolling interests
  
 
 
 
 
 
 
 
 
 
 
 (209) (209)
Adjustment of redeemable noncontrolling interests to fair value(3,110)  
 
 
 
 
 
 
 
 3,110
 
 3,110
 
 3,110
Net increase in IAC/InterActiveCorp’s investment in HomeAdvisor
  
 
 
 
 
 
 
 
 10,300
 
 10,300
 
 10,300
Other1,634
  
 
 
 
 
 
 
 
 
 
 
 
 
Balance as of December 31, 2016   
$13,781
  $
 
 $
 
 $
 
 $
 $
 $154,852
 $(1,721) $153,131
 $9,482
 $162,613
Net (loss) earnings(1,391)  
 
 
 
 
 
 
 (121,764) 18,646
 
 (103,118) (18) (103,136)
Other comprehensive income758
  
 
 
 
 
 
 
 
 
 3,953
 3,953
 257
 4,210
Net increase in IAC/InterActiveCorp’s investment in HomeAdvisor prior to the Combination
  
 
 
 
 
 
 
 
 46,339
 
 46,339
 
 46,339
Contribution of IAC/InterActiveCorp's HomeAdvisor business to ANGI Homeservices Inc. and Combination with Angie's List
  61
 61,291
 415
 414,754
 
 
 997,107
 
 (218,112) 
 779,471
 
 779,471
Stock-based compensation expense2,017
  
 
 
 
 
 
 125,451
 
 
 
 125,451
 
 125,451
Issuance of common stock pursuant to stock-based awards, net of withholding taxes
  2
 1,527
 
 
 
 
 (8,492) 
 
 
 (8,490) 
 (8,490)
Issuance of common stock to IAC pursuant to the employee matters agreement
  
 
 
 432
 
 
 
 
 
 
 
 
 
Redeemable noncontrolling interests created in acquisitions14,758
  
 
 
 
 
 
 
 
 
 
 
 
 
Purchase of redeemable noncontrolling interests(11,991)  
 
 
 
 
 
 
 
 
 
 
 
 
Purchase of noncontrolling interests
  
 
 
 
 
 
 
 
 
 
 
 (848) (848)
Adjustment of redeemable noncontrolling interests to fair value3,332
  
 
 
 
 
 
 (1,607) 
 (1,725) 
 (3,332) 
 (3,332)
Other36
  
 
 
 
 
 
 (59) 
 
 
 (59) 875
 816
Balance as of December 31, 2017$21,300
  $63
 62,818
 $415
 415,186
 $
 
 $1,112,400
 $(121,764) $
 $2,232
 $993,346
 $9,748
 $1,003,094
Angi Inc. Shareholders’ Equity
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 Income (Loss)
Total
Shareholders’
Equity
Redeemable
Noncontrolling
Interests
Additional Paid-in Capital(Accumulated Deficit) Retained EarningsTreasury
 Stock
Noncontrolling
Interests
$Shares$Shares$Shares
(In thousands)
Net (loss) earnings(23)— — — — — — — (71,378)— — (71,378)907 (70,471)
Other comprehensive income (loss)515 — — — — — — — — (1,328)— (1,328)(406)(1,734)
Stock-based compensation expense— — — — — — — 33,057 — — — 33,057 — 33,057 
Issuance of common stock pursuant to stock-based awards, net of withholding taxes— 2,919 — — — — (61,226)— — — (61,223)— (61,223)
Issuance of common stock to IAC pursuant to the employee matters agreement— 2,588 — 157 — — (3)— — — — — — 
Purchase of treasury stock— — — — — — — — — — (35,959)(35,959)— (35,959)
Purchase of noncontrolling interests(28,318)— — — — — — — — — — — (160)(160)
Adjustment of redeemable noncontrolling interests to fair value1,462 — — — — — — (430)— — — (430)— (430)
Other— — — — — — — (410)— — — (410)— (410)
Balance as of December 31, 2021$— $100 99,745 $422 422,019 $— — $1,350,457 $(61,629)$3,309 $(158,040)$1,134,619 $10,908 $1,145,527 

The accompanying Notes to Consolidated and Combined Financial Statements are an integral part of these statements.




54

ANGI HOMESERVICES INC. AND SUBSIDIARIES
CONSOLIDATED AND COMBINED STATEMENT OF CASH FLOWS

Years Ended December 31,
202120202019
(In thousands)
Cash flows from operating activities:
Net (loss) income$(70,494)$(4,160)$35,314 
Adjustments to reconcile net loss to net cash provided by operating activities:
Provision for credit losses88,076 78,229 64,278 
Stock-based compensation expense28,702 83,649 68,255 
Depreciation59,246 52,621 39,915 
Amortization of intangibles16,430 42,902 55,482 
Deferred income taxes(36,306)(15,278)(3,250)
Impairment of long-lived and right-of-use assets12,671 169 30 
Non-cash lease expense12,880 13,659 12,318 
Revenue reserves8,569 10,251 5,934 
Other adjustments, net5,107 1,702 2,241 
Changes in assets and liabilities, net of effects of acquisitions and dispositions:
Accounts receivable(115,379)(79,830)(78,954)
Other assets923 (7,672)1,064 
Accounts payable and other liabilities14,018 30,597 24,332 
Operating lease liabilities(16,847)(13,391)(10,705)
Income taxes payable and receivable232 (1,243)1,650 
Deferred revenue(1,619)(3,786)(3,743)
Net cash provided by operating activities6,209 188,419 214,161 
Cash flows from investing activities:
Acquisitions, net of cash acquired(25,607)(2,264)(20,341)
Capital expenditures(70,215)(52,488)(68,804)
Purchases of marketable debt securities— (99,977)— 
Proceeds from maturities of marketable debt securities50,000 50,000 25,000 
Net proceeds from the sale of a business750 731 23,615 
Proceeds from sale of fixed assets— 20 — 
Other, net— 24 (103)
Net cash used in investing activities(45,072)(103,954)(40,633)
Cash flows from financing activities:
Proceeds from the issuance of Senior Notes— 500,000 — 
Principal payments on Term Loan(220,000)(27,500)(13,750)
Debt issuance costs— (6,484)— 
Principal payments on related party debt— — (1,008)
Purchase of treasury stock(35,403)(63,674)(56,905)
Proceeds from the exercise of stock options— — 573 
Withholding taxes paid on behalf of employees on net settled stock-based awards(61,908)(64,079)(35,284)
Distribution from IAC pursuant to the tax sharing agreement— 3,071 (11,355)
Purchase of noncontrolling interests(27,857)(4,281)(71)
Other, net— — (3,732)
Net cash (used in) provided by financing activities(345,168)337,053 (121,532)
Total cash (used) provided(384,031)421,518 51,996 
Effect of exchange rate changes on cash and cash equivalents and restricted cash(45)565 661 
Net (decrease) increase in cash and cash equivalents and restricted cash(384,076)422,083 52,657 
Cash and cash equivalents and restricted cash at beginning of period813,561 391,478 338,821 
Cash and cash equivalents and restricted cash at end of period$429,485 $813,561 $391,478 
 Years Ended December 31,
 2017 2016 2015
 (In thousands)
Cash flows from operating activities:     
Net (loss) earnings$(104,527) $10,631
 $(3,996)
Adjustments to reconcile net (loss) earnings to net cash provided by operating activities:     
Stock-based compensation expense149,230
 8,916
 7,853
Amortization of intangibles23,261
 3,153
 3,835
Bad debt expense27,514
 17,425
 13,234
Depreciation14,543
 8,419
 6,593
Deferred income taxes(48,350) (3,719) (3,469)
Other adjustments, net(911) 1,142
 874
Changes in assets and liabilities, net of effects of acquisitions:     
Accounts receivable(33,179) (23,862) (16,202)
Other current assets4,523
 (2,972) (1,823)
Accounts payable and other current liabilities778
 14,936
 1,339
Income taxes payable and receivable(2,054) 6,932
 2,459
Deferred revenue10,995
 6,895
 7,188
Net cash provided by operating activities   
41,823
 47,896
 17,885
Cash flows from investing activities:     
Acquisitions, net of cash acquired(66,340) (15,649) 
Capital expenditures(26,837) (16,660) (10,170)
Net cash used in investing activities   
(93,177) (32,309) (10,170)
Cash flows from financing activities:     
Borrowing under term loan275,000
 
 
Debt issuance costs(3,013) 
 
Proceeds from issuance of related party debt131,360
 44,838
 
Principal payments on related party debt(181,580) (11,350) 
Proceeds from the exercise of stock options
1,653
 
 
Withholding taxes paid on behalf of employees on net settled stock-based awards
(10,113) 
 
Funds returned from (held in) escrow for MyHammer tender offer10,604
 (10,548) 
Transfers from (to) IAC/InterActiveCorp for periods prior to the Combination24,178
 (4,305) (9,525)
Purchase of noncontrolling interests(12,789) (209) 
Other, net37
 
 9
Net cash provided by (used in) financing activities   
235,337
 18,426
 (9,516)
Total cash provided (used)183,983
 34,013
 (1,801)
Effect of exchange rate changes on cash and cash equivalents1,161
 (98) (322)
Net increase (decrease) in cash and cash equivalents   
185,144
 33,915
 (2,123)
Cash and cash equivalents at beginning of period36,377
 2,462
 4,585
Cash and cash equivalents at end of period   
$221,521
 $36,377
 $2,462
The accompanying Notes to Consolidated and Combined Financial Statements are an integral part of these statements.
55

Table of Contents

ANGI HOMESERVICES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

NOTE 1—ORGANIZATION
Nature of Operations
Angi Inc., formerly ANGI Homeservices, isInc., (“Angi,” the world's largest digital marketplace for home services, connecting millions of homeowners across the globe with“Company,” “we,” “our,” or “us”) connects quality home service professionals. ANGI Homeservices operates leading brands in eight countries, including HomeAdvisor®professionals with consumers across more than 500 different categories, from repairing and Angie's List® (United States), HomeStars (Canada), Travaux.com (France), MyHammer (Germanyremodeling homes to cleaning and Austria), MyBuilder (UK), Werkspot (Netherlands) and Instapro (Italy).
ANGI Homeservices owns and operateslandscaping. During the HomeAdvisor digital marketplace in the United States (the “Marketplace”), which connects consumers withyear ended December 31, 2021, over 240,000 domestic service professionals nationwideactively sought consumer matches, completed jobs, or advertised work through Angi Inc. platforms. Additionally, consumers turned to at least one of our brands to find a service professional for home repair, maintenanceapproximately 33 million projects during the year ended December 31, 2021.
Angi Ads provides service professionals the capability to engage with potential customers, including quoting, invoicing, and improvement projects. The Marketplacepayment services. Angi Leads provides consumers with tools and resources to help them find local, pre-screened and customer-rated service professionals. Angi Services allows consumers to browse and buy common household services at set prices, rather than requesting quotes from vetted service professionals, as well as instantly book appointments online for household services (primarily cleaning and handyman services) with those professionals online or connect with them by telephone. Effective September 29, 2017,top-quality, pre-screened independent service professionals. Consumers can request and pay for household services directly through the Company also ownsAngi platform and operates Angie’s List, which connects consumers with service professionals for local servicesAngi fulfills the request through a nationwide online directorythe use of service professionals in over 700 service categories and provides consumers with valuable tools, services and content, including more than ten million verified reviews of local service professionals, to help them research, shop and hire for local services. In addition to its market-leading U.S. operations, ANGI Homeservices owns the leadingindependently established home services online marketplacesproviders engaged in Canada (HomeStars, acquired on February 8, 2017), Germany and Austria (MyHammer, acquired on November 3, 2016), France (Travaux.com) and the Netherlands (Werkspot), as well as operations in Italy (Instapro) and the United Kingdom (MyBuilder, acquired on March 24, 2017). ANGI Homeservices also owns mHelpDesk, a provider of cloud-based field service softwaretrade, occupation and/or business that customarily provides such services. Additionally, Angi Services (including Angi Roofing) manages home improvement projects for small to mid-size businesses, and Felix, a pay-per-call advertising service.consumers.
As of December 31, 2017, the Company had a network of approximately 181,000 Marketplace Paying Service Professionals providing services in more than 500 categories and 400 discrete markets in the United States, ranging from simple home repairs to larger home remodeling projects. The Company generated approximately 18.1 million Marketplace Service Requests from consumers during the year ended December 31, 2017. As of December 31, 2017, the Company also had approximately 45,000 Angie's List Advertising Service Professionals.
The Company has two2 operating segments: (i) North America (United States and Canada), which primarily includes HomeAdvisor's operations in the United States, Angie's List, mHelpDeskAngi Ads, Angi Leads and HomeStars,Angi Services; and (ii) Europe, which includes Travaux.com, MyHammer, MyBuilder, Werkspot and Instapro.
On September 29, 2017, IAC/InterActiveCorp ("IAC") and Angie's List Inc. ("Angie's List") combined IAC's HomeAdvisor business and Angie's List under a new publicly traded company called ANGI Homeservices Inc.Europe. The merger agreement provided for the combination withbrands operate as follows: Angi Ads (formerly Angie’s List by way of the merger of a direct wholly-owned subsidiary of ANGI Homeservices with and into Angie’s List (the "Combination"), with Angie’s List continuing as the surviving company in the Combination. Prior to the effective time of the Combination, IAC contributed its HomeAdvisor business, along with certain cash, to ANGI Homeservices in exchange for shares of ANGI Homeservices Class B common stock. Following the Combination, Angie’s ListList) brand, Angi Leads (formerly HomeAdvisor) brand, and the legal entity that holdsAngi Services (Handy and Angi Roofing) brand.
As used herein, “Angi,” the HomeAdvisor business are direct wholly-owned“Company,” “we,” “our,” “us,” and similar terms refer to Angi Inc. and its subsidiaries of ANGI Homeservices Inc. (unless the context requires otherwise).

At December 31, 2017, IAC2021, IAC/InterActiveCorp (“IAC”) owned 86.9%84.5% and 98.5%98.2% of the economic interest and voting interest, respectively, of ANGI Homeservices. See "Note 4—Business Combinations" for additional information related to the Combination.Company.
All references to "ANGI Homeservices," the "Company," "we," "our" or "us" in this report are to ANGI Homeservices Inc.
NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentationPresentation and consolidationConsolidation
The Company prepares its consolidated and combined financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”). The Company's financial statements were prepared on a consolidated basis beginning September 29, 2017 and on a combined basis for periods prior thereto. The difference in presentation is due to the fact that the final steps of the legal reorganization through which IAC contributed the HomeAdvisor business and cash to fund the cash consideration paid in the Combination to ANGI Homeservices Inc. were not completed, as planned, until immediately prior to September 29, 2017. The preparation of the financial statements on a combined basis for periods prior thereto allows for the financial statements to be presented on a consistent basis for all periods presented. The combined financial statements have

ANGI HOMESERVICES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)



been prepared on a standalone basis and are derived from the historical consolidated financial statements and accounting records of IAC through September 29, 2017. The combined financial statements reflect the historical financial position, results of operations and cash flows of the businesses comprising the HomeAdvisor business since their respective dates of acquisition by IAC. 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 consolidated and combined financial statements reflect the allocation to ANGI Homeservices of certain IAC corporate expenses relating to the HomeAdvisor business based on the historical consolidated financial statements and accounting records of IAC through September 29, 2017. For the purpose of these financial statements, income taxes have been computed as if ANGI Homeservices filed on a standalone, separate tax return basis.
All intercompany transactions and balances between and among the Company and its subsidiaries have been eliminated. All intercompany transactions between (i) ANGI HomeservicesAngi Inc. and (ii) IAC and its subsidiaries, with the exception of notes payable due to IAC and its subsidiaries are considered to be effectively settled for cash at the time the transaction is recorded. The notes payable due to IAC and its subsidiaries are included in “Long-term debt—related party” in the accompanying consolidated and combined balance sheet. See "Note 15—14Related Party Transactions with IAC" for additional information on transactions between ANGI HomeservicesAngi Inc. and IAC.

In the opinion of management, the assumptions underlying the historical consolidated and combined 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 weAngi Inc. may have incurred as a standalone public company for the periods presented.
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.
As previously disclosed, the initial impact of COVID-19 on the Company 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 the second half of 2020 and through early 2021, service requests did start to decline in May 2021 compared to the comparable months of 2020 as a result of the surge in 2020 and due to impacts of the brand integration initiative launched in March 2021. Moreover, many service professionals’ businesses have
56

ANGI INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
been adversely impacted by labor and material constraints and many service professionals have limited capacity to take on new business, which continue to negatively impact our ability to monetize the slightly increased level of service requests. Although our ability to monetize service requests rebounded modestly in the second half 2021, we still have not returned to levels we 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 be adversely impacted 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 estimatesEstimates
Management of the Company is required to make certain estimates, judgments, and assumptions during the preparation of its consolidated and combined 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 recoverabilityfair values of goodwillcash equivalents and indefinite-lived intangible assets; the useful lives and recoverability of definite-lived intangible assets and property and equipment;marketable debt securities; the carrying value of accounts receivable, including the determination of the allowance for doubtful accounts;credit losses and the determination of revenue reserves; the liabilitiesdetermination of the customer relationship period for uncertaincertain 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 positions;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.

Revenue recognitionRecognition
The Company’s disaggregated revenue disclosures are presented in “Note 11—Segment Information.”
The Company recognizes revenueaccounts for a contract with a customer when persuasive evidenceit has approval and commitment from all parties, the rights of an arrangement exists, servicesthe parties and payment terms are rendered to customers,identified, the fee or price charged is fixed or determinablecontract has commercial substance and collectability of consideration is reasonably assured. Deferred revenueprobable. Revenue is recordedrecognized when payments are received, or contractually due, in advancecontrol of the promised services or advertisinggoods is transferred to our customers and in an amount that reflects the consideration the Company expects to be provided. Deferred revenue is recognized as revenue when the relatedentitled to in exchange for those services or advertising are actually provided.goods.
Marketplace Revenue is primarily derived from (i) consumer connection revenue, which includescomprises fees paid by Angi Leads service professionals for consumer matches (regardless of whether the service professional ultimately provides the requested service), and (ii) membership subscription fees paid by service professionals.. Consumer connection revenue varies based upon several factors, including the service requested, type of match (such as Instant Booking, Instant Connect, Same Day Service or Next Day Service)product experience offered and geographic location of service. The Company’s consumerConsumer connection revenue is generated and recognized when an in-network service professional is deliveredgenerally billed one week following a consumer match. Membership subscriptionmatch, with payment due upon receipt of invoice. The Company maintains revenue is generated through subscription salesreserves for potential credits issued to service professionals and is deferred and recognized over the term of the applicable membership. Membership agreements can be one month, three months, or one year.Angi Leads services providers.
Effective with the Combination, revenueRevenue is also derived from Angie's List (i) sales of time-based website, mobile and call center advertising to service professionals, and (ii) Angi Leads service professional membership subscription fees, (iii) membership subscription fees from consumers. Angie's Listconsumers, (iv) service warranty subscription and other services and (v) revenue from completed jobs sourced through the Angi Services platforms. Angi service professionals generally pay for

ANGI HOMESERVICES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)



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. These contracts include an early termination penalty. Angie's List revenue from the sale ofAngi website, mobile and call center advertising revenue is recognized ratably over the period during which the advertisements run.contract term. Revenue from the sale of advertising in the Angie’s ListMagazineis recognized in the period in which the publication is publisheddistributed. Service professional membership subscription revenue is initially deferred upon receipt of payment and distributed. Angie's Listis recognized using the straight-line method over the applicable
57

ANGI INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
subscription period, which is typically one year. Angi prepaid consumer membership subscription fees are recognized as revenue ratablyusing the straight-line method over the term of the associatedapplicable subscription period, which is typically one year. Consumers typically pay when a job is scheduled through the Angi Services platform, or when the job is completed for Angi Roofing. Billing practices are governed by the contract terms of each project as negotiated with the consumer. 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.
DeferredPrior to January 1, 2020, Handy recorded revenue on a net basis. Effective January 1, 2020, the Company modified the Handy terms and conditions so that Handy, rather than the service professional, has the contractual relationship with the consumer to deliver the service and Handy, rather than the consumer, has the contractual relationship with the service professional. Consumers request services and pay for such services directly through the Handy platform and then Handy fulfills the request with independently established home services providers engaged in a trade, occupation and/or business that customarily provides such services. This change in contractual terms requires gross revenue accounting treatment was effective January 1, 2020 and resulted in an increase in revenue of $73.8 million during the year ended December 31, 2020.
Transaction Price
The objective of determining the transaction price is $64.1to estimate the amount of consideration the Company is due in exchange for its services or goods, including amounts that are variable. The Company determines the total transaction price, including an estimate of any variable consideration, at contract inception and reassesses this estimate each reporting period.
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.
Arrangements with Multiple Performance Obligations
The Company’s contracts with customers may include multiple performance obligations. For such arrangements, the Company allocates revenue to each performance obligation based on its relative standalone selling price. 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.
During the years ended December 31, 2021 and 2020 and the Company recognized expense of $84.7 million and $18.8$64.8 million, respectively, related to the amortization of these costs. The current contract assets are $38.0 million and $49.2 million at December 31, 20172021, and 2016,2020, respectively. The balancenon-current contract asset balances are $1.1 million and $0.4 million at December 31, 2017 includes Angie's List2021 and 2020, respectively. The current and non-current contract assets are included in “Other current assets” and “Other non-current assets,” respectively, in the accompanying consolidated balance sheet.
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
58

ANGI INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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 Credit Loss and Revenue Reserves
Accounts receivable include amounts billed and currently due from customers. The credit loss reserve is based upon a number of factors, including the length of time accounts receivable are past due, the Company’s previous loss history and the specific customer’s ability to pay its obligation. 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. The Company also maintains reserves for potential credits issued to service professionals or other revenue adjustments. The amounts of these revenue reserves are based primarily upon historical experience.
Credit Losses and Revenue Reserve
The following table presents the changes in the credit loss reserve for the years ended December 31, 2021 and 2020:
December 31, 2021December 31, 2020
(In thousands)
Balance at January 1$26,046 $19,066 
Current period provision for credit losses88,076 78,229 
Write-offs charged against the credit loss reserve(82,911)(73,682)
Recoveries collected2,441 2,433 
Balance at December 31$33,652 $26,046 
The revenue reserve was $2.7 million and $1.8 million at December 31, 2021 and 2020, respectively. The total credit loss and revenue reserve was $36.4 million and $27.8 million as of December 31, 2021 and 2020.
Deferred Revenue
Deferred revenue consists of advance payments that are received or are contractually due in advance of the Company’s performance. The Company’s deferred revenue is reported on a contract by contract basis at the end of $37.7 million.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, 2021 and 2020, the Company recognized $54.5 million and $57.6 million of revenue that was included in the deferred revenue balance as of December 31, 2020 and 2019, respectively. The current deferred revenue balances are $53.8 million and $54.7 million at December 31, 2021 and 2020, respectively. The non-current deferred revenue balances are $0.1 million and $0.2 million at December 31, 2021 and 2020, respectively. Non-current deferred revenue is included in “Other long-term liabilities” in the accompanying consolidated balance sheet.
Cash and cash equivalentsCash Equivalents
Cash and cash equivalents include cash and short-term investments, with maturities of less than 91 days from the date of purchase. Domestically, cash equivalents consist of AAA rated government money market funds, certificates of deposit and treasury discount notes.notes, and time deposits. Internationally, there are no0 cash equivalents at December 31, 2017. At December 31, 2016, internationally,2021 and 2020.
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 equivalents consist of AAA rated government money market funds.
Accounts receivable,requirements as needed. Marketable debt securities are adjusted to fair value each quarter, and the unrealized gains and losses, net of allowance for doubtful accountstax, are included in accumulated other comprehensive income (loss) as a separate component of shareholders’ equity. The specific-identification method is used to determine the cost of debt securities sold and revenue reservesthe amount of unrealized gains and losses reclassified out of accumulated other comprehensive income (loss) into
Accounts receivable are stated at amounts due from customers, net
59

earnings. The Company determinesreviews its allowance by considering a numberdebt securities for impairment, including from risk of factors, includingcredit loss, each reporting period. The Company recognizes an unrealized loss on debt securities in net loss when the length of time accounts receivable are past due,impairment is determined to be other-than-temporary. Factors the Company’s previous loss historyCompany considers in making such determination include the duration, severity and reason for the decline in value and the specific customer’s abilitypotential recovery and our intent to pay its obligation tosell the Company. The Company writes off accounts receivable when they become uncollectible.debt security. The Company also maintains allowancesconsiders whether it will be required to reserve for potential credits issuedsell the security before recovery of its amortized cost basis and whether the amortized cost basis cannot be recovered because of credit losses. If an impairment is considered to customers orbe other-than-temporary, the debt security will be written down to its fair value and the loss will be recognized within other revenue adjustments.(expense) income, net. The amounts of these reserves are based,Company held 0 marketable debt securities at December 31, 2021. The Company held $50.0 million in part, on historical experience.marketable debt securities at December 31, 2020.
PropertyCapitalized Software, Leasehold Improvements and equipmentEquipment
PropertyCapitalized software, leasehold improvements and equipment, including significant improvements, are recorded at cost. 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.
Asset Category
Estimated

Useful Lives
ComputerCapitalized software and computer equipment and capitalized software2 to 3 Years
Furniture and other equipment5 to 7 Years
Buildings and leaseholdLeasehold improvements5 to 25 Years
The Company capitalizes certain internal use software costs including external direct costs utilized in developing or obtaining the software and compensation for personnel directly associated with the development of the software. Capitalization of such costs begins when the preliminary project stage is complete and ceases when the project is substantially complete and ready for its intended purpose. The net book value of capitalized internal use software is $23.3was $86.4 million and $14.5$67.9 million at December 31, 20172021 and 2016,2020, respectively.
Business combinationsCombinations
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 fair valueCompany usually uses the assistance of theseoutside valuation experts to assist in the allocation of purchase price to identifiable intangible assets is based on detailed valuations that use informationacquired. While outside valuation experts may be used, management has ultimate responsibility for the valuation methods, models and assumptions provided by management.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.

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Goodwill and indefinite-lived intangible assetsIndefinite-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 reducethat 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, 2017,2021, the Company has two2 reporting units: North America and Europe.
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 fair value an impairment loss equal to the excess is recorded.
For the Company’s annual goodwill test at October 1, 2017,2021, a qualitative assessment of the North America and Europe reporting units’ goodwill was performed because the Companyand it was concluded that it was more likely than not that the fair value of these reporting units was in excess of their respective carrying values. In the aggregate, ANGI Homeservices'Angi’s October 1, 20172021 market capitalization of $5.9$6.2 billion exceeded its carrying value by more than 450%.approximately $5.0 billion. The primary factor that the Company considered in its qualitative assessment for its Europe reporting unit was a valuationwere valuations performed during September 2017, which2021 that indicated a fair value in excess
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of the carrying value. The fair value based on the valuation that was prepared primarily in connection with IAC's contribution of HomeAdvisor International into ANGI Homeservices immediately prior to the Combination. The valuation was prepared timemost proximate to, but not as of, October 1, 2017. The fair value from the September 2017 valuation exceeds2021 exceeded the carrying value of the Europe reporting unit by 60%.$164.2 million. The primary factorsfactor that the Company considered in its qualitative assessment for its North America reporting unit were the strong operating performance of the North America reporting unit andwas the significant excess of the estimated fair value of the North America reporting unit over its carrying value. The fair value of the North America reporting unit was estimated by subtracting the fair value of the Europe reporting unit, frombased on the September 2017 valuation described above, from the October 1, 20172021 market capitalization of the Company; the estimated fair value of the North America reporting unit exceeded its carrying value by approximately 500%.$4.9 billion.
The fair value of the Company’s Europe reporting unit is determined using both an income approach based on discounted cash flows (“DCF”) and a market approach when it tests goodwill for impairment, either on an interim basis or annual basis as of October 1 each year. 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. The expected cash flows used in the DCF analyses are based on the Company’s most recent forecast and budget and, for years beyond the budget, the Company’s estimates, which are based, in part, on forecasted growth rates. The discount rates used in the DCF analyses are intended to reflect the risks inherent in the expected future cash flows of the respective reporting units. 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 Europe reporting unit was 15% in both 2021 and 2020. 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. From the comparable companies, a representative market multiple is determined which is applied to financial metrics to estimate the fair value of a reporting unit. 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.
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 2017,1, in part, because the Company did not quantitatively assesslevel of effort required to perform the Angie's List indefinite-lived intangible assets acquired through the Combination given the proximity of the September 29, 2017 transaction date to the October 1, 2017 annual test date.quantitative and qualitative assessments is essentially equivalent. The Company determines the fair value of indefinite-lived intangible assets using an avoided royalty discounted cash flow (“DCF”)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. The discount rates used in the DCF analyses are intended to reflect the risks inherent in the expected future cash flows generated by the respective intangible assets. The royalty rates used in the DCF analyses are based upon an estimate of the royalty rates that a market participant would pay to license the Company’s trade names and trademarks. Assumptions used in the avoided royalty DCF analyses, including the discount rate and royalty rate, are assessed annually based on the actual and projected cash flows related to the asset, as well as macroeconomic and industry specific factors. The discount raterates used in the Company’s annual indefinite-lived impairment assessment ranged from 11.1% to 15.0% in 2021 and 11.5% to 18.5%15.0% in 2017 and was 17% in 2016,2020, and the royalty raterates used ranged from 1%2.0% to 6%5.0% in 20172021 and was 1%2.0% to 5.5% in 2016.2020.
The 2017, 2016,2021, 2020 and 20152019 annual assessments of goodwill and indefinite-lived intangible assets identified no impairments.
Long-lived assetsLong-Lived Assets and intangible assetsIntangible Assets with definite livesDefinite Lives
Long-lived assets, which consist of propertyROU 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 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.

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Fair value measurementsValue 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:
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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'sCompany’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 Company’s non-financial assets, such as goodwill, intangible assets, and propertyROU assets, capitalized software, leasehold improvements and equipment are adjusted to fair value only when an impairment charge is recognized. 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 costsCosts
Advertising costs are expensed in the period incurred (when the advertisement first runs for production costs that are initially capitalized) and represent online marketing, including fees paid to search engines, offline marketing, which is primarily television advertising and partner-related payments to those who direct traffic to our platforms. Advertising expense is $282.3was $556.4 million, $196.8$487.6 million and $145.4$484.3 million for the years ended December 31, 2017, 20162021, 2020 and 2015,2019, respectively.
Legal costsCosts
Legal costs are expensed as incurred.
Income taxesTaxes
ANGI HomeservicesThe Company is included within IAC'sIAC’s tax group for purposes of federal and consolidated state income tax return filings. In all periods presented, current and deferredthe income taxes havetax provision and/or benefit has been computed for ANGI Homeservicesthe Company on an as if standalone, separate return basis. The Company’sbasis and payments to and refunds from IAC for itsthe Company’s share of IAC’s consolidated federal and state income tax return liabilitiesliabilities/receivables calculated on this basis have been reflected within cash flows from operating activities in the accompanying consolidated and combined 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. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. A valuation allowance is provided on deferred tax assets if it is determined that it is more likely than not that the deferred tax asset will not be realized. The Company records interest, net of any applicable related income tax benefit, on potential income tax contingencies as a component of income tax expense.
The Company evaluates and accounts for uncertain tax positions using a two-step approach. Recognition (step one) occurs when the Company concludes that a tax position, based solely on its technical merits, is more-likely-than-not to be sustainable upon examination. Measurement (step two) determines the amount of benefit that is greater than 50% likely to be realized upon
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ultimate settlement with a taxing authority that has full knowledge of all relevant information. De-recognition of

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a tax position that was previously recognized would occur when the Company subsequently determines that a tax position no longer meets the more-likely-than-not threshold of being sustained.
On December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act (the “Tax Act”).  The Tax Act imposes a new minimum tax on global intangible low-taxed income (“GILTI”) earned by foreign subsidiaries beginning in 2018.  The Financial Accounting Standards Board ("FASB") Staff Q&A, Topic 740 No. 5, Accounting for Global Intangible Low-Taxed Income, states that an entity can make an accounting policy election to either recognize deferred taxes for temporary differences expected to reverse as GILTI in future years or provide for the tax expense related to GILTI in the year the tax is incurred.  The Company intends to elect to recognize the tax on GILTI as a period expense in the period the tax is incurred.
Earnings Per Share
Basic earnings per share is computed by dividing net earnings attributable to ANGI HomeservicesAngi Inc. shareholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflects the potential dilution that could occur if stock options,appreciation rights, stock appreciation rightsoptions 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.
Foreign currency translationCurrency Translation and transaction gainsTransaction Gains and lossesLosses
The financial position and operating results of foreign entities whose primary economic environment is based on their local currency are combinedconsolidated using the local currency as the functional currency. These local currency assets and liabilities are translated at the rates of exchange as of the balance sheet date, and local currency revenue and expenses of these operations are translated at average rates of exchange during the period. 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 and combined 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.
Stock-based compensationStock-Based Compensation
Stock-based compensation is measured at the grant date based on the fair value of the award and is expensed over the requisite service period. See “Note 11—10Stock‑based Compensation” for a discussion of the Company'sCompany’s stock-based compensation plans.
Redeemable noncontrolling interestsNoncontrolling Interests
Noncontrolling interests in the consolidated subsidiaries of the Company are ordinarily reported on the consolidated and combined 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 and combined balance sheet.
In connection with the acquisition of certain subsidiaries, management of these businesses has retained an ownership interest. The Company is party to fair value put and call arrangements with respect to these interests. These put and call arrangements allow management of these businesses to require the Company to purchase their interests or allow the Company to acquire such interests at fair value, respectively. 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 counterpartycounter-party at various dates. During the year ended December 31, 2017, one2021, the remaining redeemable non-controlling interest was exercised. One of these arrangementarrangements was exercised. No putexercised during the year ended December 31, 2020, and callnone of these arrangements were exercised during 2016 or 2015.the year ended December 31, 2019. Because these put arrangements are exercisable by the counterpartycounter-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 or invested capital for periods subsequent to and prior to the Combination, respectively.capital. During the years ended December 31, 2017, 20162021, 2020 and 2015,2019, the Company recorded adjustments of $3.3$28.3 million, $(3.1)$1.6 million and $12.2$8.2 million, respectively, to increase (decrease) 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.

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Certain risksRisks and concentrationsConcentrations
The Company’s business is subject to certain risks and concentrations including dependence on third partythird-party technology providers, exposure to risks associated with online commerce security and credit card fraud.
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Financial instruments, which potentially subject the Company to concentration of credit risk, consist primarily of cash and cash equivalents.equivalents and marketable debt securities. Cash and cash equivalents are maintained with financial institutions and are in excess of Federal Deposit Insurance CompanyCorporation insurance limits.
Recent accounting pronouncementsAccounting Pronouncements
Accounting pronouncements not yet adoptedPronouncements Adopted by the Company
ASU 2021-08 – Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers

In May 2014,October 2021, the FASB issuedFinancial Accounting Standards Update ("ASU")Board issued ASU No. 2021-08, which changes how entities will recognize assets acquired and liabilities assumed in a business combination, including contract assets and contract liabilities arising from revenue contracts with customers. The provisions of ASU No. 2021-08 will require acquiring entities to recognize and measure contract assets and contract liabilities, including deferred revenue, acquired in a business combination in accordance with ASU No. 2014-09 (Topic 606), Revenue from Contracts with Customers, which clarifiesas if it had originated the principles for recognizing revenue and develops a common standard for all industries. ASU No. 2014-09 was subsequently amended during 2015, 2016 and 2017; these amendments provide further revenue recognition guidance related to principal versus agent considerations, performance obligations and licensing, narrow-scope improvements and practical expedients.
ASU No. 2014-09 is a comprehensive revenue recognition standard that will supersede nearly all existing revenue recognition guidance under GAAP. The new standard provides a single principles-based, five-step model to be applied to all contracts with customers. This five-step model includes (1) identifying the contract(s) with the customer, (2) identifying the performance obligations in the contract, (3) determining the transaction price, (4) allocating the transaction price to the performance obligations in the contract and (5) recognizing revenue when each performance obligation is satisfied. More specifically, revenue will be recognized when promised goods or services are transferred to the customer in an amount that reflects the consideration expected in exchange for those goods or services. ASU No. 2014-09 is effective for interim and annual reporting periods beginning after December 15, 2017, with early adoption permitted for interim and annual reporting periods beginning after December 15, 2016. Upon adoption, ASU No. 2014-09 may either be applied retrospectively to each prior period presented or using the modified retrospective approach with the cumulative effect recognized as of the date of initial application.
The Company’s evaluation of the impact of the adoption of ASU No. 2014-09 on its consolidated and combined financial statements is substantially complete. The principal remaining work is a confirmation of the calculation of the cumulative effect of ASU No. 2014-09 as of January 1, 2018, which will be completed during the financial close process for the first quarter of 2018. The Company has adopted ASU No. 2014-09 using the modified retrospective approach effective January 1, 2018. Therefore, the cumulative effect of adoption will be reflected as an adjustment to beginning retained earnings in the Form 10-Q for the period ending March 31, 2018. The effect of the adoption of ASU No. 2014-09 on the Company is that sales commissions, which represent the incremental direct costs of obtaining a service professional contract, will be capitalized and amortized over the average life of a service professional. These costs were expensed as incurred prior to January 1, 2018. The current estimate of the cumulative effect of the adoption of ASU No. 2014-09 is the establishment of a current and non-current asset for capitalized sales commissions of approximately $30 million and $5 million, respectively, for the unamortized cost of the sales commissions paid to obtain a service professional and a related deferred tax liability of approximately $10 million, resulting in a net increase to retained earnings of $25 million on January 1, 2018. The estimated impact of ASU No. 2014-09 on the Company's consolidated and combined statement of operations, if January 1, 2017 were the date of adoption, would be a reduction in net loss of approximately $8 million.
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which supersedes pre-existing guidance on accounting for leases in "Leases (Topic 840)" and generally requires all leases to be recognized in the statement of financial position.contracts. The provisions of ASU No. 2016-022021-08 are effective for reporting periodsfiscal years beginning after December 15, 2018;2022, with early adoption is permitted. The provisions of ASU No. 2016-02 are to be applied using a modified retrospective approach.permitted, including adoption in an interim period. The Company will adoptearly adopted ASU No. 2016-022021-08 effective January 1, 2019.
The Companyin the fourth quarter of 2021. An entity that early adopts in an interim period is not a lessorrequired to apply the amendments (i) retrospectively to all business combinations for which the acquisition date occurs on or after the beginning of the fiscal year that includes the interim period of early adoption and (ii) prospectively to all business combinations that occur on or after the date of initial application. Early adoption has no capitalized leases and does not expect to enter into any capitalized leases prior toretrospective impact on the adoption of ASU No. 2016-02. Accordingly, the Company does not expect the amount or classification of rent expense in its statement of operations to be affected by ASU No. 2016-02. The primary effect of the adoption of ASU No. 2016-02 will be

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the recognition of a right of use asset and related liability to reflect the Company's rights and obligations under its operating leases. The Company will also be required to provide the additional disclosures stipulated in ASU No. 2016-02.
Company. The adoption of ASU No. 2016-02 will not have an impact on the leverage calculation set forth in the Company's term loan facility because the leverage calculation is not affected by the liability that will be recorded upon adoption of the new standard.
While the Company's evaluation of the impact of the adoption of ASU No. 2016-02 on its consolidated financial statements continues, outlined below is a summary of the status of the Company's progress:
the Company has selected a software package to assist in the determination of the right of use asset and related liability as of January 1, 2019 and to provide the required information following the adoption;
the Company has prepared summaries of its leases for input into the software package;
the Company is assessing the other inputs required in connection with the adoption of ASU No. 2016-02; and,
the Company is developing its accounting policy, procedures and controls related to the new standard.
The Company does not expect to have a preliminary estimate of the right of use asset and related liability as of the adoption date until the third quarter of 2018.
Accounting pronouncements adopted by the Company
In May 2017, the FASB issued ASU No. 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting, which provides guidance about the changes to the terms and conditions of a share-based payment award that require an entity to apply modification accounting in "Stock Compensation (Topic 718)." The provisions of ASU No. 2017-09 are effective for reporting periods beginning after December 15, 2017; early adoption is permitted. The provisions of ASU No. 2017-09 are to be applied prospectively to an award modified on or after the adoption date. The Company early adopted the provisions of ASU No. 2017-09 during the third quarter of 2017 and the adoption of this standard update did not2021-08 may have a material impact on its consolidated and combined financial statements.the purchase accounting for prospective business combinations.
In August 2016,
Accounting Pronouncements Not Yet Adopted by the FASBCompany
There are no recently issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which clarifies how cash receipts and cash payments in certain transactionsaccounting pronouncements that have not yet been adopted that are presented and classified on the statement of cash flows. The provisions of ASU No. 2016-15 are effective for reporting periods beginning after December 15, 2017, including interim periods, and will require adoption on a retrospective basis unless it is impracticableexpected to apply, in which case we would be required to apply the amendments prospectively as of the earliest date practicable; early adoption is permitted. The Company early adopted the provisions of ASU No. 2016-15 on January 1, 2017 and the adoption of this standard update did not have a material impact on its consolidated and combinedeffect of the financial statements.
In March 2016, the FASB issued ASU No. 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The Company adopted the provisions of ASU No. 2016-09 on January 1, 2017. Excess tax benefits or deficiencies related to equity awards to employees upon exercise of stock options, stock appreciation rights and the vesting of restricted stock units after January 1, 2017 are (i) reflected in the consolidated and combined statement of operations as a component of the provision for income taxes, rather than recognized in equity (adopted on a prospective basis), and (ii) reflected as operating, rather than financing, cash flows in our consolidated and combined statement of cash flows (adopted on a retrospective basis). Excess tax benefits for the year ended December 31, 2017 were $35.8 million. Excess tax benefits of $7.7 million and $0.1 million for the years ended December 31, 2016 and 2015, respectively were reclassified in the combined statement of cash flows to conform to the current year presentation. The Company continues to account for forfeitures using an estimated forfeiture rate.Company.
In January 2017, the FASB issued ASU No. 2017-04, IntangiblesGoodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which is intended to simplify the accounting for goodwill impairment. The guidance eliminates the requirement to calculate the implied fair value of goodwill under the two-step impairment test to measure a goodwill

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impairment charge. The Company early adopted the provisions of ASU No. 2017-04 on January 1, 2017 and the adoption of this standard update did not have a material impact on its consolidated and combined financial statements.
Reclassifications
Certain prior year amounts have been reclassified to conform to the current year presentation.

NOTE 3—INCOME TAXES
ANGI HomeservicesThe Company is included within IAC’s tax group for purposes of federal and consolidated state income tax return filings. In all periods presented, current and deferredthe income tax benefit andand/or provision havehas been computed for ANGI Homeservicesthe Company on an as if stand-alone,standalone, separate return basis. ANGI Homeservices’basis and payments to and refunds from IAC for itsthe Company’s share of IAC’s consolidated federal and state tax return liabilitiesliabilities/receivables calculated on this basis have been reflected within cash flows from operating activities in the accompanying consolidated and combined 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.

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U.S. and foreign (loss) earnings before income taxes and noncontrolling interests are as follows:
Years Ended December 31, Years Ended December 31,
2017 2016 2015 202120202019
(In thousands) (In thousands)
U.S. $(132,000) $27,284
 $1,149
U.S. $(88,777)$(10,913)$39,821 
Foreign(21,633) (4,819) (3,387)Foreign(13,730)(8,415)(6,175)
Total$(153,633) $22,465
 $(2,238)Total$(102,507)$(19,328)$33,646 
The components of the income tax (benefit) provision for income taxes are as follows:
 Years Ended December 31,
 202120202019
 (In thousands)
Current income tax provision:   
Federal$36 $(306)$(43)
State3,008 1,408 819 
Foreign1,249 (992)806 
Current income tax provision4,293 110 1,582 
Deferred income tax benefit   
Federal(29,889)(5,163)(3,416)
State(8,712)(6,249)517 
Foreign2,295 (3,866)(351)
Deferred income tax benefit(36,306)(15,278)(3,250)
Income tax benefit$(32,013)$(15,168)$(1,668)
 Years Ended December 31,
 2017 2016 2015
 (In thousands)
Current income tax provision (benefit):     
Federal$(443) $13,440
 $2,901
State21
 2,274
 601
Foreign(334) (161) 1,725
     Current income tax (benefit) provision(756) 15,553
 5,227
Deferred income tax benefit     
Federal(38,587) (2,483) (2,823)
State(8,467) (775) (557)
Foreign(1,296) (461) (89)
     Deferred income tax benefit(48,350) (3,719) (3,469)
     Income tax (benefit) provision$(49,106) $11,834
 $1,758
The deferred tax asset for net operating losses ("NOLs") was increased by $35.8 million for the year ended December 31, 2017 for excess tax deductions attributable to stock-based compensation. The related income tax benefit was recorded as a component of the deferred income tax benefit. The current income tax payable was reduced by $7.7 million and $0.1 million for the years ended December 31, 2016 and 2015, respectively, for excess tax deductions attributable to stock-based compensation. For the years ended December 31, 2016 and 2015, the related income tax benefits were recorded as increases to invested capital.

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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.
 December 31,
 20212020
 (In thousands)
Deferred tax assets:
Net operating loss (“NOL”) carryforwards$212,315 $182,449 
Long-term lease liabilities26,182 29,314 
Stock-based compensation5,390 18,955 
Other35,384 28,637 
Total deferred tax assets279,271 259,355 
Less valuation allowance(66,626)(77,076)
Net deferred tax assets212,645 182,279 
Deferred tax liabilities:
Intangible assets(46,591)(47,858)
Capitalized software, leasehold improvements and equipment(18,624)(16,152)
Right-of-use assets(17,270)(21,496)
Capitalized costs to obtain a contract with a customer(9,263)(12,233)
Other(87)(90)
Total deferred tax liabilities(91,835)(97,829)
Net deferred tax assets$120,810 $84,450 
 December 31,
 2017 2016
 (In thousands)
Deferred tax assets:   
Accrued expenses$5,468
 $3,527
NOL carryforwards135,042
 12,869
Stock-based compensation34,408
 10,382
Allowance for bad debts1,999
 3,186
Deferred revenue10,924
 
Property and equipment650
 
Other3,575
 1,811
     Total deferred tax assets192,066
 31,775
Less valuation allowance(61,563) (14,180)
     Net deferred tax assets130,503
 17,595
Deferred tax liabilities:   
Intangible and other assets(85,227) (1,818)
Property and equipment
 (2,661)
Other(179) (133)
     Total deferred tax liabilities(85,406) (4,612)
     Net deferred tax assets$45,097
 $12,983
The portion of the December 31, 2021 deferred tax assets that will be payable to IAC pursuant to the tax sharing agreement, upon realization, is $93.9 million.
At December 31, 2017,2021, the Company has federal and state NOLs of $317.5$592.9 million and $378.6$479.2 million, respectively. Ifrespectively, available to offset future income. Of these federal NOLs, $220.7 million can be carried forward indefinitely and $372.2 million, if not utilized, the federal NOLs will expire at various times between 20242030 and 2037 and the2037. The state NOLs, if not utilized, will expire at various times primarily between 20272025 and 2037.2041. Federal and state NOLs of $116.0$327.5 million and $121.1$226.6 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, 2017,2021, the Company has foreign NOLs of $298.4$358.0 million available to offset future income. Of these foreign NOLs, $286.1$314.3 million can be carried forward indefinitely and $12.3$43.7 million, if not utilized, will expire at various times between 2022 and 2037.2039. During 2017,2021, the Company recognized tax benefits related to NOLs of $103.8$44.0 million. Included in this amount is $74.0 million of tax benefits of acquired attributes which was recorded as a reduction in goodwill.
At December 31, 2017,2021, the Company has tax credit carryforwards of $3.4$19.9 million relating to federal and state tax credits for research activities. Of these credit carryforwards, $0.6$0.8 million can be carried forward indefinitely and $2.8$19.1 million, if not utilized, will expire between 20332024 and 2037.2041.
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. As ofAt December 31, 2017,2021, the Company has a U.S. gross deferred tax asset of $84.4$210.7 million that the Company expects to fully utilize on a more likely than not basis. However,
During 2021, the tax sharing agreement between ANGI HomeservicesCompany’s valuation allowance decreased by $10.5 million primarily due to a decrease in state and IAC governsforeign NOLs and currency translation adjustments on foreign NOLs. At December 31, 2021, the parties’ respective rights, responsibilities and obligations with respect to tax matters, including responsibility for taxes attributable to ANGI Homeservices, entitlement to refunds, allocationCompany has a valuation
66

Table of tax attributes and other matters. Any differences between taxes currently due or receivable under the tax sharing agreement and the current tax provision computed on an as if standalone, separate return basis are reflected as adjustments to additional paid-in capital.
ANGI HOMESERVICES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)



During 2017, the Company’s valuation allowance increased by $47.4 million primarily due to the establishment of foreign NOLs related to a recent acquisition. At December 31, 2017, the Company has a valuation allowance of $61.6$66.6 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) provisionbenefit 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,
Years Ended December 31, 202120202019
2017 2016 2015 (In thousands)
(In thousands)
Income tax (benefit) provision at the federal statutory rate of 35%$(53,771) $7,862
 $(783)
Change in tax reserves, net235
 (72) 1,895
Income tax (benefit) provision at the federal statutory rate of 21%Income tax (benefit) provision at the federal statutory rate of 21%$(21,527)$(4,058)$7,066 
State income taxes, net of effect of federal tax benefit(3,678) 1,063
 (39)State income taxes, net of effect of federal tax benefit(1,379)1,641 2,693 
Stock-based compensationStock-based compensation(10,331)(2,914)(12,768)
Unbenefited losses5,915
 2,592
 1,133
Unbenefited losses4,481 2,899 1,523 
Change in judgement on beginning of the year valuation allowanceChange in judgement on beginning of the year valuation allowance(4,165)(3,544)— 
Research credit(784) (930) (645)Research credit(2,431)(2,494)(3,308)
Federal tax rate change to 21%33,002
 
 
Stock-based compensation(32,702) 
 
Deferred tax adjustment for enacted changes in tax law and ratesDeferred tax adjustment for enacted changes in tax law and rates768 (5,244)502 
Net adjustment related to the reconciliation of income tax provision accruals to tax returnsNet adjustment related to the reconciliation of income tax provision accruals to tax returns335 (743)448 
Other, net2,677
 1,319
 197
Other, net2,236 (711)2,176 
Income tax (benefit) provision$(49,106) $11,834
 $1,758
Income tax benefitIncome tax benefit$(32,013)$(15,168)$(1,668)
A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding interest, is as follows:
 December 31,
 202120202019
 (In thousands)
Balance at January 1$5,268 $4,025 $2,356 
Additions based on tax positions related to the current year1,317 1,676 1,325 
Additions for tax positions of prior years264 423 344 
Reductions for tax positions of prior years(91)— — 
Settlements(460)(856)— 
Balance at December 31$6,298 $5,268 $4,025 
 December 31,
 2017 2016 2015
 (In thousands)
Balance at January 1$602
 $1,863
 $129
Additions based on tax positions related to the current year235
 279
 376
Additions for tax positions of prior years711
 
 1,358
Reductions for tax positions of prior years
 (263) 
Settlements
 (1,277) 
Balance at December 31$1,548
 $602
 $1,863
The Company recognizes interest and, if applicable, penalties related to unrecognized tax benefits in the income tax provision. At both December 31, 20172021, accruals for interest are not material and there are no accruals for penalties. At December 31, 2016, the Company has not accrued any amount2020, there are no accruals for the payment of either interest orand penalties.
ANGI Homeservices
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 is currently auditing(“IRS”) has substantially completed its audit of IAC’s federal income tax returns for the years ended December 31, 20102013 through 2012,2017, and has begun its audit of the years December 31, 2018 through 2019, which includes the operations of the HomeAdvisor business.Company. The statutestatutes of limitations for the years 20102013 through 2012 has2019 have been extended to June 30, 2019, and the statute of limitations for the year 2013 has been extended to June 30, 2018.December 31, 2023. Returns filed in various other jurisdictions are open to examination for various tax years beginning with 2009. Income taxes payable include reservesunrecognized tax benefits considered sufficient to pay assessments that may result from examination of prior year tax returns. We considerThe Company considers many factors when evaluating and estimating ourits tax positions and tax benefits, which may require periodic adjustments and which may not accurately anticipate actual outcomes.outcomes and, therefore, may require periodic adjustment. Although management currently believes changes to reservesin unrecognized tax benefits from period to period and differences between amounts paid, if any, upon resolution of issues raised in audits and

ANGI HOMESERVICES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)



amounts previously provided will not have a material impact on liquidity, results
67

Table of Contents
ANGI INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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, 20172021 and 2016,2020, the Company has unrecognized tax benefits, are $1.5including interest, of $6.3 million and $0.6$5.3 million respectively,respectively; all of which are for tax positions included in IAC’s consolidated tax return filings. If unrecognized tax benefits at December 31, 20172021 are subsequently recognized, the income tax provision would be reduced by $1.5$6.0 million. The comparable amount as of December 31, 20162020 is $0.6$5.1 million.
On December 22, 2017, the U.S. enacted the Tax Act. The Tax Act implements a number of changes that take effect on January 1, 2018, including, but not limited to, a reduction of the U.S. federal corporate income tax rate from 35% to 21% and a new minimum tax on intangible income earned by foreign subsidiaries. The Company's income tax provision for the year endedAt December 31, 2017, includes an expense of $33.0 million related to the Tax Act, for the remeasurement of U.S. net deferred tax assets due to the reduction in the corporate income tax rate. The Company was not subject to the one-time transition tax because it has cumulative losses from its international operations.  While the Company was able to make a reasonable estimate of the impacts of the Tax Act, certain amounts are provisional as the Company gathers additional data. Any adjustment2021, all of the Company’s provisionalinternational cash can be repatriated without any significant tax expense will be reflected as a change in estimate in its results in the period in which the change in estimate is made in accordance with Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act. In addition, our estimates may also be impacted and adjusted as the law is clarified and additional guidance is issued at the federal and state levels.consequences.

NOTE 4—BUSINESS COMBINATIONS
Angie's List Combination
Through the Combination, the Company acquired 100% of the common stock of Angie's List on September 29, 2017 for a total purchase price valued at $781.4 million.
The purchase price of $781.4 million was determined based on the sum of (i) the fair value of the 61.3 million shares of Angie's List common stock outstanding immediately prior to the Combination based on the closing stock price of Angie's List common stock on the NASDAQ on September 29, 2017 of $12.46 per share; (ii) the cash consideration of$1.9 million paid to holders of Angie's List common stock who elected to receive $8.50 in cash per share; and (iii) the fair value of vested equity awards (including the pro rata portion of unvested awards attributable to pre-combination services) outstanding under Angie's List stock plans on September 29, 2017. Each stock option to purchase shares of Angie's List common stock that was outstanding immediately prior to the effective time of the Combination was, as of the effective time of the Combination, converted into an option to purchase (i) that number of Class A shares of ANGI Homeservices equal to the total number of shares of Angie's List common stock subject to such Angie's List option immediately prior to the effective time of the Combination, (ii) at a per-share exercise price equal to the exercise price per share of Angie's List common stock at which such Angie's List option was exercisable immediately prior to the effective time of the Combination. Each award of Angie's List restricted stock units that was outstanding immediately prior to the effective time of the Combination was, as of the effective time of the Combination, converted into an ANGI Homeservices restricted stock unit award with respect to a number of Class A shares of ANGI Homeservices equal to the total number of shares of Angie's List common stock subject to such Angie's List restricted stock unit award immediately prior to the effective time of the Combination.
The table below summarizes the purchase price:
 Angie's List
 (In thousands)
Class A common stock$763,684
Cash consideration for holders who elected to receive $8.50 in cash per share of Angie's List common stock1,913
Fair value of vested and pro rata portion of unvested stock options attributable to pre-combination services11,749
Fair value of the pro rata portion of unvested restricted stock units attributable to pre-combination services4,038
Total purchase price$781,384

ANGI HOMESERVICES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)



The financial results of Angie's List are included in the Company's consolidated and combined financial statements, within the North America segment, beginning September 29, 2017. For the year ended December 31, 2017, the Company included $58.9 million of revenue and $21.7 million of net loss in its consolidated and combined statement of operations related to Angie's List. The net loss of Angie's List reflects $28.7 million in stock-based compensation expense related to (i) the acceleration of previously issued Angie's List equity awards held by employees terminated in connection with the Combination and (ii) the expense related to previously issued Angie's List equity awards, severance and retention costs of $19.8 million related to the Combination and a reduction in revenue of $7.8 million due to the write-off of deferred revenue related to the Combination.
The table below summarizes the fair values of the assets acquired and liabilities assumed at the date of combination:
 Angie's List
 (In thousands)
Cash and cash equivalents$44,270
Other current assets11,280
Property and equipment16,341
Goodwill545,204
Intangible assets317,300
Total assets934,395
Deferred revenue(32,595)
Other current liabilities(46,150)
Long-term debt - related party(61,498)
Deferred income taxes(11,363)
Other long-term liabilities(1,405)
Net assets acquired$781,384
The purchase price was based on the expected financial performance of Angie's List, not on the value of the net identifiable assets at the time of combination. This resulted in a significant portion of the purchase price being attributed to goodwill because Angie's List is complementary and synergistic to the other North America businesses of ANGI Homeservices.
The fair values of the identifiable intangible assets acquired at the date of combination are as follows:
 Angie's List
 (In thousands) 
Weighted-average useful life
(years)
Indefinite-lived trade name and trademarks$137,000
 Indefinite
Service professionals90,500
 3
Developed technology63,900
 6
Memberships15,900
 3
User base10,000
 1
Total identifiable intangible assets acquired$317,300
  
Other current assets, current liabilities and other long-term liabilities of Angie's List were reviewed and adjusted to their fair values at the date of combination, as necessary. The fair value of deferred revenue was determined using an income approach that utilized a cost to fulfill analysis. The fair value of the trade name and trademarks was determined using an income approach that utilized the relief from royalty methodology. The fair values of developed technology and user base were determined using a cost approach that utilized the cost to replace methodology. The fair values of the service professionals and

ANGI HOMESERVICES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)



memberships were determined using an income approach that utilized the excess earnings methodology. The valuations of deferred revenue and intangible assets incorporate significant unobservable inputs and require significant judgment and estimates, including the amount and timing of future cash flows, cost and profit margins related to deferred revenue and the determination of royalty and discount rates. The amount attributed to goodwill is not tax deductible.
HomeStars Acquisition
The Company acquired a 90% voting interest in HomeStars Inc. ("HomeStars"), a leading home services platform in Canada, on February 8, 2017. The purchase price for HomeStars was $16.6 CAD million (or $12.7 million) in cash and is net of a $0.3 CAD million (or $0.2 million) working capital adjustment paid in full to the Company in the third quarter of 2017. In connection with the acquisition, the Company measured and recorded the acquisition date fair value of the 10% noncontrolling interest in HomeStars, which totaled $1.9 CAD million (or $1.4 million). The determination of the fair value of noncontrolling interest was calculated using the implied value of 100% of the enterprise value of the business using the purchase price.
The financial results of HomeStars are included in the Company's consolidated and combined financial statements, within the North America segment, beginning February 8, 2017. For the year ended December 31, 2017, the Company included $6.5 million of revenue and $1.2 million of net loss in its consolidated and combined statement of operations related to HomeStars.
The table below summarizes the fair values of the assets acquired and liabilities assumed at the date of acquisition:
 HomeStars
 (In thousands)
Cash and cash equivalents$181
Other current assets165
Goodwill9,841
Intangible assets6,414
Total assets16,601
Current liabilities(649)
Other long-term liabilities(1,873)
Net assets acquired$14,079
The purchase price was based on the expected financial performance of HomeStars, not on the value of the net identifiable assets at the time of acquisition. This resulted in a significant portion of the purchase price being attributed to goodwill because HomeStars is complementary and synergistic to the other North America businesses of ANGI Homeservices.
The fair values of the identifiable intangible assets acquired at the date of acquisition are as follows:
 HomeStars
 (In thousands) 
Weighted-average useful life
(years)
Indefinite-lived trade name$2,358
 Indefinite
Contractor relationships2,435
 2
Developed technology1,522
 2
User base99
 1
    Total identifiable intangible assets acquired$6,414
  
Other current assets, current liabilities and other long-term liabilities of HomeStars were reviewed and adjusted to their fair values at the date of acquisition, as necessary. The fair values of the trade name and contractor relationships were

ANGI HOMESERVICES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)



determined using variations of the income approach; specifically, in respective order, the relief from royalty and excess earnings methodologies. The fair values of developed technology and user base were determined using a cost approach that utilized the cost to replace methodology. The valuations of the intangible assets incorporate significant unobservable inputs and require significant judgment and estimates, including the amount and timing of future cash flows and the determination of royalty and discount rates. The amount attributed to goodwill is not tax deductible.
MyBuilder Acquisition
The Company acquired a 75% voting interest in MyBuilder Limited ("MyBuilder"), a leading home services platform in the United Kingdom, on March 24, 2017. The purchase price was £32.6 million (or $40.7 million) in cash and includes a £0.6 million (or $0.8 million) working capital adjustment paid in full by the Company in the third quarter of 2017. In connection with the acquisition, the Company measured and recorded the acquisition date fair value of the 25% noncontrolling interest in MyBuilder, which totaled £10.7 million (or $13.3 million). The determination of the fair value of noncontrolling interest was calculated using the implied value of 100% of the enterprise value of the business using the purchase price.
The financial results of MyBuilder are included in the Company's consolidated and combined financial statements, within the Europe segment, beginning April 1, 2017. For the year ended December 31, 2017, the Company included $8.0 million of revenue and $1.4 million of net loss in its consolidated and combined statement of operations related to MyBuilder.
The table below summarizes the fair values of the assets acquired and liabilities assumed at the date of acquisition:
 MyBuilder
 (In thousands)
Cash and cash equivalents$6,004
Other current assets344
Goodwill37,072
Intangible assets15,239
Total assets58,659
Current liabilities(2,065)
Other long-term liabilities(2,595)
Net assets acquired$53,999
The purchase price was based on the expected financial performance of MyBuilder, not on the value of the net identifiable assets at the time of acquisition. This resulted in a significant portion of the purchase price being attributed to goodwill because MyBuilder is complementary and synergistic to the other European businesses of ANGI Homeservices.
The fair values of the identifiable intangible assets acquired at the date of acquisition are as follows:
 MyBuilder
 (In thousands) 
Weighted-average useful life
(years)
Indefinite-lived trade name$7,994
 Indefinite
Contractor relationships4,122
 2
Developed technology1,499
 2
User base1,624
 1
    Total identifiable intangible assets acquired$15,239
  

ANGI HOMESERVICES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)



Other current assets, current liabilities and other long-term liabilities of MyBuilder were reviewed and adjusted to their fair values at the date of acquisition, as necessary. The fair values of the trade name and contractor relationships were determined using variations of the income approach; specifically, in respective order, the relief from royalty and excess earnings methodologies. The fair values of developed technology and user base were determined using a cost approach that utilized the cost to replace methodology. The valuations of the intangible assets incorporate significant unobservable inputs and require significant judgment and estimates, including the amount and timing of future cash flows and the determination of royalty and discount rates. The amount attributed to goodwill is not tax deductible.
MyHammer Acquisition
On November 3, 2016, the Company acquired a 70% voting interest in MyHammer Holding AG ("MyHammer"), the leading home services marketplace in Germany. The purchase price was €17.7 million (or $19.7 million). In connection with the acquisition, the Company measured and recorded the acquisition date fair value of the 30% noncontrolling interest in MyHammer, which totaled €9.4 million (or $10.4 million). The determination of the fair value of noncontrolling interest was calculated using the MyHammer share price on the acquisition date. In 2017, the Company increased its ownership stake in MyHammer to 81.1%.
The financial results of MyHammer are included in the Company's consolidated and combined financial statements, within the Europe segment, with effect from the date of acquisition. For the years ended December 31, 2017 and 2016, the Company included $12.7 million and $1.3 million of revenue, respectively, and less than $0.1 million and $(0.4) million of net income (loss), respectively, in its consolidated and combined statement of operations related to MyHammer.
The table below summarizes the fair values of the assets acquired and liabilities assumed at the date of acquisition:
 MyHammer
 (In thousands)
Cash and cash equivalents$4,041
Other current assets790
Goodwill22,277
Intangible assets8,107
Total assets35,215
Current liabilities(2,642)
Other long-term liabilities(2,447)
Net assets acquired$30,126
The purchase price was based on the expected financial performance of MyHammer, not on the value of the net identifiable assets at the time of acquisition. This resulted in a significant portion of the purchase price being attributed to goodwill because MyHammer is complementary and synergistic to the other European businesses of ANGI Homeservices.
The fair values of the identifiable intangible assets acquired at the date of acquisition are as follows:

ANGI HOMESERVICES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)



 MyHammer
 (In thousands) 
Weighted-average useful life
(years)
Indefinite-lived trade name$4,553
 Indefinite
Contractor relationships1,444
 4
Developed technology1,222
 3
User base888
 1
    Total identifiable intangible assets acquired$8,107
  
Other current assets, current liabilities and other long-term liabilities of MyHammer were reviewed and adjusted to their fair values at the date of acquisition, as necessary. The fair values of the trade name and contractor relationships were determined using variations of the income approach; specifically, in respective order, the relief from royalty and excess earnings methodologies. The fair values of developed technology and user base were determined using a cost approach that utilized the cost to replace methodology. The valuations of the intangible assets incorporate significant unobservable inputs and require significant judgment and estimates, including the amount and timing of future cash flows and the determination of royalty and discount rates. The amount attributed to goodwill is not tax deductible.
Unaudited pro forma financial information
The unaudited pro forma financial information in the table below presents the combined results of the Company and Angie's List, HomeStars, MyBuilder and MyHammer as if these acquisitions had occurred on January 1, 2016. The unaudited pro forma financial information includes adjustments required under the acquisition method of accounting and is presented for informational purposes only and is not necessarily indicative of the results that would have been achieved had the acquisitions actually occurred on January 1, 2016. For the year ended December 31, 2017, pro forma adjustments include (i) reductions in stock-based compensation expense of $96.9 million and transaction related costs of $35.2 million because they are one-time in nature and will not have a continuing impact on operations; and (ii) an increase in amortization of intangibles of $31.2 million. The stock-based compensation expense is primarily related to the modification of previously issued HomeAdvisor vested equity awards, which were converted into ANGI Homeservices' equity awards, and the acceleration of previously issued Angie's List equity awards held by employees terminated in connection with the Combination. The transaction related costs include severance and retention costs of $19.8 million related to the Combination. For the year ended December 31, 2016, pro forma adjustments include a reduction in revenue of $35.0 million due to the write-offs of deferred revenue at the assumed date of acquisition as well as increases in stock-based compensation expense of $81.7 million and amortization of intangibles of $64.0 million.
 Years Ended December 31,
 2017 2016
 (In thousands, except per share data)
Revenue$962,597
 $809,999
Net loss attributable to ANGI Homeservices Inc. shareholders$(36,459) $(86,557)
Basic and diluted loss per share attributable to ANGI Homeservices Inc. shareholders$(0.08) $(0.21)
NOTE 5—GOODWILL AND INTANGIBLE ASSETS
Goodwill and intangible assets, net are as follows:

ANGI HOMESERVICES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)



December 31,December 31,
2017 201620212020
(In thousands)(In thousands)
Goodwill$770,226
 $170,990
Goodwill$916,039 $891,797 
Intangible assets with indefinite lives153,447
 4,884
Intangible assets with indefinite lives171,427 171,888 
Intangible assets with definite lives, net of accumulated amortization175,124
 5,908
Intangible assets with definite lives, net of accumulated amortization22,399 37,829 
Total goodwill and intangible assets, net$1,098,797
 $181,782
Total goodwill and intangible assets, net$1,109,865 $1,101,514 
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, 2017:2021:
Balance at December 31, 2020Additions(Deductions)Foreign
Currency
Translation
Balance at December 31, 2021
(In thousands)
North America$816,307 $26,822 $— $64 $843,193 
Europe75,490 — — (2,644)72,846 
Total goodwill$891,797 $26,822 $— $(2,580)$916,039 
 Balance at
December 31,
2016
 Additions Deductions Foreign
exchange
translation
 Balance at December 31,
2017
 (In thousands)
North America$140,930
 $555,045
 $
 $316
 $696,291
Europe30,060
 37,257
 
 6,618
 73,935
Total goodwill$170,990
 $592,302
 $
 $6,934
 $770,226
Additions relate to the acquisitionsIn July, 2021, Angi acquired certain assets and assumed certain liabilities of Angie's List and HomeStarsTotal Home Roofing (“Angi Roofing”) (included in the North America segment) and MyBuilder (included in the Europe segment)., including $26.8 million of goodwill.
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, 2016:2020:
Balance at
December 31,
2015
 Additions (Deductions) Foreign
exchange
translation
 Balance at
December 31,
2016
Balance at December 31, 2019Additions(Deductions)Foreign
Currency
Translation
Balance at December 31, 2020
(In thousands)(In thousands)
North America$140,930
 $
 $
 $
 $140,930
North America$813,417 $2,665 $— $225 $816,307 
Europe9,700
 21,985
 
 (1,625) 30,060
Europe70,543 — — 4,947 75,490 
Total goodwill$150,630
 $21,985
 $
 $(1,625) $170,990
Total goodwill$883,960 $2,665 $— $5,172 $891,797 
Additions relate to immaterial acquisition activity during the acquisitionyear (included in the North America segment).
68

Table of MyHammer.Contents
ANGI INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Intangible assets with indefinite lives are trade names and trademarks acquired in various acquisitions. At December 31, 20172021 and December 31, 2016,2020, intangible assets with definite lives are as follows:

December 31, 2021
Gross
Carrying
Amount
Accumulated
Amortization
NetWeighted-Average
Useful Life
(Years)
(Dollars in thousands)
Service professional relationships$97,989 $(97,322)$667 3.0
Technology82,351 (60,619)21,732 5.5
Trade names1,415 (1,415)— 5.0
Total$181,755 $(159,356)$22,399 4.1
ANGI HOMESERVICES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)



 December 31, 2017
 Gross
carrying
amount
 Accumulated
amortization
 Net Weighted-average
useful life
(years)
 (Dollars in thousands)
Contractor and service professional relationships$99,497
 $(11,452) $88,045
 3.0
Technology78,690
 (14,127) 64,563
 5.6
Memberships15,900
 (1,340) 14,560
 3.0
Customer lists and user base12,788
 (4,906) 7,882
 1.0
Trade names4,538
 (4,464) 74
 2.6
Total$211,413
 $(36,289) $175,124
 3.8
December 31, 2020
December 31, 2016Gross
Carrying
Amount
Accumulated
Amortization
NetWeighted-Average
Useful Life
(Years)
Gross
carrying
amount
 Accumulated
amortization
 Net Weighted-average
useful life
(years)
(Dollars in thousands)
(Dollars in thousands)
Contractor relationships$1,830
 $(495) $1,335
 4.0
Service professional relationshipsService professional relationships$97,160 $(97,000)$160 3.0
Technology11,377
 (7,834) 3,543
 4.3Technology83,468 (47,144)36,324 5.5
MembershipsMemberships15,900 (15,900)— 3.0
Customer lists and user base4,136
 (3,432) 704
 1.8Customer lists and user base800 (192)608 8.0
Trade names5,260
 (4,934) 326
 2.9Trade names3,128 (2,391)737 5.6
Total$22,603
 $(16,695) $5,908
 3.5Total$200,456 $(162,627)$37,829 4.1
At December 31, 2017,2021, amortization of intangible assets with definite lives for each of the next five years and thereafter is estimated to be as follows:
Years Ending December 31,(In thousands)
2022$14,441 
20237,958 
2024— 
2025— 
2026— 
Thereafter— 
Total$22,399 
Years ending December 31, (In thousands)
2018 $60,657
2019 47,731
2020 37,477
2021 10,650
2022 10,650
Thereafter 7,959
Total $175,124
NOTE 6—5—FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS
Marketable Debt Securities
The Company did not hold any available-for-sale marketable debt securities at December 31, 2021.

At December 31, 2020, current available-for-sale marketable debt securities were as follows:
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NOTES TO CONSOLIDATED FINANCIAL INSTRUMENTSSTATEMENTS (Continued)
Amortized CostGross Unrealized GainsGross Unrealized LossesFair Value
(In thousands)
Treasury discount notes$49,995 $— $— $49,995 
Total available-for-sale marketable debt securities$49,995 $— $— $49,995 
The contractual maturities of debt securities classified as current available-for-sale at December 31, 2020 were within one year.

For the years ended December 31, 2021 and 2020, proceeds from maturities of available-for-sale marketable debt securities were $50.0 million, respectively. There were no gross realized gains or losses from the maturities of available-for-sale marketable debt securities for the years ended December 31, 2021 and 2020.
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:
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 $— $— $280,052 

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NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)


December 31, 2020
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$374,014 $— $— $374,014 
Treasury discount notes— 324,995 — 324,995 
Time deposits— 2,721 — 2,721 
Marketable debt securities:
Treasury discount notes— 49,995 — 49,995 
Total$374,014 $377,711 $— $751,725 


 December 31, 2017
 Quoted market
prices in active
markets for
identical assets
(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$189,207
 $
 $
 $189,207
Treasury discount notes500
 
 
 500
Certificates of deposit
 6,195
 
 6,195
Total$189,707
 $6,195
 $
 $195,902
Assets measured at fair value on a nonrecurring basis
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.
 December 31, 2016
 Quoted market prices in active markets for identical assets
(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$28,064
 $
 $
 $28,064
Total$28,064
 $
 $
 $28,064

During the year ended December 31, 2021, the Company recorded $12.7 million in impairment charges on ROU assets, leasehold improvements, and furniture and equipment, of which $9.6 million is a result of the Company reducing its real estate footprint in 2021. 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.

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, 2021December 31, 2020
Carrying ValueFair ValueCarrying ValueFair Value
(In thousands)
Long-term debt, net (a)
$(494,552)$(486,875)$(712,277)$(725,700)
 December 31, 2017 December 31, 2016
 Carrying value Fair value Carrying value Fair value
 (In thousands)
Current portion of long term debt$(13,750) $(13,802) $
 $
Long-term debt, net(258,312) (262,230) 
 
Current portion of long-term debt—related party(816) (837) (2,838) (2,776)
Long-term debt—related party, net(1,997) (2,048) (47,000) (46,324)
________________________
(a)    At December 31, 2021 and December 31, 2020, the carrying value of long-term debt, net includes unamortized debt issuance costs of $5.4 million and $7.7 million, respectively.

The fair value of long-term debt including the current portion, is estimated using observable market prices or indices for similar liabilities, and taking into consideration other factors such as credit quality and maturity, which are Level 32 inputs. The fair value of long-term debt—related party, including the current portion, is based on Level 3 inputs and is estimated by discounting the future cash flows based on current market conditions.
NOTE 7—6—LONG-TERM DEBT
Long-term debt consists of:

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NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)


 December 31, 2021December 31, 2020
 (In thousands)
3.875% ANGI Group Senior Notes due August 15, 2028 (“ANGI Group Senior Notes”); interest payable each February 15 and August 15, commencing February 15, 2021$500,000 $500,000 
ANGI Group Term Loan due November 5, 2023 (“ANGI Group Term Loan”)— 220,000 
Total long-term debt500,000 720,000 
Less: unamortized debt issuance costs5,448 7,723 
Total long-term debt, net$494,552 $712,277 

ANGI Group Senior Notes
 December 31,
 2017 2016
 (In thousands)
Term Loan due November 1, 2022$275,000
 $
Less: current portion of Term Loan13,750
 
Less: unamortized debt issuance costs2,938
 
Total long-term debt, net$258,312
 $
See "Note 15—Related Party Transactions" for a description of related-party long-term debt.
Term Loan
On November 1, 2017, the Company borrowed $275 million under a five-year term loan facility ("Term Loan"). The Term Loan currently bears interest at LIBOR plus 2.00%, or 3.38% at December 31, 2017, which is subject to change basedANGI Group Senior Notes were issued on the Company's consolidated net leverage ratio. Interest payments are due at least quarterly through the term of the loan and quarterly principal payments of 1.25% of the original principal amount in the first three years, 2.5% in the fourth year and 3.75% in the fifth year are required. A portion ofAugust 20, 2020, the proceeds from the Term Loan were used to repay the Intercompany Notes outstanding to IAC and its subsidiaries on November 1, 2017, see "Note 15—Related Party Transactions" for additional information, and the remaining proceeds will beof which have been used for general corporate purposes.purposes, including the acquisition of Total Home Roofing, Inc. (“Angi 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:
There are additional covenants
YearPercentage
2023101.938 %
2024100.969 %
2025 and thereafter100.000 %
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 (as defined in the indenture) exceeds 3.75 to 1.0. At December 31, 2021, there were no limitations pursuant thereto.
ANGI Group Revolving Facility
The $250.0 million ANGI Group Revolving Facility, which otherwise would have expired on November 5, 2023, was terminated effective August 3, 2021.No amounts were ever drawn under the ANGI Group Revolving Facility prior to its termination.

ANGI Group Term Loan
As of May 6, 2021, the outstanding balance of the ANGI Group Term Loan that limit the abilitywas repaid in its entirety. The outstanding balance of the Company and its subsidiaries to, among other things, incur indebtedness, pay dividends or make distributions. TheANGI Group Term Loan is guaranteed by the Company's wholly-owned material domestic subsidiariesat December 31, 2020 was $220.0 million and is secured by substantially all assets of the Company and the guarantors, subject to certain exceptions.bore interest at 2.16%.
Long-term debt maturities:
Years Ending December 31, (In thousands)
2018 $13,750
2019 13,750
2020 13,750
2021 27,500
2022 206,250
Total 275,000
Less: current portion of Term Loan 13,750
Less: unamortized debt issuance costs 2,938
Total long-term debt, net $258,312
NOTE 8—SHAREHOLDERS'7—SHAREHOLDERS’ EQUITY
Description of Class A Common Stock, Class B Convertible Common Stock and Class C Common Stock
The rightsExcept as described herein, shares of holders of ANGI HomeservicesAngi Inc. Class A common stock, Class B common stock and Class C common stock are identical, except for voting rights, conversion rights and dividend rights. identical.
Holders of Class A common stock are entitled to one1 vote per share on all matters to be voted upon by the stockholders. Holders of Class B common stock are entitled to ten10 votes per share on all matters to be voted upon by stockholders. Holders of Class C common stock have no voting rights, except as otherwise required by the laws of the State of Delaware, in which case holders of Class C common stock are entitled to one one-hundredth (1/100) of a vote per share. Holders of the Company'sCompany’s Class A common stock, Class B common stock and Class C common stock do not have cumulative voting rights in the election of directors.

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NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)



Shares of ANGI HomeservicesAngi Inc. Class B common stock are convertible into shares of our Class A common stock at the option of the holder at any time on a share for share basis. Such conversion ratio will in all events be equitably preserved in the event of any recapitalization of ANGI HomeservicesAngi Inc. by means of a stock dividend on, or a stock split or combination of, our outstanding Class A common stock or Class B common stock, or in the event of any merger, consolidation or other reorganization of ANGI HomeservicesAngi Inc. with another corporation. Upon the conversion of a share of our Class B common stock into a share of our Class A common stock, the applicable share of Class B common stock will be retired and will not be subject to reissue. Shares of Class A common stock and Class C common stock have no conversion rights.
The holders of shares of ANGI HomeservicesAngi Inc. Class A common stock, Class B common stock and Class C common stock are entitled to receive, share for share, such cash dividends as may be declared by ANGI HomeservicesAngi Inc. Board of Directors out of funds legally available therefore.therefor. In the event of a liquidation, dissolution or winding up, holders of the Company'sCompany’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.
At December 31, 2017,2021, IAC holds 415.2all 422.0 million outstanding shares of our Class B common stock, which represents all of our outstandingthe Company’s Class B common stock, and an 86.9%2.6 million outstanding shares of the Company’s Class A common stock, in total representing approximately 84.5% economic interest and 98.5%98.2% voting interest in the Company.
In the event that ANGI HomeservicesAngi Inc. issues or proposes to issue any shares of ANGI HomeservicesAngi Inc. 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'sCompany’s non-voting capital stock, with respect to issuances of our non-voting capital stock.
Reserved Common Shares
In connection with outstanding awards under our equity compensation plans, 80.025.6 million shares of ANGI HomeservicesAngi Inc. Class A common stock are reserved for future issuances at December 31, 2017.2021.
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 has approximately 16.1 million shares remaining in its share repurchase authorization.








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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 9—8—ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
ForThe following tables presents the years ended December 31, 2017, 2016 and 2015, the Company'scomponents of accumulated other comprehensive income (loss) relates to foreign currency translation adjustments, which is presented in the table below.
 Years Ended December 31,
 2017 2016 2015
 (In thousands)
Balance at January 1$(1,721) $(1,064) $(483)
Other comprehensive income (loss) before reclassifications3,980
 (657) (581)
Amounts reclassified to earnings(27) 
 
Net current period other comprehensive income (loss)3,953
 (657) (581)
Balance at December 31$2,232
 $(1,721) $(1,064)
The amountand items reclassified out of accumulated other comprehensive income (loss) into earnings for the year ended December 31, 2017 relates to the liquidation of an international subsidiary.earnings:
Years Ended December 31,
202120202019
Foreign
Currency
Translation
Adjustment
Accumulated Other Comprehensive IncomeForeign
Currency
Translation
Adjustment
Accumulated Other Comprehensive Income (Loss)Foreign
Currency
Translation
Adjustment
Unrealized Gains on Available-For-Sale Debt SecuritiesAccumulated Other Comprehensive (Loss) Income
(In thousands)
Balance at January 1$4,637 $4,637 $(1,379)$(1,379)$(1,864)$$(1,861)
Other comprehensive (loss) income(1,328)(1,328)6,016 6,016 485 (3)482 
Balance at December 31$3,309 $3,309 $4,637 $4,637 $(1,379)$— $(1,379)
At December 31, 2017, 20162021, 2020, and 2015,2019, there was no tax benefit or provision on the accumulated other comprehensive income (loss).

ANGI HOMESERVICES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)



NOTE 10—9—(LOSS) EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted (loss) earnings per share attributable to ANGI HomeservicesAngi Inc. Class A and Class B Common Stock shareholders:
 Years Ended December 31,
 2017 2016 2015
 Basic Diluted Basic Diluted Basic Diluted
 (In thousands, except per share data)
Numerator:           
Net (loss) earnings$(104,527) $(104,527) $10,631
 $10,631
 $(3,996) $(3,996)
Net loss attributable to noncontrolling interests1,409
 1,409
 2,497
 2,497
 2,671
 2,671
Net (loss) earnings attributable to ANGI Homeservices Inc. shareholders$(103,118) $(103,118) $13,128
 $13,128
 $(1,325) (1,325)
            
Denominator:           
Weighted average basic shares outstanding430,612
 430,612
 414,754
 414,754
 414,754
 414,754
Dilutive securities including stock appreciation rights, stock options, RSUs and subsidiary denominated equity awards (a)

 
 
 
 
 
Denominator for earnings per share—weighted average shares (b)
430,612
 430,612
 414,754
 414,754
 414,754
 414,754
            
(Loss) earnings per share attributable to ANGI Homeservices Inc. shareholders:      
(Loss) earnings per share$(0.24) $(0.24) $0.03
 $0.03
 $(0.00) $(0.00)
 Years Ended December 31,
 202120202019
 BasicDilutedBasicDilutedBasicDiluted
 (In thousands, except per share data)
Numerator:
Net (loss) earnings$(70,494)$(70,494)$(4,160)$(4,160)$35,314 $35,314 
Net earnings attributable to noncontrolling interests(884)(884)(2,123)(2,123)(485)(485)
Net (loss) earnings attributable to Angi Inc. Class A and Class B Common Stock shareholders$(71,378)$(71,378)$(6,283)$(6,283)$34,829 $34,829 
Denominator:
Weighted average basic Class A and Class B common stock shares outstanding502,761 502,761 498,159 498,159 504,875 504,875 
Dilutive securities (a) (b)
— — — — — 13,044 
Denominator for (loss) earnings per share—weighted average shares502,761 502,761 498,159 498,159 504,875 517,919 
(Loss) earnings per share attributable to Angi Inc. shareholders:
(Loss) earnings per share$(0.14)$(0.14)$(0.01)$(0.01)$0.07 $0.07 
________________________
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(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, 2021, 2020, and 2019, 17.5 million, 24.9 million, and 5.5 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, 2021, 2020, and 2019, 2.2 million, 2.0 million and 0.9 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.
(a)
For the year ended December 31, 2017, the Company had a loss from operations and as a result, approximately 54.1 million potentially dilutive securities were excluded from computing dilutive earnings per share because the impact would have been anti-dilutive. Accordingly, the weighted average basic shares outstanding were used to compute diluted earnings per share amounts.
(b)
The Company computed basic and diluted earnings per share for the years ended December 31, 2016 and 2015 using the shares issued to IAC for the contribution of the HomeAdvisor business.
NOTE 11—10—STOCK-BASED COMPENSATION
The Company currently has one1 active stock plan, which became effective inon September 29, 2017 upon (“the completion of the Combination. This plan replaces the HomeAdvisor 2013 Incentive plan, which governed equity awards prior to the Combination.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 HomeservicesAngi Inc. common stock, as well as provides for the future grant of these and other equity awards. The 2017 planPlan authorizes the Company to grant awards to its employees, officers, directors and consultants. At December 31, 2017,2021, there are 25.88.1 million shares available for grant under the 2017 plan.Plan.
The 2017 planPlan 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'sCompany’s common stock on the grant date. The planPlan does not specify grant dates or vesting schedules for awards, as those determinations have been delegated to the Compensation Committee of ANGI HomeservicesAngi 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

ANGI HOMESERVICES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)



subsequent to under the Combination through December 31, 2017Plan 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 1 installment over a three-year period or in equal annual installments over a four-year period, in each case, from the grant date. MSU awards granted under the Plan generally vest in 5 installments over a two-year period from the grant date. PSU awards granted subsequent to the Combination through December 31, 2017 generally cliff-vest three yearscliff vest in a two to five-year period from the grant date.
Stock-based compensation expense recognized in the consolidated and combined statement of operations includes expense related to: (i) the Company'sCompany’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 HomeservicesAngi Inc. employees. The amount of stock-based compensation expense recognized is net of estimated forfeitures, as the expense recorded is based on awards that are ultimately expected to vest.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, 2017,2021, there is $188.4was $107.7 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 2.42.9 years.
The total income tax benefit recognized in the accompanying consolidated and combined statement of operations for the years ended December 31, 2017, 20162021, 2020, and 20152019 related to all stock-based compensation is $71.1$16.9 million, $3.4$24.3 million, and $3.0$28.8 million, respectively.
The increase in totalaggregate income tax benefit recognized during 2017 is duerelated to the adoptionexercise of ASU 2019-06 and the recognition of excess tax benefits attributable to stock-based compensation included as a component of the current year provision for income taxes rather than recognized in equity.
The Company will recognize a corporate income tax deduction based on the intrinsic value of the stock options exercised in 2017, however, there willand stock appreciation rights for the years ended December 31, 2021, 2020, and 2019 is $10.8 million, $11.4 million, and $27.9 million, respectively. There may be some delay in the timing of the realization of the cash benefit of the income tax deductiondeductions 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. The income tax benefit to be realized on stock option deductions, including those net settled, for the year ended December 31, 2017, is $47.3 million. The income tax benefit realized on stock options deductions, including those net settled, for the years ended December 31, 2016 and 2015 are $8.8 million and $0.2 million, respectively.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Stock optionsOptions and stock appreciation rightsStock Appreciation Rights
Stock options and stock appreciation rights outstanding at December 31, 20172021 and changes during the year ended December 31, 2017 is2021 were as follows:

ANGI HOMESERVICES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)



December 31, 2021
December 31, 2017Shares
Weighted Average
Exercise Price
Weighted Average
Remaining
Contractual Term (In Years)
Aggregate
Intrinsic Value
Shares 
Weighted Average
Exercise Price
 
Weighted Average
Remaining
Contractual Term (In Years)
 
Aggregate
Intrinsic Value
(Shares and intrinsic value in thousands)
(Shares and intrinsic value in thousands)
Outstanding HomeAdvisor (US) stock appreciation rights at January 1, 201713,830
 $3.97
  
Granted4,720
 16.83
  
Exercised(6,659) 2.87
  
Forfeited(110) 9.86
  
Outstanding HomeAdvisor (US) stock appreciation rights prior to the Combination on September 29, 201711,781
 9.69
  
Converted HomeAdvisor (US) stock appreciation rights in connection with the Combination43,780
 2.61
  
Converted Angie's List stock options in connection with the Combination5,290
 10.56
  
Outstanding at January 1, 2021Outstanding at January 1, 202110,689 $4.67 
Granted948
 11.32
  Granted— — 
Exercised(1,948) 7.40
  Exercised(9,050)4.19 
Forfeited(331) 6.86
  Forfeited(17)6.58 
Expired(624) 17.94
  Expired(13)10.64 
Outstanding at December 31, 201747,115
 $3.25
 7.1 $346,595
Outstanding at December 31, 2021Outstanding at December 31, 20211,609 $7.32 3.84$5,954 
Exercisable17,358
 $2.22
 4.7 $148,729
Exercisable1,609 $7.32 3.84$5,954 
The aggregate intrinsic value in the table above represents the difference between ANGI HomeservicesAngi Inc. closing stock price on the last trading day of 20172021 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, 2017.2021. The total intrinsic value of awards exercised during the years ended December 31, 2017, 20162021, 2020, and 20152019 is $100.7$103.8 million, $21.7$120.9 million and $0.2$107.5 million, respectively.
The following table summarizes the information about stock options and stock appreciation rights outstanding and exercisable at December 31, 2017:2021:
Awards outstanding & exercisable
Range of Exercise PricesOutstanding
at
December 31,
2021
Weighted average
remaining
contractual
life in years
Weighted
average
exercise
price
(Shares in thousands)
$0.01 to $10.001,086 3.9$3.80 
$10.01 to $20.00508 3.814.41 
$20.01 to $30.0015 1.622.02 
1,609 3.8$7.32 
  Awards Outstanding Awards Exercisable
Range of Exercise Prices 
Outstanding
at
December 31,
2017
 
Weighted Average
Remaining
Contractual
Life in Years
 
Weighted
Average
Exercise
Price
 
Exercisable
at
December 31,
2017
 
Weighted Average
Remaining
Contractual
Life in Years
 
Weighted
Average
Exercise
Price
  (Shares in thousands)
$0.01 to $3.00 26,143
 6.0 $1.32
 15,462
 4.8 $0.99
$3.01 to $6.00 17,580
 9.1 4.54
 50
 6.5 5.82
$6.01 to $9.00 1,210
 5.5 7.66
 711
 4.1 7.68
$9.01 to $12.00 950
 9.0 10.57
 202
 6.3 9.92
$12.01 to $15.00718
718
 5.6 13.12
 420
 3.0 13.34
$15.01 to $18.00239
239
 0.5 17.71
 238
 0.4 17.72
$18.01 to $21.00192
192
 5.2 19.88
 192
 5.2 19.88
$21.01 to $24.0083
83
 4.8 22.51
 83
 4.8 22.51
  47,115
 7.1 $3.25
 17,358
 4.7 $2.22
The fair value ofThere were no stock options and stock appreciation rights is estimated on the grant date using the Black-Scholes option pricing model. The Black-Scholes option pricing model incorporates various assumptions, including expected volatility and

ANGI HOMESERVICES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)



expected term. Prior to the Combination, expected stock price volatilities were estimated based on historical stock price volatilities of a group of peer companies. Subsequent to the Combination, expected stock price volatilities were estimated based on the average of IAC's historical volatility, as a result of the Company representing a large percentage of the overall value of IAC, and the historical stock price volatilities of the aforementioned group of peer companies. The risk-free interest rates are based on U.S. Treasuries with comparable terms as the awards, in effect at the grant date. Prior to the Combination, expected term was based upon the mid-point of the first and last windows for exercise. Subsequent to the Combination, expected term is based upon the historical exercise pattern of IAC's employees for comparable awards, a ten-year contractual life with vesting in four equal annual installments, because the Company does not have sufficient data to estimate an expected term for these awards. No dividends have been assumed. The following are the weighted average assumptions used in the Black-Scholes option pricing model:
 Years Ended December 31,
 2017 2016 2015
Expected volatility50% 44% 48%
Risk-free interest rate2.0% 0.8% 1.2%
Expected term5.5 years
 3.2 years
 3.7 years
Dividend yield% % %
Approximately 0.9 million stock options and stock appreciation rights were granted by the Company subsequent to the Combination through December 31, 2017. Approximately 4.7 million, 2.1 million and 2.4 million stock appreciation rights were granted by the Company for the period prior to the Combination in 2017, and for the years ended December 31, 2016 and 2015, respectively. The per share weighted average grant date fair value of stock options and stock appreciation rights granted by the Company subsequent to the Combination through December 31, 2017 is $4.30. The per share weighted average grant date fair value ofor stock appreciation rights granted by the Company for the period prior to the Combination in 2017, and for the years ended December 31, 20162021, 2020, and 2015, are $8.24, $3.13 and $1.34, respectively.2019.
In connection with the Combination, the previously issued HomeAdvisor (US) stock appreciation rights were converted into ANGI Homeservices'Angi Inc. equity awards resulting in a modification charge of $217.7 million of which $93.4 million was recognized ascharge. Included in stock-based compensation expense in the yearyears ended December 31, 20172021, 2020, and 2019 were charges of $0.9 million, $21.1 million, and $29.0 million, respectively, related to these modified awards, and the remaining charge will be recognized over the remaining vesting period of the modified awards.
During the second quarter of 2017, the Company modified certain HomeAdvisor (US) stock appreciation rights and recognized a modification charge of $6.6 million.
CashNo cash was received from stock option exercises forduring the period subsequent to the Combination throughyears ended December 31, 2017 is $1.7 million. For periods prior to the Combination, no cash was received from the exercise of stock appreciation rights2021 and 2020 because they were net settled in shares of IAC’sAngi Inc. common stock. Cash received from stock option exercises was $0.6 million for the year ended December 31, 2019.
In connection
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The Company currently settles all equity awards on a net basis with the Combination, previously issued stock appreciation rights that relatedCompany 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 common stock of HomeAdvisor (US) were converted into stock appreciation rights that are settleablecover the withholding taxes. In addition, at IAC’s option, certain awards can be settled in either Class A shares of ANGI Homeservices. IAC may require those awards to be settled in eitherAngi Inc. or shares of IAC common stock. If settled in IAC common stock, Angi Inc. reimburses IAC in either cash or inthrough the issuance of Class A shares of the Company's common stock and, to the extent shares of IAC common stock are issued in settlement, the Company will reimburse IAC for the cost of those shares by issuing to IAC additional Class A shares of the Company's common stock.IAC. Assuming all vested and unvestedof the stock appreciation rights outstanding on December 31, 2017, which can only be exercised on a2021 were net basis, were exercisedsettled on that date, 16.4ANGI would have issued 0.3 million Class A shares of the Company's common stock would have been issued either (i)(either to award holders or to IAC as reimbursement if the awards were settled in IAC shares or (ii) directly to award holders if IAC did not exercise its right to settle these awards in IAC shares. In either case, the Companyreimbursement) and ANGI would have remitted $171.3$2.9 million in cash infor withholding taxes (assuming a 50% withholding rate). Assuming all other ANGI equity awards outstanding on behalf of the employees.December 31, 2021, were net settled on that date, including stock options, RSUs and subsidiary denominated equity described below, ANGI would have issued 9.1 million Class A shares and would have remitted $83.5 million in cash for withholding taxes (assuming a 50% withholding rate).
Restricted stock unitsStock 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 HomeservicesAngi Inc. common stock and with the value of each RSU and PSU equal to the fair value of ANGI HomeservicesAngi Inc. common

ANGI HOMESERVICES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)



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. TheMSUs 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 HomeservicesAngi 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.
Prior to the Combination, there were no RSUs outstanding.
Unvested RSUs, MSUs, and PSUs outstanding at December 31, 20172021 and changes during the year ended December 31, 2017 is2021 are as follows:

RSUsMSUsPSUs
RSUsNumber of SharesWeighted Average
 Grant Date
 Fair Value
Number of Shares (a)
Weighted Average
 Grant Date
 Fair Value
Number of Shares (a)
Weighted Average
 Grant Date
 Fair Value
Number of Shares 
Weighted Average
 Grant Date
 Fair Value
(Shares in thousands)
(Shares in thousands)
Converted Angie's List RSUs in connection with the Combination4,957
 $12.46
Unvested at January 1, 2021Unvested at January 1, 20219,560 $10.19 2,496 $7.82 1,958 $5.11 
Granted489
 12.58
Granted11,670 12.73 3,328 14.39 696 13.51 
Vested(1,574) 12.46
Vested(2,424)12.78 (153)6.81 (369)5.11 
Forfeited(977) 12.46
Forfeited(5,510)11.28 (1,960)6.85 (1,111)6.37 
Unvested at December 31, 20172,895
 $12.48
Unvested at December 31, 2021Unvested at December 31, 202113,296 $11.49 3,711 $14.27 1,174 $8.89 
___________________________
(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 are 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 per share weighted average grant date fair value of RSUs granted during the yearyears ended December 31, 20172021, 2020, and 2019 based on market prices of ANGI Homeservices’Angi Inc. common stock on the grant date was $12.58.$12.73, $7.37, and $13.16, respectively. The weighted average fair value of MSUs granted during the years ended December 31, 2021 and 2019, based on the lattice model, was $14.39 and $3.67, respectively. There were no MSUs granted during the year ended December 31, 2020. The weighted average fair value
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
of PSUs granted during the years ended December 31, 2021, 2020, and 2019 based on market prices of Angi Inc. common stock on the grant date was $13.51, $6.92 and $15.93, respectively. The total fair value of RSUs that vested during the years ended December 31, 2021, 2020, and 2019 was $35.2 million, $23.4 million and $16.1 million, respectively. The total fair value of MSUs that vested during the years ended December 31, 2021, 2020, and 2019 was $2.1 million, $5.2 million, and $3.2 million, respectively. The total fair value of PSUs that vested during the year ended December 31, 20172021 was $19.2$3.6 million. There were no PSUs that vested during the years ended December 31, 2020 and 2019.

Equity instruments denominatedInstruments Denominated in the sharesShares of certain subsidiariesCertain Subsidiaries
ANGI Homeservices
Angi Inc. has granted stock appreciation rights and stock options denominated in the equity of itscertain non-publicly traded subsidiaries to employees and management of certainthose subsidiaries. These equity awards vest over a period of years, which is typically four years. The value of the stock appreciation rights and stock options 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 HomeservicesAngi Inc. Class A common stock, at IAC's election, with fair value generally determined by negotiation or arbitration, at various dates through 2027.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.
IAC denominated stock options
There were no IAC stock options granted by IAC underNOTE 11—SEGMENT INFORMATION
The overall concept that the Company employs in determining its equity incentive plansoperating segments is to employees of ANGI Homeservices duringpresent the year ended December 31, 2017. For eachfinancial information in a manner consistent with how the chief operating decision maker views the businesses. In addition, the Company considers how the businesses are organized as to segment management and the focus of the years ended December 31, 2016 and 2015, approximately 0.1 million IAC stock options were granted by IAC under its equity incentive plans to employees of ANGI Homeservices. Approximately 0.2 million IAC options remain outstanding to employees of ANGI Homeservices as of December 31, 2017. The fair value of each stock option award is estimated on the grant date using the Black-Scholes option-pricing model. IAC stock options are grantedbusinesses with exercise prices at least equalregards to the fair value ontypes of services or products offered or the datetarget market.

The following table presents revenue by reportable segment:
Years Ended December 31,
202120202019
(In thousands)
Revenue:
North America$1,602,571 $1,395,428 $1,249,892 
Europe82,867 72,497 76,313 
Total$1,685,438 $1,467,925 $1,326,205 

The following table presents the revenue of grant, vest ratably in annual installments over a four-year period and expire ten years from the dateCompany’s segments disaggregated by type of grant.
IAC denominated performance stock units ("PSUs")service:

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NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)


Years Ended December 31,
202120202019
(In thousands)
North America
Angi Ads and Leads:
Consumer connection revenue(a)
$896,711 $899,175 $867,307 
Advertising revenue(b)
252,010 226,505 214,259 
Membership subscription revenue(c)
68,062 74,073 92,975 
Other revenue27,812 33,136 23,844 
Total Angi Ads and Leads revenue1,244,595 1,232,889 1,198,385 
Angi Services revenue(d)
357,976 162,539 51,507 
Total North America revenue1,602,571 1,395,428 1,249,892 
Europe
Consumer connection revenue(e)
68,686 57,692 59,611 
Service professional membership subscription revenue12,939 13,091 14,231 
Advertising and other revenue1,242 1,714 2,471 
Total Europe revenue82,867 72,497 76,313 
Total revenue$1,685,438 $1,467,925 $1,326,205 
________________________

There were 0.1 million IAC PSUs granted by IAC to employees of ANGI Homeservices during the year ended December 31, 2017. There were no IAC PSUs granted by IAC to employees of ANGI Homeservices during the years ended December 31, 2016 and 2015.PSUs are awards in the form of phantom shares or units, denominated in a hypothetical equivalent number of shares of IAC common stock and with the value of each PSU equal to the fair value of IAC common stock at the date of grant. Each PSU grant is subject to service-based vesting, where a specific period of continued employment must pass before an award vests and certain performance targets, set at the time of grant, must be achieved before an award vests.
NOTE 12—SEGMENT INFORMATION
The Company has two operating segments, North America and Europe, which are also the Company’s reportable segments. Each segment manager reports to the Company’s chief operating decision maker. The chief operating decision maker allocates resources and assesses performance at the segment level.
 Years Ended December 31,
 2017 2016 2015
 (In thousands)
Revenue:     
North America$678,897
 $461,847
 $329,867
Europe57,489
 37,043
 31,334
Total$736,386
 $498,890
 $361,201
 Years Ended December 31,
 2017 2016 2015
 (In thousands)
Operating (Loss) Income:     
North America$(128,483) $32,464
 $2,311
Europe(19,388) (8,406) (3,879)
Total$(147,871) $24,058
 $(1,568)
 Years Ended December 31,
 2017 2016 2015
 (In thousands)
Adjusted EBITDA(a):
     
North America$50,182
 $50,088
 $18,184
Europe(11,019) (5,542) (1,471)
Total$39,163
 $44,546
 $16,713
 December 31,
 2017 2016
 (In thousands)
Segment Assets:(b)
   
North America$253,582
 $24,630
Europe10,868
 50,249
Total$264,450
 $74,879

ANGI HOMESERVICES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)



 Years Ended December 31,
 2017 2016 2015
 (In thousands)
Capital expenditures:     
North America$24,214
 $14,672
 $9,933
Europe2,623
 1,988
 237
Total$26,837
 $16,660
 $10,170
___________________________
(a)
The Company’s primary financial measure is Adjusted EBITDA, which is defined as operating income excluding: (1) stock-based compensation expense; (2) depreciation; and (3) acquisition-related items consisting of amortization of intangible assets and impairments of goodwill and intangible assets, if applicable. The Company believes this measure is useful for analysts and investors as this measure allows a more meaningful comparison between our performance and that of our competitors. Moreover, our management uses this measure internally to evaluate the performance of our business as a whole and our individual business segments, and this measure is one of the primary metrics by which our internal budgets are based and by which management is compensated. The above items are excluded from our Adjusted EBITDA measure because these items are non-cash in nature, and we believe that by excluding these items, Adjusted EBITDA corresponds more closely to the cash operating income generated from our business, from which capital investments are made and long-term related party debt is serviced. Adjusted EBITDA has certain limitations in that it does not take into account the impact to ANGI Homeservices Inc.'s statement of operations of certain expenses.
(b)
Consistent with the Company's primary metric (described in (a) above), the Company excludes, if applicable, property and equipment, goodwill and intangible assets from the measure of segment assets presented above.
The following table presents revenue disaggregated(a)Includes fees paid by service professionals for consumer matches through the Company's reportable segments:Angi Ads and Leads platforms.
(b)Includes revenue from service professionals under contract for advertising.
 Years Ended December 31,
 2017 2016 2015
 (In thousands)
Marketplace:     
Consumer connection revenue(c)
$521,481
 $382,466
 $269,309
Membership subscription revenue56,135
 43,573
 24,164
Other revenue3,798
 2,827
 3,423
Marketplace revenue581,414
 428,866
 296,896
Advertising & Other revenue(d)
97,483
 32,981
 32,971
North America678,897
 461,847
 329,867
Consumer connection revenue(c)
40,009
 28,124
 23,298
Membership subscription revenue16,596
 7,936
 6,921
Advertising and other revenue884
 983
 1,115
Europe57,489
 37,043
 31,334
Revenue$736,386
 $498,890
 $361,201
(c)    Includes membership subscription revenue from service professionals and consumers.
___________________________
(c)
Fees paid by service professionals for consumer matches.
(d)
(d)Includes Angie's List revenue from service professionals under contract for advertising and Angie's List membership subscription fees from consumers, as well as revenue from mHelpDesk, HomeStars and Felix.
Geographic information about revenue from pre-priced offerings and long-lived assets is presented below. revenue from Angi Roofing.
(e)    Includes fees paid by service professionals for consumer matches.

Revenue by geography is based on where the customer is located. Geographic information about revenue and long-lived assets is presented below.

Years Ended December 31,
202120202019
(In thousands)
Revenue
United States$1,581,051 $1,379,236 $1,234,755 
All other countries104,387 88,689 91,450 
Total$1,685,438 $1,467,925 $1,326,205 
ANGI HOMESERVICES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)



 Years Ended December 31,
 2017 2016 2015
 (In thousands)
Revenue     
United States$672,159
 $461,372
 $329,117
All other countries64,227
 37,518
 32,084
Total$736,386
 $498,890
 $361,201
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, 2017, 20162021, 2020, and 2015.2019.
December 31, 2021December 31, 2020
(In thousands)
Long-lived assets (excluding goodwill and intangible assets):
United States$111,136 $97,841 
All other countries7,131 11,001 
Total$118,267 $108,842 
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 December 31,
 2017 2016
 (In thousands)
Long-lived assets (excluding goodwill and intangible assets)   
United States$49,356
 $21,775
All other countries3,936
 1,870
Total$53,292
 $23,645
The following tables present operating (loss) income and Adjusted EBITDA by reportable segment:
Years Ended December 31,
202120202019
(In thousands)
Operating (loss) income:
North America$(63,316)$4,811 $48,967 
Europe(13,197)(11,179)(10,322)
Total$(76,513)$(6,368)$38,645 
Years Ended December 31,
202120202019
(In thousands)
Adjusted EBITDA(f):
North America$35,328 $178,854 $208,192 
Europe$(7,463)$(6,050)$(5,895)
(f)    The Company’s primary financial measure is Adjusted EBITDA, which is defined as operating (loss) income excluding: (1) stock-based compensation expense; (2) depreciation; and (3) acquisition-related items consisting of amortization of intangible assets and impairments of goodwill and intangible assets, if applicable.
The following tables reconcile operating (loss) income for the Company’s reportable segments and net (loss) earningsloss attributable to ANGI HomeservicesAngi Inc. shareholders to Adjusted EBITDA:
 Year Ended December 31, 2017
 Operating
loss
 Stock-based
compensation
 Depreciation Amortization
of intangibles
 Adjusted EBITDA
 (In thousands)
North America$(128,483) $147,574
 $13,243
 $17,848
 $50,182
Europe(19,388) 1,656
 1,300
 5,413
 (11,019)
Total(147,871) $149,230
 $14,543
 $23,261
 $39,163
Interest expense—third party(1,765)        
Interest expense—related party(5,971)        
Other income, net1,974
        
Loss before income taxes(153,633)        
Income tax benefit49,106
        
Net loss(104,527)        
Net loss attributable to noncontrolling interests1,409
        
Net loss attributable to ANGI Homeservices Inc. shareholders$(103,118)        
Year Ended December 31, 2021
Operating LossStock-Based
Compensation Expense
DepreciationAmortization
of Intangibles
Adjusted
EBITDA
(In thousands)
North America$(63,316)$28,399 $53,815 $16,430 $35,328 
Europe(13,197)$303 $5,431 $— $(7,463)
Operating loss(76,513)
Interest expense(23,485)
Other expense, net(2,509)
Loss before income taxes(102,507)
Income tax benefit32,013 
Net loss(70,494)
Net earnings attributable to noncontrolling interests(884)
Net loss attributable to Angi Inc. shareholders$(71,378)

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NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)


Year Ended December 31, 2020
Operating Income (Loss)Stock-Based
Compensation Expense
DepreciationAmortization
of Intangibles
Adjusted
EBITDA
(In thousands)
North America$4,811 $82,933 $48,515 $42,595 $178,854 
Europe(11,179)$716 $4,106 $307 $(6,050)
Operating loss(6,368)
Interest expense(14,178)
Other income, net1,218 
Loss before income taxes(19,328)
Income tax benefit15,168 
Net earnings(4,160)
Net earnings attributable to noncontrolling interests(2,123)
Net earnings attributable to Angi Inc. shareholders$(6,283)

 Year Ended December 31, 2016
 Operating
income
(loss)
 Stock-based
compensation
 Depreciation Amortization
of intangibles
 Adjusted
EBITDA
 (In thousands)
North America$32,464
 $7,126
 $7,996
 $2,502
 $50,088
Europe(8,406) 1,790
 423
 651
 (5,542)
Total24,058
 $8,916
 $8,419
 $3,153
 $44,546
Interest expense—third party
        
Interest expense—related party(894)        
Other expense, net(699)        
Earnings before income taxes22,465
        
Income tax provision(11,834)        
Net earnings10,631
        
Net loss attributable to noncontrolling interests2,497
        
Net earnings attributable to ANGI Homeservices Inc. shareholders$13,128
        
 Year Ended December 31, 2015
 Operating
income
(loss)
 Stock-based
compensation
 Depreciation Amortization
of intangibles
 Adjusted
EBITDA
 (In thousands)
North America$2,311
 $6,758
 $5,768
 $3,347
 $18,184
Europe(3,879) 1,095
 825
 488
 (1,471)
Total(1,568) $7,853
 $6,593
 $3,835
 $16,713
Interest expense—third party
        
Interest expense—related party(272)        
Other expense, net(398)        
Loss before income taxes(2,238)        
Income tax provision(1,758)        
Net loss(3,996)        
Net loss attributable to noncontrolling interests2,671
        
Net loss attributable to ANGI Homeservices Inc. shareholders$(1,325)        
 Year Ended December 31, 2019
Operating Income (Loss)Stock-Based
Compensation Expense
DepreciationAmortization
of Intangibles
Adjusted
EBITDA
(In thousands)
North America$48,967 $67,646 $37,481 $54,098 $208,192 
Europe(10,322)$609 $2,434 $1,384 $(5,895)
Operating income38,645 
Interest expense(11,493)
Other income, net6,494 
Earnings before income taxes33,646 
Income tax benefit1,668 
Net earnings35,314 
Net earnings attributable to noncontrolling interests(485)
Net earnings attributable to Angi Inc. shareholders$34,829 
The following tables reconcile segment assets to total assets:table presents capital expenditures by reportable segment:
Years Ended December 31,
202120202019
(In thousands)
Capital expenditures:
North America$67,772 $50,462 $64,215 
Europe2,443 2,026 4,589 
Total$70,215 $52,488 $68,804 


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NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)



 December 31, 2017
 Segment assets Property and equipment, net Goodwill Indefinite-lived intangible assets Definite-lived
intangible
assets, net
 Total assets
 (In thousands)
North America$253,582
 $49,487
 $696,291
 $140,034
 $169,054
 $1,308,448
Europe10,868
 3,805
 73,935
 13,413
 6,070
 108,091
Total$264,450
 $53,292
 $770,226
 $153,447
 $175,124
 $1,416,539
Add: Deferred tax assets (e)
          50,723
Total assets          $1,467,262
 December 31, 2016
 Segment assets Property and equipment, net Goodwill Indefinite-lived intangible assets Definite-lived
intangible
assets, net
 Total assets
 (In thousands)
North America$24,630
 $21,775
 $140,930
 $600
 $2,454
 $190,389
Europe50,249
 1,870
 30,060
 4,284
 3,454
 89,917
Total$74,879
 $23,645
 $170,990
 $4,884
 $5,908
 $280,306
Add: Deferred tax assets (e)
          15,211
Total assets          $295,517
___________________________
(e)
Total segment assets differ from total assets on a consolidated basis as a result of unallocated deferred tax assets.
NOTE 13—COMMITMENTS AND CONTINGENCIES
Commitments12—LEASES
The Company leases office space, data center facilities, and equipment used in connection with its operations under various operating leases, the majority of which contain escalation clauses.
Future minimumROU 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 under operatingarising 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 or January 1, 2019 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 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 are as follows:do not contain any material residual value guarantees or material restrictive covenants.
December 31,
LeasesBalance Sheet Classification20212020
(In thousands)
Assets:
Right-of-use assetsOther non-current assets$69,858 $87,559 
Liabilities:
Current lease liabilitiesAccrued expenses and other current liabilities17,098 15,700 
Long-term lease liabilitiesOther long-term liabilities88,423 103,575 
Total lease liabilities$105,521 $119,275 
Years ending December 31, (In thousands)
2018 $11,090
2019 13,728
2020 10,859
2021 9,578
2022 8,306
Thereafter 32,820
Total $86,381
December 31,
Lease CostIncome Statement Classification20212020
(In thousands)
Fixed lease costCost of revenue$346 $321 
Fixed lease costSelling and marketing expense7,305 9,913 
Fixed lease costGeneral and administrative expense16,829 7,545 
Fixed lease costProduct development expense1,232 1,848 
Total fixed lease cost(a)
25,712 19,627 
Variable lease costCost of revenue— — 
Variable lease costSelling and marketing expense1,087 2,314 
Variable lease costGeneral and administrative expense2,481 1,567 
Variable lease costProduct development expense567 867 
Total variable lease cost4,135 4,748 
Net lease cost$29,847 $24,375 

Expenses charged to operations under these agreements are $8.9 million, $6.2 million and $5.8 million for the(a)    The years ended December 31, 2017, 20162021 and 2015, respectively.2020 includes $0.1 million and $0.04 million of short-term lease cost, respectively, and $1.8 million of sublease income for both years.


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ANGI HOMESERVICES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)


Maturities of lease liabilities as of December 31, 2021(b):

For Years Ending December 31:(In thousands)
2022$22,818 
202321,103 
202419,825 
202519,302 
202618,377 
Thereafter25,050 
Total126,475 
Less: Interest20,954 
Present value of lease liabilities$105,521 

(b) Lease payments exclude $1.2 million of legally binding minimum lease payments for leases signed but not yet commenced.
The Company’s two most significant operating leasesfollowing are a 10.5-yearthe weighted average assumptions used for lease for its call center in New Yorkterms and a 10.5-year lease for its corporate headquarters in Denver, Colorado which collectively approximate 58%discount rates as of the future minimum payments due under all operating lease agreements in the table above.December 31, 2021 and 2020:
December 31,
20212020
Remaining lease term6.0 years6.9 years
Discount rate5.97 %5.91 %
December 31,
20212020
(In thousands)
Other information:
Right-of-use assets obtained in exchange for lease liabilities$3,143 $326 
Cash paid for amounts included in the measurement of lease liabilities$23,506 $20,939 
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ANGI INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 13—COMMITMENTS AND CONTINGENCIES
Commitments
The Company also has fundingentered into certain off-balance sheet commitments that could potentially require its performance in the eventfuture purchase of demands by third parties or contingent eventsservices (“purchase obligations”). Future payments under non-cancelable unconditional purchase obligations as of December 31, 2021 are as follows:
Amount of Commitment Expiration Per Period
Less Than
1 Year

1–3
Years

3–5
Years

More Than
5 Years

Total

(In thousands)
Purchase obligations$26,262 $4,515 $— $— $30,777 
  Amount of commitment expiration per period
  
Less than
1 Year
 1 to 3 years Total
  (In thousands)
Purchase obligations $831
 $650
 $1,481
Purchase obligations include (i) payments of $13.0 million related to advertising commitments to be made in 2022, (ii) payments of $6.6 million related to technology contracts spend, (iii) payments of $6.1 million related to communication spend, and (iv) payments of $3.1 million related to background check services.
The purchase obligations primarily consist of software licenses.
Contingencies
In the ordinary course of business, the Company is a party to various lawsuits. The Company establishes reserves for specific legal matters when it determines that the likelihood of an unfavorable outcome is probable and the loss is reasonably estimable. As a result, a $3.8 million legal reserve is established. Management has also identified certain other legal matters where we believe an unfavorable outcome is not probable and, therefore, no reserve is established.probable. Although management currently believes that resolving claims against us, including claims where an unfavorable outcome is reasonably possible, will not have a material impact on the 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. The Company also evaluates other contingent matters, including income and non-income tax contingencies, to assess the likelihood of an unfavorable outcome and estimated extent of potential loss. It is possible that an unfavorable outcome of one or more of these lawsuits or other contingencies could have a material impact on the liquidity, results of operations, or financial condition of the Company. See "Note 3—Income Taxes" for additional information related to income tax contingencies.
NOTE 14—SUPPLEMENTAL CASH FLOW INFORMATION
Supplemental Disclosure of Non-Cash Transactions:
On September 29, 2017, ANGI Homeservices issued 61.3 million shares of Class A common stock valued at $763.7 million in connection with the Combination.
Supplemental Disclosure of Cash Flow Information:
84
 Years Ended December 31,
 2017 2016 2015
 (In thousands)
Cash paid (received) during the year for:     
Interest—third party$
 $
 $
Interest—related party6,169
 417
 262
Income tax payments, including amounts paid to IAC for ANGI Homeservices share of IAC's consolidated tax liability1,700
 8,820
 3,424
Income tax refunds(402) (263) (657)
NOTE 15—RELATED PARTY TRANSACTIONS
Relationship with IAC prior to the Combination


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ANGI HOMESERVICES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)



For periods prior to the Combination, the Company’s combined statement of operations includes allocations of general and administrative costs, including stock-based compensation expense, related to IAC’s accounting, treasury, legal, tax, corporate support and internal audit functions. These allocations were based on the HomeAdvisor business' revenue as a percentage of IAC’s total revenue. Allocated general and administrative costs, inclusive of stock-based compensation expense, were $4.8 million, $4.2 million and $2.6 million for the years ended December 31, 2017, 2016, and 2015, respectively, and are included in “General and administrative expense” in the accompanying consolidated and combined statement of operations. It is not practicable to determine the actual expenses that would have been incurred for these services had the HomeAdvisor business operated as a standalone entity during the periods presented. Management considers the allocation method to be reasonable.
The following table summarizes the components of the net (increase) decrease in IAC’s investment in HomeAdvisor prior to the contribution of the HomeAdvisor business to ANGI Homeservices:
 December 31,
 2017 2016 2015
 (In thousands)
Cash transfers (from) to IAC related to its centrally managed U.S. treasury management function, acquisitions and cash expenses paid by IAC on behalf of HomeAdvisor, net$(80,368) $(363) $8,801
Taxes38,162
 (5,968) (3,281)
Interest income(a)
656
 278
 86
Allocation of general and administrative expense(4,789) (4,247) (2,598)
Net (increase) decrease in IAC’s investment in HomeAdvisor$(46,339) $(10,300) $3,008

(a)
Interest expense on long-term debt—related party is not included.
The related party notes described below were settled in full immediately prior to the Combination.
On October 14, 2016, the Company, through a foreign subsidiary, issued a promissory note due October 14, 2023 in the amount of $42.0 million to a foreign subsidiary ofNOTE 14—RELATED PARTY TRANSACTIONS WITH IAC that is not part of the HomeAdvisor business. The proceeds were used to finance the acquisition of MyHammer and refinance an $11.4 million loan that was previously outstanding. The promissory note bore interest at 11% per annum.
On March 20, 2017, the Company, through two foreign subsidiaries, issued promissory notes in the amount of £21.0 million due March 20, 2024 (“Note A”) and $15.5 million due March 20, 2047 (“Note B”), respectively, to two foreign subsidiaries of IAC that are not part of the HomeAdvisor business. The proceeds were used to finance the acquisition of MyBuilder. Note A and Note B bore interest at 6.5% and 7% per annum, respectively.
On February 7, 2017, the Company, through a foreign subsidiary, issued a promissory note due February 7, 2024 in the amount of £8.4 million to a foreign subsidiary of IAC that is not part of the HomeAdvisor business. The proceeds were used to finance the acquisition of HomeStars. The promissory note bore interest at 6.875% per annum.
On August 29, 2013, the Company, through a foreign subsidiary, issued a promissory note due August 29, 2018 in the amount of $5.0 million to a foreign subsidiary of IAC that is not part of the HomeAdvisor business. The proceeds were used to repay certain indebtedness. The promissory note bore interest at LIBOR plus 2.00%.
Interest expense related to the long-term debt is included in “Interest expense—related party” in the accompanying consolidated and combined statement of operations.
Intercompany Loans entered into in Connection with the Combination

ANGI HOMESERVICES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)



On September 29, 2017, the Company and IAC entered into two intercompany notes (collectively referred to as "Intercompany Notes") as follows: (i) a Payoff Intercompany Note, which provided the funds necessary to repay the outstanding balance under Angie's List's existing credit agreement, totaling $61.5 million; and (ii) a Working Capital Intercompany Note, which provided ANGI Homeservices with $15 million for working capital purposes. These Intercompany Notes were repaid on November 1, 2017 with a portion of the proceeds from the Term Loan that were received on the same date. See "Note 7—Long-term Debt" for additional information.
Additionally, immediately prior to the Combination, the Company, through a foreign subsidiary, sold a promissory note due December 31, 2020 in the amount of €2.4 million ($2.8 million at December 31, 2017) to a foreign subsidiary of IAC that is not part of the HomeAdvisor business.
Relationship with IAC following the Combination
In connection with the Combination, ANGI Homeservices
Angi Inc. and IAC have entered into certain agreements to govern our relationship following the Combination.their relationship. These agreements include: a contribution agreement; an investor rights agreement; a services agreement; a tax sharing agreement; and an employee matters agreement.
Contribution Agreement
The contribution agreement sets forth the agreements between the Company and IAC regarding the principal transactions necessary for IAC to separate the HomeAdvisorAngi business from IAC's other businesses, and to cause the HomeAdvisor business to be transferred to ANGI Homeservices prior to the Combination, as well as governs certain aspects of our relationship following the Combination.relationship. Under the contribution agreement, the Company agreed to assume all of the assets and liabilities related to the HomeAdvisorAngi business and agreed to indemnify IAC against any losses arising out of any breach by the Company of the contribution agreement or the other transaction related agreements described below. IAC also agreed to indemnify the Company against losses arising out of any breach by IAC of the contribution agreement or any of the other transaction related agreements described below.
Investor Rights Agreement
The investor rights agreement provides IAC with certain registration, preemptive, and governance rights related to usthe Company and the shares of ourits capital stock it holds, as well as certain governance rights for the benefit of stockholders other than IAC.
Services Agreement
The services agreement governs services that IAC provides to the Company including, among others: (i) assistance with certain legal, M&A, human resources, finance, risk management, internal audit and treasury functions, health and welfare benefits, information security services and insurance and tax affairs, including assistance with certain public company and unclaimed property reporting obligations; (ii) accounting, controllership and payroll processing services; (iii) investor relations services; (iv) tax compliance services; and (v) such other services as to which IAC and the Company may agree. The services agreement hasautomatically renews annually for an initial term of one year from the date of the Combination, and will automatically renew for additional one-year periods thereafterperiod for so long as IAC continues to own a majority of the outstanding shares of the Company'sCompany’s common stock.
For the years ended December 31, 2021, 2020 and 2019, the Company was charged $3.9 million, $4.8 million and $4.8 million, respectively, by IAC for services rendered pursuant to the services agreement. There were no outstanding receivables or payables pursuant to the services agreement as of December 31, 2021 and 2020, respectively.
Separately, the Company subleases office space to IAC and charged rent of $1.6 million, $1.8 million, and $1.4 million for the years ended December 31, 2021, 2020, and 2019, respectively. IAC subleases office space to the Company and charged the Company $0.6 million of rent for the year ended December 31, 2021. IAC did not sublease office space to the Company for the years ended December 31, 2020 and 2019. There were no outstanding receivables due from IAC or payables due to IAC, pursuant to sublease agreements, for the year ended December 31, 2021. At both December 31, 2020 and 2019, there were outstanding receivables of less than $0.1 million due from IAC, pursuant to sublease agreements, which were subsequently paid in full in the first quarter of 2021 and 2020, respectively.
Tax Sharing Agreement
The tax sharing agreement governs the rights, responsibilities, and obligations of the Company and IAC with respect to tax liabilities and benefits, entitlements to refunds, preparation of tax returns, tax contests and other tax matters regarding U.S. federal, state, local and foreign income taxes. Under the tax sharing agreement, the Company is generally responsible and required to indemnify IAC for: (i) all taxes imposed with respect to any consolidated, combined or unitary tax return of IAC or its subsidiaries that includes the Company or any of its subsidiaries to the extent attributable to the Company or any of its subsidiaries, as determined under the tax sharing agreement, and (ii) all taxes imposed with respect to any of the Company's or its subsidiaries’ consolidated, combined, unitary or separate tax returns.
Employee Matters Agreement
85


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ANGI HOMESERVICES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)


At December 31, 2021 and 2020, the Company had outstanding payables of $0.3 million and $0.9 million, respectively, due to IAC pursuant to the tax sharing agreement, which are included in “Accrued expenses and other current liabilities,” in the accompanying consolidated balance sheet. There were $1.5 million of payments to IAC pursuant to this agreement during the year ended December 31, 2021. There were $3.1 million of refunds received from IAC pursuant to this agreement during the year ended December 31, 2020.

Employee Matters Agreement
The employee matters agreement addresses certain compensation (including stock-based compensation) and benefit issues related to the allocation of liabilities associated with: (i) employment or termination of employment, (ii) employee benefit plans and (iii) equity awards. Under the employee matters agreement, the Company's employees participate in IAC’s U.S. health and welfare plans, 401(k) plan and flexible benefits plan and the Company reimburses IAC for the costs of such participation. In the event IAC no longer retains shares representing at least 80% of the aggregate voting power of shares entitled to vote in the election of the Company’s Board of Directors, ANGI HomeservicesAngi will no longer participate in IAC’s employee benefit plans, but will establish its own employee benefit plans that will be substantially similar to the plans sponsored by IAC prior to the Combination.
In addition,the employee matters agreement requires the Company to reimburse IAC for the cost of any IAC equity awards held by ANGI HomeservicesAngi current and former employees, with IAC electing to receive payment in cash or shares of our Class B common stock. This agreement also provides that IAC may require stock appreciation rights granted prior to the closing of the Combination and equity awards in our subsidiaries to be settled in either shares of our Class A common stock or IAC common stock. To the extent shares of IAC common stock are issued in settlement of these awards, the Company is obligated to reimburse IAC for the cost of those shares by issuing shares of our Class A common stock in the case of stock appreciation rights granted prior to the closing of the Combination and shares of our Class B common stock in the case of equity awards in our subsidiaries.
Lastly, pursuant to the employee matters agreement, in the event of a distribution of Angi Inc. capital stock to IAC stockholders in a transaction intended to qualify as tax-free for U.S. federal income tax purposes, the Compensation Committee of the IAC Board of Directors has the exclusive authority to determine the treatment of outstanding IAC equity awards. Such authority includes (but is not limited to) the ability to convert all or part of IAC equity awards outstanding immediately prior to the distribution into equity awards denominated in shares of Angi Inc. Class A Common Stock, which Angi Inc. would be obligated to assume and which would be dilutive to Angi Inc.'s stockholders.
For the period subsequent to the Combination throughyears ended December 31, 2017, 0.42021, 2020, and 2019, 0.2 million, 0.3 million, and 0.5 million shares of ANGI HomeservicesAngi Class B common stock were issued to IAC, respectively, pursuant to the employee matters agreement as reimbursement for shares of IAC common stock issued in connection with the exercise and vesting of IAC equity awards held by ANGI HomeservicesAngi employees.
For the period subsequent to the Combination throughyears ended December 31, 2017, the Company was charged $1.72021, 2.6 million by IAC for services rendered pursuant to the services agreement. The amount outstanding at December 31, 2017shares of Angi Inc. Class A common stock were issued to IAC pursuant to the servicesemployee matters agreement is $0.4 million. In addition, the Company has an outstanding payable due toas reimbursement for IAC of $2.0 million at December 31, 2017 related primarily to transaction related costs incurredcommon stock issued in connection with the Combination.exercise and settlement of certain Angi Inc. stock appreciation rights. There were no shares of Angi Inc. Class A common stock issued to IAC during the years ended December 31, 2020 and 2019.
Long-term debt—related party for periods prior and subsequent to the Combination
Long-term debt—related party consists of:
86
 December 31,
 2017 2016
 (In thousands)
Promissory note due October 14, 2023$
 $42,000
Promissory note due August 29, 2018
 5,000
Other2,813
 2,838
Total long-term debt—related party2,813
 49,838
Less: Current portion of long-term debt—related party816
 2,838
Total long-term debt—related party, net$1,997
 $47,000
Long-term debt—related party maturities:

Years Ending December 31, (In thousands)
2018 $816
2019 1,495
2020 502
Total long-term debt—related party $2,813
Table of Contents
NOTE 16—BENEFIT PLANS

ANGI HOMESERVICES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)


NOTE 15—BENEFIT PLANS

HomeAdvisor
HomeAdvisorThe Company’s employees in the United States are eligible to participate in a retirement savings plan sponsoredprogram offered by IAC, which is qualified under Section 401(k) of the Internal Revenue Code. Under the IAC/InterActiveCorp Retirement Savings Plan (the "IAC Plan"“IAC Plan”), participating employees may contribute up to 50% of their pre-tax earnings, but not more than statutory limits. The current employer match under the IAC Plan is fifty cents for each dollar a participant contributes in the IAC Plan, with a maximum contribution of 3% of a participant'sparticipant’s eligible earnings. Matching contributions under the IAC Plan for the years ended December 31, 2017, 20162021, 2020, and 20152019 were $3.5$8.4 million, $2.7$7.7 million, and $1.9$6.3 million, respectively. Matching contributions are invested in the same manner as each participant’s voluntary contributions in the investment options provided under the IAC Plan. An investment option in the IAC Plan is IAC common stock, but neither participant nor matching contributions are required to be invested in IAC common stock. The increase in matching contributions in 2017 and 2016 was due primarily to an increase in participation in the Plan due to increased headcount as a result of business growth.
Internationally, HomeAdvisorthe Company also has or participates in various benefit plans, primarily defined contribution plans. The Company'sCompany’s contributions for these plans for the years ended December 31, 2017, 20162021, 2020, and 20152019 were $0.3$0.7 million, $0.1$0.6 million, and $0.2$0.5 million, respectively. The increase in the Company's contributions in 2017 was due primarily to an increase in participation in the Plan due to increased headcount as a result
87

Table of business growth and acquisitions.
Angie's List
Angie's List sponsors a 401(k) profit-sharing plan (the "Angie's List Plan") covering substantially all of its employees. Contributions to the Angie's List Plan are discretionary. Angie's List contributes 3% of gross pay for all eligible employees. Matching contributions under the Angie's List Plan, subsequent to the Combination through the year ended December 31, 2017, was $0.6 million.
The Angie's List Plan was merged into the IAC Plan effective January 1, 2018.
Contents
NOTE 17—CONSOLIDATED AND COMBINED FINANCIAL STATEMENT DETAILS
 December 31,
 2017 2016
 (In thousands)
Other current assets:   
Prepaid expenses$10,937
 $6,456
Other1,835
 2,283
Other current assets$12,772
 $8,739
 December 31,
 2017 2016
 (In thousands)
Property and equipment, net of accumulated depreciation and amortization:   
Computer equipment and capitalized software$41,853
 $27,309
Buildings and leasehold improvements13,984
 6,075
Furniture and other equipment6,222
 3,140
Projects in progress12,801
 5,198
Land2,800
 
 77,660
 41,722
Accumulated depreciation and amortization(24,368) (18,077)
Property and equipment, net of accumulated depreciation and amortization$53,292
 $23,645

ANGI HOMESERVICES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)



 December 31,
 2017 2016
 (In thousands)
Accrued expenses and other current liabilities:   
Accrued employee compensation and benefits$30,354
 $14,379
Accrued advertising expense17,243
 8,209
Other27,574
 11,850
Accrued expenses and other current liabilities$75,171
 $34,438
 Years Ended December 31,
 2017 2016 2015
 (In thousands)
Other income (expense), net$1,974
 $(699) $(398)
Other income, net in 2017 includes net foreign currency exchange gains of $0.9 million, related party interest income of $0.7 million and third party interest income of $0.5 million.
Other expense, net in 2016 and 2015 principally includes net foreign currency exchange losses.
NOTE 18—TRANSACTION AND INTEGRATION RELATED COSTS IN CONNECTION WITH THE COMBINATION16—CONSOLIDATED FINANCIAL STATEMENT DETAILS
DuringCash and Cash Equivalents and Restricted Cash
The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the year ended December 31, 2017, the Company incurred $44.1 million in costs relatedaccompanying balance sheet to the Combination (including severance, retention, transaction and integration related costs) as well as deferred revenue write-offstotal amounts shown in the accompanying statement of $7.8 million. The Company also incurred $122.1 millioncash flows:
December 31, 2021December 31, 2020
(In thousands)
Cash and cash equivalents$428,136 $812,705 
Restricted cash included in other current assets156 407 
Restricted cash included in other non-current assets1,193 449 
Total cash and cash equivalents, and restricted cash as shown on the consolidated statement of cash flows$429,485 $813,561 
Restricted cash included in stock-based compensation expense during 2017 related to the modification of previously issued HomeAdvisor vested and unvested equity awards, which were converted into ANGI Homeservices' equity awards, the expense related to previously issued Angie's List equity awards and the acceleration of certain Angie's List equity awards resulting from the termination of employees in connection with the Combination.
See "Note 4—Business Combinations" for additional information on the Combination.
A summary of the costs incurred, payments made and the related accrualother current assets at December 31, 2017 is2021 primarily consisted of funds collected from service providers for disputed payments which were not settled as of the period end, in addition to cash reserved to fund insurance claims. Restricted cash included in other current assets at December 31, 2020 primarily consists of cash received from customers at Angi Inc. through the Handy platform, representing funds collected for payment to service providers, which were not settled as of the period end.
Restricted cash included in other non-current assets for all periods presented below.above primarily consisted of deposits related to leases. Restricted cash included in other non-current assets at December 31, 2021 also included cash held related to a check endorsement guarantee for Angi Roofing.     
December 31,
20212020
(In thousands)
Other current assets:
Capitalized costs to obtain a contract with a customer$37,971 $49,194 
Prepaid expenses24,749 17,742 
Other7,828 5,022 
Other current assets$70,548 $71,958 
 December 31,
 20212020
 (In thousands)
Capitalized software, leasehold improvements and equipment, net:
Capitalized software and computer equipment$153,953 $132,026 
Leasehold improvements29,605 31,864 
Furniture and other equipment11,596 13,252 
Projects in progress31,348 27,138 
Capitalized software, leasehold improvements and equipment226,502 204,280 
Accumulated depreciation and amortization(108,235)(95,438)
Capitalized software, leasehold improvements and equipment, net$118,267 $108,842 
88
  Year Ended December 31, 2017
  (In thousands)
Transaction and integration related costs $44,101
Stock-based compensation expense 122,066
Total $166,167

  December 31, 2017
  (In thousands)
Charges incurred $44,101
Payments made (35,621)
Accrual as of December 31 $8,480
The costs are allocated as follows in the accompanying consolidated and combined statementTable of operations:
ANGI HOMESERVICES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)


December 31,
20212020
(In thousands)
Accrued expenses and other current liabilities:
Accrued employee compensation and benefits$46,464 $47,310 
Accrued advertising expense36,231 30,033 
Current lease liabilities17,098 15,700 
Other84,022 55,176 
Accrued expenses and other current liabilities$183,815 $148,219 
Other (expense) income, net
Years Ended December 31,
 202120202019
 (In thousands)
Interest income$239 $1,725 $7,974 
Gain (loss) on the sale of a business(a)
31 (454)(218)
Foreign exchange (losses) gains(1,656)(57)559 
Loss on extinguishment of debt(b)
(1,110)— — 
Other(13)(1,821)
Other (expense) income, net$(2,509)$1,218 $6,494 
________________________
(a)    Loss from acquisition/sale of a business for the year ended December 31, 2020 includes a $0.2 million mark-to-market charge for an indemnification charge related to the Handy acquisition that was settled in Angi Inc. shares during the first quarter of 2020 and a $0.3 million charge related to the final earn-out settlement related to the sale of Felix.
(b)    Represents the write-off of deferred debt issuance costs related to the ANGI Group Term Loan, which was repaid in its entirety during the second quarter of 2021.


Supplemental Disclosure of Cash Flow Information:
 Years Ended December 31,
 202120202019
 (In thousands)
Cash paid (received) during the year for:   
Interest expense—third-party$21,450 $5,367 $10,290 
Interest expense—related party— — 54 
Income tax payments, including amounts paid to IAC for Angi Inc.'s share of IAC's consolidated tax liability4,647 1,789 12,224 
Income tax refunds, including amounts received from IAC for Angi Inc.’s share of IAC's consolidated tax liability(587)(3,506)(957)
89


 Year Ended December 31, 2017
 Transaction and Integration Related Costs Stock-based Compensation Expense Total
 (In thousands)
Cost of revenue$
 $
 $
Selling and marketing expense7,430
 24,416
 31,846
General and administrative expense36,120
 83,420
 119,540
Product development expense551
 14,230
 14,781
Total$44,101
 $122,066
 $166,167
NOTE 19—QUARTERLY RESULTS (UNAUDITED)
 
Quarter Ended
March 31
 
Quarter Ended
June 30
 
Quarter Ended
September 30 (a)
 
Quarter Ended
December 31(b)
 (In thousands, except per share data)
Year Ended December 31, 2017       
Revenue$150,745
 $180,711
 $181,717
 $223,213
Cost of revenue6,830
 7,562
 7,999
 11,682
Operating income (loss)1,388
 (2,836) (112,505) (33,918)
Net earnings (loss)25,887
 (25) (72,158) (58,231)
Net earnings (loss) attributable to ANGI Homeservices Inc. shareholders26,613
 254
 (71,761) (58,224)
Per share information attributable to ANGI Homeservices Inc. shareholders:
Basic earnings (loss) per share(c)
$0.06
 $0.00
 $(0.17) $(0.12)
Diluted earnings (loss) per share(c)
$0.06
 $0.00
 $(0.17) $(0.12)
        
 
Quarter Ended
March 31
 
Quarter Ended
June 30
 
Quarter Ended
September 30
 
Quarter Ended
December 31
 (In thousands, except per share data)
Year Ended December 31, 2016       
Revenue$111,489
 $130,173
 $133,560
 $123,668
Cost of revenue5,994
 6,745
 6,826
 6,293
Operating (loss) income(514) 9,513
 8,843
 6,216
Net (loss) earnings(1,244) 5,351
 4,468
 2,056
Net (loss) earnings attributable to ANGI Homeservices Inc. shareholders(677) 6,010
 5,075
 2,720
Per share information attributable to ANGI Homeservices Inc. shareholders:
Basic (loss) earnings per share(c)
$(0.00) $0.01
 $0.01
 $0.01
Diluted (loss) earnings per share(c)
$(0.00) $0.01
 $0.01
 $0.01

(a)
The third quarter of 2017 includes after-tax stock-based compensation expense of $59.4 million related primarily to the modification of previously issued HomeAdvisor vested awards, which were converted into ANGI Homeservices equity awards, and the acceleration of certain Angie’s List equity awards in connection with the Combination, as well as after-tax costs of $17.0 million related to the Combination.
(b)
The fourth quarter of 2017 includes after-tax stock-based compensation expense of $15.6 million related primarily to the modification of previously issued HomeAdvisor unvested awards, which were converted into ANGI Homeservices equity awards, the expense related to previously issued Angie's List equity awards and the acceleration of certain Angie's List equity awards resulting from the termination of employees in connection with the Combination, as well as after-tax costs of $13.8 million related to the Combination (including $7.6 million of deferred revenue write-offs).

ANGI HOMESERVICES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)



(c)
Quarterly per share amounts may not add to the related annual per share amount because of differences in the average common shares outstanding during each period.
Item 9.    Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
Not applicable.
Item 9A.    Controls and Procedures
Conclusion Regarding the Effectiveness of the Company's Disclosure Controls and Procedures
The Company monitors and evaluates on an ongoing basis its disclosure controls and procedures and internal control over financial reporting in order to improve their overall effectiveness. In the course of these evaluations, the Company modifies and refines its internal processes as conditions warrant.
Conclusion Regarding the Effectiveness of the Company's Disclosure Controls and Procedures
As required by Rule 13a-15(b) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"“Exchange Act”), our management, including our Chief Executive Officer ("CEO"(“CEO”) and our Chief Financial Officer ("CFO"(“CFO”), conducted an evaluation, as of the end of the period covered by this report, of the effectiveness of the Company's disclosure controls and procedures as defined in Exchange Act Rule 13a-15(e). Based on this evaluation, our CEO and our CFO concluded that the Company's disclosure controls and procedures were effective as of the end of the period covered by this report.
Management's Report on Internal Control Over Financial Reporting
Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) for the Company. The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States. Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2021. In making this assessment, our management used the criteria for effective internal control over financial reporting described in “Internal Control—Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. Based on this assessment, management has determined that, as of December 31, 2021, the Company’s internal control over financial reporting is effective. The effectiveness of our internal control over financial reporting as of December 31, 2021 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their attestation report, included herein.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Changes in Internal Control Over Financial Reporting
There wereOn July 1, 2021, the Company completed its acquisition of Angi Roofing. Accordingly, the acquired assets and liabilities of Angi Roofing are included in our consolidated balance sheet at December 31, 2021 and the results of its operations and cash flows are reported in our consolidated statements of income and cash flows from July 1, 2021 through December 31, 2021. We have elected to exclude Angi Roofing from the Company’s assessment of internal control over financial reporting as of December 31, 2021. Angi Roofing represented less than 5% of the Company’s net assets and revenue as of and for the year ended December 31, 2021. During the quarter ended December 31, 2021, there have been no other changes toin our internal control over financial reporting during the quarter ended December 31, 2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. See Item 8. Consolidated Financial Statements and Supplementary Data and Report of Independent Registered Public Accounting Firm, which reports are incorporated herein by reference.
Management's
90

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Angi Inc.
Opinion on Internal Control Over Financial Reporting
We have audited Angi Inc. and subsidiaries’ internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Angi Inc. and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on the COSO criteria.
As indicated in the accompanying Management’s Report on Internal Control over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Total Home Roofing, Inc., acquired on July 1, 2021, which is included in the 2021 consolidated financial statements of the Company and constituted less than 5% of the Company’s net assets and revenues as of and for the year ended December 31, 2021. Our audit of internal control over financial reporting of Angi Inc. also did not include an evaluation of the internal control over financial reporting of Total Home Roofing, Inc.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of December 31, 2021 and 2020, and 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, 2021, and the related notes and the financial statement schedule listed in the Index at Item 15(a), and our report dated March 1, 2022 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting
This annual report does not include a report of management’s assessment regardingReporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting or an attestation report of the Company’s registeredbased on our audit. We are a public accounting firm dueregistered with the PCAOB and are required to a transition period established bybe independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission ("SEC") for newly public companies. Underand the rules and regulationsPCAOB.

We conducted our audit in accordance with the standards of the SEC,PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not requiredprevent or detect misstatements. Also, projections of any evaluation of effectiveness to complyfuture periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the requirementspolicies or procedures may deteriorate.
91

/s/ Ernst & Young LLP
New York, New York
March 1, 2022
92

Item 9B.    Other Information
Not applicable.

Item 9C.    Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
PART III
The information required by Part III (Items 10, 11, 12, 13 and 14) has been incorporated herein by reference to the definitive Proxy Statement to be used in connection with the ANGI Homeservices 2018Angi Inc. 2022 Annual Meeting of Stockholders (the "2018“2022 Proxy Statement"Statement”), as set forth below in accordance with General Instruction G(3) of Form 10-K.
Item 10.    Directors, Executive Officers and Corporate Governance
The information required by Items 401 and 405 of Regulation S-K relating to directors and executive officers of ANGI HomeservicesAngi Inc. and their compliance with Section 16(a) of the Exchange Act is set forth in the sections entitled "Information“Information Concerning Director Nominees"Nominees” and "Information“Information Concerning ANGIAngi Inc. Executive Officers Who Are Not Directors," and "Section“Delinquent Section 16(a) Beneficial Ownership Reporting Compliance,"Reports,” respectively, in the 20182022 Proxy Statement and is incorporated herein by reference. The information required by Item 406 of Regulation S-K relating to the ANGI HomeservicesAngi Inc. Code of Ethics is set forth under the caption "Part“Part I-Item 1-Business-Description of Our Businesses-Additional Information-Code of Ethics"Ethics” of this annual report and is incorporated herein by reference. The information required by subsections (c)(3), (d)(4) and (d)(5) of Item 407 of Regulation S-K is set forth in the sections entitled "Corporate Governance"“Corporate Governance” and "The“The Board and Board Committees"Committees” in the 20182022 Proxy Statement and is incorporated herein by reference.
Item 11.    Executive Compensation
The information required by Item 402 of Regulation S-K relating to executive and director compensation and pay ratio disclosure is set forth in the sections entitled "Executive“Executive Compensation," "Director Compensation"” “Director Compensation” and "Pay“Pay Ratio Disclosure," respectively, in the 20182022 Proxy Statement and is incorporated herein by reference. The information required by subsections (e)(4) and (e)(5) of Item 407 of Regulation S-K relating to certain compensation committee matters is set forth in the sections entitled "The“The Board and Board Committees," "Compensation” “Compensation Committee Report"Report” and "Compensation“Compensation Committee Interlocks and Insider Participation"Participation” in the 20182022 Proxy Statement and is incorporated herein by reference; provided, that the information set forth in the section entitled "Compensation“Compensation Committee Report"Report” shall be deemed furnished herein and shall not be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.
Item 12.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information regarding ownership of ourthe Company’s Class A common stock and Class B common stock required by Item 403 of Regulation S-K and securities authorized for issuance under our equity compensation plans required by Item 201(d) of Regulation S-K is set forth in the sections entitled "Security“Security Ownership of Certain Beneficial Owners and Management"Management” and "Equity“Equity Compensation Plan Information," respectively, in the 20182022 Proxy Statement and is incorporated herein by reference.
Item 13.    Certain Relationships and Related Transactions, and Director Independence
Information regarding certain relationships and related transactions involving ANGI HomeservicesAngi Inc. required by Item 404 of Regulation S-K and director independence determinations required by Item 407(a) of Regulation S-K is set forth in the sections entitled "Certain“Certain Relationships and Related Person Transactions"Transactions” and "Corporate“Corporate Governance," respectively, in the 20182022 Proxy Statement and is incorporated herein by reference.
Item 14.    Principal Accounting Fees and Services
Information required by Item 9(e) of Schedule 14A regarding the fees and services of ourthe Company’s independent registered public accounting firm and the pre-approval policies and procedures applicable to services provided to usthe Company by such firm is set forth in the sections entitled "Fees“Fees Paid to Our Independent Registered Public Accounting Firm"Firm” and "Audit“Audit and Non-Audit Services Pre-Approval Policy," respectively, in the 20182022 Proxy Statement and is incorporated herein by reference.

93

PART IV
Item 15.    Exhibits and Financial Statement Schedules
(a)   List of documents filed as part of this Report:

(1)   Consolidated and Combined Financial Statements of ANGI Homeservices

Angi Inc.
Report of Independent Registered Public Accounting Firm: Ernst & Young LLP.LLP (PCAOB ID:42).
Consolidated and Combined Balance Sheet as of December 31, 20172021 and 2016.2020.
Consolidated and Combined Statement of Operations for the Years Ended December 31, 2017, 20162021, 2020 and 2015.2019.
Consolidated and Combined Statement of Comprehensive Operations for the Years Ended December 31, 2017, 20162021, 2020 and 2015.2019.
Consolidated and Combined Statement of Shareholders'Shareholders’ Equity for the Years Ended December 31, 2017, 20162021, 2020 and 2015.2019.
Consolidated and Combined Statement of Cash Flows for the Years Ended December 31, 2017, 20162021, 2020 and 2015.2019.
Notes to Consolidated and Combined Financial Statements.
(2)   Consolidated and Combined Financial Statement Schedule of ANGI Homeservices
Angi Inc.
Schedule

Number
IIValuation and Qualifying Accounts.
All other financial statements and schedules not listed have been omitted since the required information is either included in the Consolidated and Combined Financial Statements or the notes thereto, is not applicable or is not required.
(3) Exhibits
The documents set forth below, numbered in accordance with Item 601 of Regulation S-K, are filed herewith, incorporated by reference herein by reference to the location indicated or furnished herewith.
Exhibit NumberDescriptionLocation
2.1
Agreement and Plan of Merger, dated as of May 1, 2017, as amended by Amendment No. 1 to the Agreement and Plan of Merger, dated as of August 26, 2017, by and among Angie's List, Inc., IAC/InterActiveCorp, ANGI Homeservices Inc. and Casa Merger Sub, Inc.
3.1
Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Angi Inc.
3.2 Amended and Restated Certificate of Incorporation of ANGI Homeservices Inc.

3.23.3 
Amended and Restated Bylaws of ANGI HomeservicesAngi Inc.


Description of Securities(1).
4.2 Investor Rights Agreement, dated as of September 29, 2017, by and between ANGI Homeservices Inc. and IAC/InterActiveCorp.








10.14.3 
Registration Rights Agreement, dated October 19, 2018, by and among ANGI Homeservices Inc. and the holders signatory thereto.
4.4 Indenture, dated as of August 20, 2020, among ANGI Group, LLC, the guarantors party thereto and Computershare Trust Company, N.A., as trustee.
94

4.5 Form of Angi Inc. Common Stock Certificate.    
10.1 
Contribution Agreement, dated as of September 29, 2017, by and between ANGI Homeservices Inc. and IAC/InterActiveCorp.(1)(2)


10.2
Services Agreement, dated as of September 29, 2017, by and between ANGI Homeservices Inc. and IAC/InterActiveCorp.(1)

(2)


10.3
Tax Sharing Agreement, dated as of September 29, 2017, by and between ANGI Homeservices Inc. and IAC/InterActiveCorp.(2)


10.4
Employee Matters Agreement, dated as of September 29, 2017, by and between ANGI Homeservices Inc. and IAC/InterActiveCorp.(1)

(2)


10.5
ANGI Homeservices Inc. 2017 Stock and Annual Incentive Plan.(2)(3)
10.6
Form of Notice and Terms and Conditions for Restricted Stock Units granted under the ANGI Homeservices Inc. 2017 Stock and Annual Incentive Plan.(2)(3)


10.7 
10.7
Form of Notice and Terms and Conditions for Stock Options granted under the ANGI Homeservices Inc. 2017 Stock and Annual Incentive Plan.(2)(3)

10.8
Form of Terms and Conditions for Stock Appreciation Rights granted under the ANGI Homeservices Inc. 2017 Stock and Annual Incentive Plan.(2)

(3)

10.9
Employment Agreement between Chris TerrillShannon Shaw and ANGI Homeservices Inc., dated as of September 28, 2017.(2)February 22, 2019.(3)
10.10
Employment Agreement between Angela R. Hicks Bowman and ANGI Homeservices Inc., dated as of June 29, 2017.(3)
Employment Agreement between Bryan Ellis and HomeAdvisor, Inc., dated as of April 24, 2020.(1)(3)(4)
10.12 
Employment Agreement between Oisin Hanrahan and ANGI Homeservices Inc., dated as of February 24, 2021.(3)

10.10
Employment Agreement between William B. RidenourUmang Dua and ANGI HomeservicesAngi Inc., dated as of AugustFebruary 24, 2017.(2)

2021.(1)(3)(4)
10.1110.14 
Employment Agreement between Craig SmithKulesh Shanmugasundaram and ANGI HomeservicesAngi Inc., dated as of August 24, 2017.(2)

March 25, 2021. (3)
10.1210.15 
Employment Agreement between Allison LowrieJeff Pedersen and ANGI HomeservicesAngi Inc., dated as of August 24, 2017.(2)

June 18, 2021. (3)
10.13
Credit Agreement, dated as of November 1, 2017, by and among ANGI Homeservices Inc., as Borrower, the Lenders party from time to time thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent.
10.16 
Employment Agreement between Dhanusha Sivajee and Angi Inc., dated as of July 30, 2021. (3)


Subsidiaries of the Registrant as of December 31, 2017.(3)2021.(1)


Consent of Ernst & Young LLP.(3)(1)


Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.(3)(1)
95


Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.(3)(1)

Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.(4)

Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.(4)

(1)101.INSAnnexes, schedules and/or exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Registrant agrees to furnish supplementally a copy of any omitted attachment toInline XBRL Instance (the instance document
does not appear in
the SEC on a confidential basis upon request.Interactive Data File because
its XBRL tags are embedded within the Inline XBRL
document)
(2)101.SCHReflects management contracts and management and director compensatory plans.
Inline XBRL Taxonomy Extension Schema(1)
(3)101.CALFiled herewith.
Inline XBRL Taxonomy Extension Calculation(1)
(4)101.DEFFurnished herewith.
Inline XBRL Taxonomy Extension Definition(1)
101.LAB
Inline XBRL Taxonomy Extension Labels(1)
101.PRE
Inline XBRL Taxonomy Extension Presentation(1)
104Cover Page Interactive Data File (formatted as Inline
XBRL and contained in Exhibit 101)


(1)Filed herewith.
(2)Annexes, schedules and/or exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Registrant agrees to furnish supplementally a copy of any omitted attachment to the SEC on a confidential basis upon request.
(3)Reflects management contracts and management and director compensatory plans.
(4)Furnished herewith.
Item 16.    Form 10-K Summary
None.
96

SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Dated:March 1, 2022
Angi Inc.
March 14, 2018ANGI Homeservices Inc.By:/s/ JEFFREY W. PEDERSEN
By:/s/ GLENN H. SCHIFFMANJeffrey W. Pedersen
Glenn H. Schiffman
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated on March 14, 2018:
1, 2022:
SignatureTitle
/s/ OISIN HANRAHANChief Executive Officer and Director
Oisin Hanrahan
SignatureTitle
/s/ CHRIS TERRILLJEFFREY W. PEDERSENChief Executive Officer and Director
Chris Terrill
/s/ GLENN H. SCHIFFMANChief Financial Officer and Director
Glenn H. Schiffman
Jeffrey W. Pedersen
/s/ MICHAEL H. SCHWERDTMANCHRISTOPHER W. BOHNERTSenior Vice President, Principal Accounting Officer
Michael H. SchwerdtmanChristopher W. Bohnert
/s/ JOSPEPHJOSEPH LEVINChairman of the Board and Director
Joseph Levin
/s/ THOMAS R. EVANSDirector
Thomas R. Evans
/s/ ALESIA J. HAASDirector
Alesia J. Haas
/s/ KENDALL HANDLERDirector
Kendall Handler
/s/ ANGELA R. HICKS BOWMANDirector
Angela R. Hicks Bowman
/s/ SANDRA HURSEDirector
Sandra Hurse
/s/ JEREMY G. PHILIPSDirector
Jeremy G. Philips
/s/ GLENN H. SCHIFFMANDirector
Glenn H. Schiffman
/s/ MARK STEINDirector
Mark Stein
/s/ SUZY WELCHDirector
Suzy Welch
/s/ GREGG WINIARSKIDirector
Gregg Winiarski
/s/ YILU ZHAODirector
Yilu Zhao


97

Schedule II
ANGI HOMESERVICES INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
DescriptionBalance at
Beginning
of Period
Charges to
Earnings
 Charges to
Other Accounts
 Deductions Balance at
End of Period
 (In thousands)
2021
Credit loss reserves$26,046 $88,076 (a)$92 $(80,562)(c)$33,652 
Revenue reserves1,793 117,239 (b)— (116,323)(d)$2,709 
Deferred tax valuation allowance77,076 (5,925)(e)(4,525)(f)— $66,626 
Other reserves7,495 $11,360 
2020
Credit loss reserves$19,066 $78,229 (a)$(152)$(71,097)(c)$26,046 
Revenue reserves1,227 103,627 (b)— (103,061)(d)1,793 
Deferred tax valuation allowance71,472 (235)(g)5,839 (f)— 77,076 
Other reserves5,057 7,495 
2019
Credit loss reserves$15,622 $64,278 (a)$(46)$(60,788)(c)$19,066 
Revenue reserves981 111,069 (b)(2)(110,821)(d)1,227 
Deferred tax valuation allowance58,903 14,083 (h)(1,514)(f)— 71,472 
Other reserves3,919 5,057 
_________________________________________________________
Description
Balance at
Beginning
of Period
 
Charges to
Earnings
 
Charges to
Other Accounts
 Deductions 
Balance at
End of Period
 (In thousands)
2017         
Allowance for doubtful accounts and revenue reserves$9,177
 $27,514
(a) 
$271
 $(27,699)
(b) 
$9,263
Deferred tax valuation allowance14,180
 42,310
(c) 
5,073
(d) 

 61,563
          
2016         
Allowance for doubtful accounts and revenue reserves$8,171
 $17,425
(a) 
$(56) $(16,363)
(b) 
$9,177
Deferred tax valuation allowance12,696
 2,384
(e) 
(900)
(f) 

 14,180
          
2015         
Allowance for doubtful accounts and revenue reserves$6,861
 $13,234
(a) 
$(453) $(11,471)
(b) 
$8,171
Deferred tax valuation allowance11,249
 2,248
(e) 
(801)
(f) 

 12,696
(a)Additions to the credit loss reserve are charged to expense.

(b)Additions to the revenue reserves are charged against revenue.
(a)
Additions to the allowance for doubtful accounts are charged to expense. Additions to the revenue reserves are charged against revenue.
(b)
Write-off of fully reserved accounts receivable. The Company writes off accounts receivable when they are deemed uncollectible, primarily once 180 days past due.
(c)
Amount is primarily due to the establishment of foreign NOLs related to a recent acquisition.
(d)
Amount is related to acquired state NOLs and currency translation adjustments on foreign NOLs.
(e)
Amount is primarily related to federal and foreign NOLs.
(f)
Amount is related to currency translation adjustments on foreign NOLs.

(c)Write-off of fully reserved accounts receivable balance, net of recoveries.
(d)Write-off of revenue reserve as credits are granted to customers.
(e)Amount is primarily related to a decrease in state and foreign NOLs.
(f)Amount is primarily related to currency translation adjustments on foreign NOLs.
(g)Amount is primarily related to an increase in foreign NOLs largely offset by a decrease in state NOLs.
(h)Amount is primarily related to foreignand state NOLs.
99
98