(Unaudited)



					ANGI Homeservices 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 Homeservices Inc. Shareholders' Equity

																				Accumulated Other Comprehensive (Loss) Income									Total Shareholders' Equity
	Redeemable Noncontrolling Interests													Additional Paid-in Capital			Accumulated Deficit									Noncontrolling Interests
	Redeemable Noncontrolling Interests				$		Shares	$		Shares	$		Shares	Additional Paid-in Capital			Accumulated Deficit									Noncontrolling Interests
				(In thousands)
Balance as of March 31, 2019	$	23,242			$	85	84,718	$	421	421,452	$	—	—	$	1,331,371		$	(8,828	)	$	(191	)	$	1,322,858		$	9,043		$	1,331,901
Net earnings	160				—		—	—		—	—		—	—			6,968			—			6,968			106			7,074
Other comprehensive loss	(335		)		—		—	—		—	—		—	—			—			(1,291		)	(1,291		)	(48		)	(1,339		)
Stock-based compensation expense	35				—		—	—		—	—		—	17,485			—			—			17,485			—			17,485
Issuance of common stock pursuant to stock-based awards, net of withholding taxes	—				1		1,085	—		—	—		—	(10,257		)	—			—			(10,256		)	—			(10,256		)
Issuance of common stock to IAC pursuant to the employee matters agreement	—				—		—	—		1	—		—	—			—			—			—			—			—
Adjustment of redeemable noncontrolling interests to fair value	319				—		—	—		—	—		—	(319		)	—			—			(319		)	—			(319		)
Balance as of June 30, 2019	$	23,421			$	86	85,803	$	421	421,453	$	—	—	$	1,338,280		$	(1,860	)	$	(1,482	)	$	1,335,445		$	9,101		$	1,344,546



Balance as of March 31, 2018	$	22,655		$	63	63,353	$	416	415,885	$	—	—	$	1,135,024		$	(105,000	)	$	6,224		$	1,036,727		$	9,583		$	1,046,310
Net earnings	22			—		—	—		—	—		—	—			22,899			—			22,899			102			23,001
Other comprehensive loss	(593		)	—		—	—		—	—		—	—			—			(5,133		)	(5,133		)	(229		)	(5,362		)
Stock-based compensation expense	390			—		—	—		—	—		—	21,663			—			—			21,663			—			21,663
Issuance of common stock pursuant to stock-based awards, net of withholding taxes	—			2		2,063	—		—	—		—	(18,149		)	—			—			(18,147		)	—			(18,147		)
Purchase of redeemable noncontrolling interests	(53		)	—		—	—		—	—		—	—			—			—			—			—			—
Purchase of noncontrolling interests	—			—		—	—		—	—		—	—			—			—			—			(549		)	(549		)
Adjustment of redeemable noncontrolling interests to fair value	(582		)	—		—	—		—	—		—	582			—			—			582			—			582
Other	1			—		—	—		—	—		—	(182		)	—			—			(182		)	174			(8		)
Balance as of June 30, 2018	$	21,840		$	65	65,416	$	416	415,885	$	—	—	$	1,138,938		$	(82,101	)	$	1,091		$	1,058,409		$	9,081		$	1,067,490

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, 2016
$ 13,781
$ —
—
$ —
—
$ —
—
$ —
$ —
$ 154,852
$ (1,721 ) $ 153,131
$ 9,482
$ 162,613
Net (loss) earnings (1,256 ) —
—
—
—
—
—
—
(63,540 ) 18,646
—
(44,894 ) (146 ) (45,040 )
Other comprehensive income 280
—
—
—
—
—
—
—
—
—
5,069
5,069
243
5,312
Stock-based compensation expense 1,577
—
—
—
—
—
—
96,939
—
—
—
96,939
—
96,939
Redeemable noncontrolling interests created in acquisitions 14,692
—
—
—
—
—
—
—
—
—
—
—
—
—
Purchase of redeemable noncontrolling interests (11,991 ) —
—
—
—
—
—
—
—
—
—
—
—
—
Purchase of noncontrolling interests —
—
—
—
—
—
—
—
—
—
—
—
(633 ) (633 )
Adjustment of redeemable noncontrolling interests to fair value 1,725
—
—
—
—
—
—
—
—
(1,725 ) —
(1,725 ) —
(1,725 )
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
Other 36
—
—
—
—
—
—
—
—
—
—
—
817
817
Balance as of September 30, 2017 $ 18,844
$ 61
61,291
$ 415
414,754
$ —
—
$ 1,094,046
$ (63,540 ) $ —
$ 3,348
$ 1,034,330
$ 9,763
$ 1,044,093

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

ANGI HOMESERVICES INC. AND SUBSIDIARIES

CONSOLIDATED ~~AND COMBINED~~ STATEMENT OF ~~CASH FLOWS~~SHAREHOLDERS' EQUITY

Six Months Ended June 30, 2019 and 2018

(Unaudited)



					ANGI Homeservices 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 Homeservices Inc. Shareholders' Equity

																				Accumulated Other Comprehensive (Loss) Income									Total Shareholders' Equity
	Redeemable Noncontrolling Interests													Additional Paid-in Capital			Accumulated Deficit									Noncontrolling Interests
	Redeemable Noncontrolling Interests				$		Shares	$		Shares	$		Shares	Additional Paid-in Capital			Accumulated Deficit									Noncontrolling Interests
				(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 earnings	51				—		—	—		—	—		—	—			16,937			—			16,937			97			17,034
Other comprehensive (loss) income	(149		)		—		—	—		—	—		—	—			—			379			379			(42		)	337
Stock-based compensation expense	77				—		—	—		—	—		—	36,725			—			—			36,725			—			36,725
Issuance of common stock pursuant to stock-based awards, net of withholding taxes	—				5		5,288	—		—	—		—	(25,448		)	—			—			(25,443		)	—			(25,443		)
Issuance of common stock to IAC pursuant to the employee matters agreement	—				—		—	—		335	—		—	(795		)	—			—			(795		)	—			(795		)
Adjustment of redeemable noncontrolling interests to fair value	5,279				—		—	—		—	—		—	(5,279		)	—			—			(5,279		)	—			(5,279		)
Other	—				—		—	—		—	—		—	(20		)	—			—			(20		)	—			(20		)
Balance as of June 30, 2019	$	23,421			$	86	85,803	$	421	421,453	$	—	—	$	1,338,280		$	(1,860	)	$	(1,482	)	$	1,335,445		$	9,101		$	1,344,546



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
Cumulative effect of adoption of ASU No. 2014-09	—			—		—	—		—	—		—	—			25,649			—			25,649			—			25,649
Net (loss) earnings	(89		)	—		—	—		—	—		—	—			14,014			—			14,014			(16		)	13,998
Other comprehensive loss	(218		)	—		—	—		—	—		—	—			—			(1,141		)	(1,141		)	(92		)	(1,233		)
Stock-based compensation expense	800			—		—	—		—	—		—	46,159			—			—			46,159			—			46,159
Issuance of common stock pursuant to stock-based awards, net of withholding taxes	—			2		2,598	—		—	—		—	(19,292		)	—			—			(19,290		)	—			(19,290		)
Issuance of common stock to IAC pursuant to the employee matters agreement	—			—		—	1		699	—		—	(1		)	—			—			—			—			—
Purchase of redeemable noncontrolling interests	(53		)	—		—	—		—	—		—	—			—			—			—			—			—
Purchase of noncontrolling interests	—			—		—	—		—	—		—	—			—			—			—			(818		)	(818		)
Adjustment of redeemable noncontrolling interests to fair value	61			—		—	—		—	—		—	(61		)	—			—			(61		)	—			(61		)
Other	39			—		—	—		—	—		—	(267		)	—			—			(267		)	259			(8		)
Balance as of June 30, 2018	$	21,840		$	65	65,416	$	416	415,885	$	—	—	$	1,138,938		$	(82,101	)	$	1,091		$	1,058,409		$	9,081		$	1,067,490

Nine Months Ended September 30,
2017 2016
(In thousands)
Cash flows from operating activities:
Net (loss) earnings $ (46,296 ) $ 8,575
Adjustments to reconcile net (loss) earnings to net cash provided by operating activities:
Bad debt expense 20,625
12,336
Stock-based compensation expense 120,280
6,685
Depreciation 9,705
5,824
Amortization of intangibles 6,885
2,271
Deferred income taxes (71,446 ) (2,742 )
Other adjustments, net (1,328 ) 488
Changes in assets and liabilities, net of effects of acquisitions:
Accounts receivable (30,080 ) (20,999 )
Other current assets (5,972 ) (925 )
Accounts payable and other current liabilities 41,847
18,278
Income taxes payable 22
4,664
Deferred revenue 7,788
6,171
Net cash provided by operating activities
52,030
40,626
Cash flows from investing activities:
Acquisitions, net of cash acquired (66,378 ) —
Capital expenditures (16,278 ) (13,742 )
Net cash used in investing activities
(82,656 ) (13,742 )
Cash flows from financing activities:
Proceeds from the issuance of related party debt 131,359
446
Funds returned from escrow for MyHammer tender offer 10,604
—
Transfers from (to) IAC/InterActiveCorp 30,216
(26,485 )
Purchase of noncontrolling interests (12,574 ) —
Principal payments on related party debt (104,089 ) —
Other 34
—
Net cash provided by (used in) financing activities
55,550
(26,039 )
Total cash provided 24,924
845
Effect of exchange rate changes on cash and cash equivalents (1,758 ) 65
Net increase in cash and cash equivalents
23,166
910
Cash and cash equivalents at beginning of period 36,377
2,462
Cash and cash equivalents at end of period
$ 59,543
$ 3,372

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

ANGI HOMESERVICES INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS



	Six Months Ended June 30,
	2019			2018
	(In thousands)
Cash flows from operating activities:
Net earnings	$	17,085		$	13,909
Adjustments to reconcile net earnings to net cash provided by operating activities:
Stock-based compensation expense	36,802			46,959
Amortization of intangibles	28,252			32,084
Bad debt expense	32,143			20,581
Depreciation	15,795			12,070
Deferred income taxes	(12,407		)	(6,416		)
Other adjustments, net	3,446			164
Changes in assets and liabilities, net of effects of acquisitions and dispositions:
Accounts receivable	(61,889		)	(36,951		)
Other assets	10,556			(14,217		)
Accounts payable and other liabilities	29,588			(1,673		)
Income taxes payable and receivable	269			667
Deferred revenue	3,384			6,389
Net cash provided by operating activities	103,024			73,566
Cash flows from investing activities:
Acquisition, net of cash acquired	(20,341		)	—
Capital expenditures	(39,113		)	(21,448		)
Proceeds from maturities of marketable debt securities	25,000			—
Net proceeds from the sale of a business	23,599			—
Proceeds from sale of fixed assets	—			10,410
Other, net	(103		)	—
Net cash used in investing activities	(10,958		)	(11,038		)
Cash flows from financing activities:
Principal payments on term loan	(6,875		)	(6,875		)
Principal payments on related party debt	(1,008		)	(1,322		)
Proceeds from the exercise of stock options	573			2,125
Withholding taxes paid on behalf of employees on net settled stock-based awards	(26,245		)	(21,439		)
Distribution to IAC pursuant to the tax sharing agreement	(11,355		)	—
Purchase of noncontrolling interests	—			(871		)
Other, net	(3,732		)	39
Net cash used in financing activities	(48,642		)	(28,343		)
Total cash provided	43,424			34,185
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	157			(111		)
Net increase in cash, cash equivalents, and restricted cash	43,581			34,074
Cash, cash equivalents, and restricted cash at beginning of period	338,821			221,521
Cash, cash equivalents, and restricted cash at end of period	$	382,402		$	255,595

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

ANGI HOMESERVICES INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED ~~AND COMBINED~~ FINANCIAL STATEMENTS

(Unaudited)

NOTE 1—THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

~~ANGI Homeservices is creating the world's largest digital marketplace for home services, connecting millions~~Nature of homeowners across the globe with home service professionals. ANGI Homeservices operates 10 brands in eight countries, including HomeAdvisor®, Angie's List, mHelpDesk, HomeStars (Canada), Travaux.com (France), MyHammer (Germany), MyBuilder (UK), Werkspot (Netherlands) and Instapro (Italy).operations

~~All references to "ANGI Homeservices," the "Company," "we," "our" or "us" in this report are to~~ ANGI Homeservices Inc. ~~The Company has two operating segments, North America~~connects quality home service pros across 500 different categories, from repairing and ~~Europe. North America includes HomeAdvisor's operations in the United States, Angie's List, mHelpDesk~~remodeling to cleaning and ~~HomeStars. Europe includes Travaux.com, MyHammer, MyBuilder, Werkspot and Instapro.~~

~~Organization~~

~~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~~landscaping, with consumers. Over 250,000 domestic service professionals find work through ANGI Homeservices, ~~Inc. The merger agreement provided~~and consumers turn to at least one of our brands to find a pro for ~~the combination~~more than 20 million projects each year. We’ve established category-transforming products with brands such as HomeAdvisor, Angie’s List, ~~by way of the merger of a direct wholly-owned subsidiary of ANGI Homeservices with~~Handy 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 List and the legal entity that holds the HomeAdvisor business are direct wholly-owned subsidiaries of ANGI Homeservices Inc. Fixd Repair.

At ~~September~~June 30, ~~2017,~~2019, IAC owned ~~87.1%~~83.1% and ~~98.5%~~98.0% of the economic and voting interest, respectively, of ANGI Homeservices. ~~See "Note 3—Business Combinations~~

The Company has two operating segments (i) North America (United States and Canada), which includes HomeAdvisor, Angie's List, Handy, mHelpDesk, HomeStars, Fixd Repair, LLC and Fixd Services LLC (collectively, "Fixd Repair") and Felix, for periods prior to its sale on December 31, 2018, and (ii) Europe, which includes Travaux, MyHammer, My Builder, Werkspot and Instapro.

As used herein, "ANGI Homeservices," ~~for additional information related~~the "Company," "ANGI," "we," "our" or "us" and similar terms refer to ~~the Combination.~~

~~Nature of operations~~

ANGI Homeservices isInc and its subsidiaries (unless the operator of the largest global home services marketplace, connecting homeowners with service professionals for home repair, maintenance and improvement projects. The Company’s marketplace provides the tools and resources to allow homeowners to find local pre-screened service professionals and instantly book appointments online or through its award-winning HomeAdvisor mobile application. The Company's marketplace also provides consumers with other home services-related resources, including access to average project costs using its HomeAdvisor True Cost Guide. Effective September 29, 2017, the Company also owns Angie's List, a nationwide marketplace for local services where consumers can research, hire, rate and review the providers of these services. Ratings and reviews assist members in identifying and hiring a provider for their local service needs. Angie's List's services are provided in markets located across the continental United States. In addition to its market-leading U.S. operations, ANGI Homeservices owns the leading home services online marketplaces in Canada (HomeStars), which was acquired on February 8, 2017, Germany (MyHammer), which was acquired on November 3, 2016, France (Travaux.com) and the Netherlands (Werkspot), as well as operations in Italy (Instapro) and the United Kingdom (MyBuilder), which was acquired on March 24, 2017. ANGI Homeservices also owns Felix, a pay-per-call advertising service, and mHelpDesk, a provider of cloud-based field service software for small to mid-size businesses.

As of September 30, 2017, the Company's network of service professionals in the United States consisted of approximately 172,000 Marketplace Paying Service Professionals providing services in more than 500 categories ranging from simple home repairs to larger home remodeling projects in more than 400 discrete geographies. The Company generated approximately 13.9 million Marketplace Service Requests from homeowners in the United States during the nine months ended September 30, 2017. As of September 30, 2017, the Company also had 47,000 Angie's List service professionals under contract for advertising.context requires otherwise).

Basis of ~~presentation~~Presentation and ~~consolidation~~Consolidation

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

~~ANGI HOMESERVICES INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

financial statements to be presented on a consistent basis for all periods presented. The combined financial statements have 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. Intercompany transactions and accounts have been eliminated.

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~~ Any differences between ~~and among~~taxes currently payable to or receivable from IAC under the tax sharing agreement between the Company and ~~its subsidiaries have been eliminated. All intercompany transactions between (i) ANGI Homeservices and (ii)~~ IAC and ~~its subsidiaries, with~~ the ~~exception~~current tax provision computed on an as if standalone, separate return basis for GAAP are reflected as adjustments to additional paid-in capital and as financing activities within the statement of ~~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 10—Related Party Transactions with IAC" for additional information on transactions between ANGI Homeservices and IAC.~~flows.

In ~~the~~management's 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 the expenses that we may have incurred as an independent, standalone public company for the periods presented.

~~The~~ unaudited interim consolidated ~~and combined~~ financial statements have been prepared on the same basis as the annual ~~combined~~consolidated financial statements and reflect ~~in management's opinion,~~ all adjustments, consisting of normal and recurring adjustments, necessary for the fair presentation of our financial position, results of operations and cash flows for the periods presented. Interim results are not necessarily indicative of the results that may be expected for the full year. The accompanying unaudited interim consolidated ~~and combined~~ financial statements should be read in conjunction with the audited ~~combined~~consolidated financial statements ~~of the HomeAdvisor business~~ and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2016 included in the Company's Registration Statement on Form S-4 dated June 29, 2017 and the amendments thereto.~~2018.

Accounting ~~estimates~~Estimates

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 ~~recoverability~~fair values of ~~goodwill~~cash 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; the determination of revenue reserves; the ~~liabilities for uncertain~~useful lives and recoverability of definite-lived intangible assets and property and equipment; the recoverability of goodwill and indefinite-lived intangible assets;

Table of Contents

ANGI HOMESERVICES INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

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.

~~Recent accounting pronouncements~~General Revenue Recognition

~~Accounting pronouncements not yet adopted by the Company~~

~~In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09,~~ Revenue ~~from Contracts with Customers,~~ which clarifies 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.

~~ANGI HOMESERVICES INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

~~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 control of the promised services or goods ~~or services are~~is transferred to ~~the customer~~our customers, and in an amount that reflects the consideration ~~expected~~the Company expects to be entitled to in exchange for those ~~goods~~services 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 periodgoods.

The Company's disaggregated revenue disclosures are presented in "Note 9—Segment Information."

Deferred Revenue

Deferred revenue consists of payments that are received or ~~using the modified retrospective approach with the cumulative effect recognized as~~are contractually due in advance of the ~~date~~Company's performance. The Company’s deferred revenue is reported on a contract by contract basis at the end of ~~initial application.~~

While the Company’s evaluation of the impact of the adoption of ASU No. 2014-09 on its consolidated and combined financial statements continues, it has progressed to the point where we have reached certain preliminary determinations.each reporting period. The Company ~~will adopt ASU No. 2014-09 using the modified retrospective approach effective January 1, 2018. Therefore, the cumulative effect of adoption will be reflected~~classifies deferred revenue as an adjustment to beginning retained earnings in the Form 10-Q for the period ending March 31, 2018. The effect on the Company will be 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 are expensed as incurred currently. The cumulative effect of the adoption of ASU No. 2014-09 will be to establish an asset equal to the unamortized cost of the sales commissions paid to obtain a service professional and a related deferred tax liability with the net effect being recorded as an increase to retained earnings as of January 1, 2018. The ultimate amounts recorded will depend upon both the timing and amount of monthly sales commissions during the year ended December 31, 2016 and the year ending December 31, 2017 and the average life of a service professional as of January 1, 2018. The Company is in the initial stages of assessing the impact of ASU No. 2014-09 on Angie's List following the Combination. Prior to the Combination, Angie's List capitalized sales commissions and amortized the cost overcurrent when the term of the applicable ~~advertising contract. Following~~subscription period or expected completion of our performance obligation is one year or less. The current and non-current deferred revenue balances at December 31, 2018 are $61.4 million and $0.5 million, respectively. During the ~~Combination, Angie's List accounting policies will be conformed~~six months ended June 30, 2019, the Company recognized $50.5 million of revenue that was included in the deferred revenue balance as of December 31, 2018. The current and non-current deferred revenue balances at June 30, 2019 are $65.3 million and $0.2 million, respectively. Non-current deferred revenue is included in “Other long-term liabilities” in the accompanying consolidated balance sheet.

Practical Expedients and Exemptions

As permitted under the practical expedient available under ASU No. 2014-09, Revenue from Contracts with Customers, the Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less, (ii) contracts with variable consideration that is allocated entirely to unsatisfied performance obligations or to a wholly unsatisfied promise accounted for under the ~~Company's accounting policies~~series guidance, and ~~these~~(iii) contracts for which the Company recognizes revenue at the amount which we have the right to invoice for services performed.

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 ~~will be expensed~~ as incurred. ~~Following~~The amount of capitalized sales commissions where the ~~adoption~~customer relationship period is greater than one year is $38.4 million and $38.8 million at June 30, 2019 and December 31, 2018, respectively.

Recent Accounting Pronouncements

Accounting Pronouncement Adopted by the Company

Adoption of ASU No. ~~2014-09, these costs will be capitalized and amortized over the average life of a service professional. Exclusive of the impact of the adoption of ASU No. 2014-09 on Angie's List, the~~2016-02, Leases (Topic 842)

The Company ~~estimates that the cumulative effect of adoption on the Company's combined financial position, if~~adopted Accounting Standards Update ("ASU") 2016-02, Leases (Topic 842) ("ASC 842") effective January 1, 2017 were the date of adoption, would have been less than 9% of total assets, less than 8% of total liabilities and less than 10% of shareholders' equity. The Company, subject to the completion of assessing Angie's List, does not expect the adoption of ASU No. 2014-09 to have a material effect on its consolidated and combined results of operations or cash flows.

~~In February 2016, the FASB issued ASU No. 2016-02,~~ ~~Leases (Topic 842), which supersedes pre-existing~~2019. ASC 842 superseded previously existing guidance on accounting for leases in ~~"Leases (Topic 840)"~~ and generally requires all leases to be recognized in the statement of financial position.

The adoption of ASC 842 resulted in the recognition of $69.4 million of right-of-use assets ("ROU assets") and related lease liabilities as of January 1, 2019, with no cumulative effect adjustment. The adoption of ASC 842 had no impact on the Company’s consolidated statement of operations and consolidated statement of cash flows.

The Company adopted ASC 842 prospectively and, therefore, did not revise comparative period information or disclosure. In addition, the Company elected the package of practical expedients permitted under ASC 842.

See "Note 2—Leases" for additional information on the adoption of ASC 842.

Accounting Pronouncement Not Yet Adopted by the Company

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments

In June 2016, the Financial Accounting Standards Board issued ASU No. 2016-13, which significantly changes how entities will measure credit losses for most financial assets, including accounts receivable. ASU No. 2016-13 will replace today’s “incurred loss” approach with an “expected loss” model, under which companies will recognize allowances based on expected rather than incurred losses. The provisions of ASU No. ~~2016-02~~2016-13 are effective for reporting periods beginning after December 15, ~~2018; early~~2019. Upon adoption, ~~is permitted. The provisions of~~ ASU No. ~~2016-02 are to~~2016-13 will be applied using athe modified retrospective ~~approach. The Company will adopt ASU No. 2016-02 effective January 1, 2019.~~approach with a cumulative-effect adjustment to retained earnings recognized as of the date of initial application. The Company is currently evaluating the impact of the adoption of ~~this standard update~~ASU No. 2016-13 will have on its consolidated ~~and combined~~ financial statements.

~~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~~Reclassifications

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

NOTE 2—LEASES

The Company leases office space and ~~conditions~~equipment used in connection with its operations under various operating leases, the majority of ~~a share-based payment award~~which contain escalation clauses.

ROU assets represent the Company’s right to use the underlying assets for the lease term and lease liabilities represent the present value of the Company’s obligation to make payments arising from these leases. ROU assets and related lease liabilities are based on the present value of fixed lease payments over the lease term using the Company's incremental borrowing rate on the lease commencement date or January 1, 2019 for leases that ~~require an entity~~commenced prior 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 adoptionthat date. The Company ~~early adopted~~combines the ~~provisions~~lease and non-lease components of ~~ASU No. 2017-09 during the third quarter of 2017 and the adoption of this standard update did not have a material impact on its consolidated and combined financial statements.~~

~~In August 2016, the FASB 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~~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 ~~transactions~~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 ~~presented and classified~~not recorded on the ~~statement~~accompanying consolidated balance sheet.

Variable lease payments consist primarily of ~~cash flows.~~common area maintenance, utilities and taxes, which are not included in the recognition of ROU assets and related lease liabilities. The ~~provisions~~Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.



Leases	Balance Sheet Classification	June 30, 2019
		(In thousands)
Assets:
Right-of-use assets	Right-of-use assets	$	103,997

Liabilities:
Current lease liabilities	Accrued expenses and other current liabilities	12,809
Long-term lease liabilities	Other long-term liabilities	119,982
Total lease liabilities		$	132,791

Table 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 impracticable~~

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NOTES TO CONSOLIDATED ~~AND COMBINED~~ FINANCIAL STATEMENTS (Continued)

(Unaudited)

~~to apply, in which case we would be required to apply~~



Lease Cost	Income Statement Classification	Three Months Ended June 30, 3019		Six Months Ended June 30, 3019
		(In thousands)
Fixed lease cost	Cost of revenue	$	47	$	47
Fixed lease cost	Selling and marketing expense	2,519		4,430
Fixed lease cost	General and administrative expense	2,263		4,048
Fixed lease cost	Product development expense	282		582
Total fixed lease cost ^(a)		5,111		9,107
Variable lease cost	Selling and marketing expense	366		670
Variable lease cost	General and administrative expense	140		331
Variable lease cost	Product development expense	25		55
Total variable lease cost		531		1,056
Net lease cost		$	5,642	$	10,163

________________________

^(a)Includes approximately $0.4 million and $0.6 million of short-term lease cost and $0.5 million and $0.5 million of sublease income for the ~~amendments prospectively~~three and six months ended June 30, 2019, respectively.

Maturities of lease liabilities as of June 30, 2019 (in thousands)^(b):



Remainder of 2019	$	8,325
2020	21,718
2021	21,463
2022	20,517
2023	19,505
After 2023	79,654
Total	171,182
Less: Interest	38,391
Present value of lease liabilities	$	132,791

________________________

^(b) Lease payments exclude $0.7 million of legally binding minimum lease payments for leases signed but not yet commenced.

The following are the ~~earliest date practicable; early adoption is permitted. The Company early adopted the provisions~~weighted average assumptions used for lease term and discount rate as 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 combined financial statements.~~June 30, 2019:



Remaining lease term	8.1 years
Discount rate	6.06	%

~~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 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, and (ii) reflected as operating, rather than financing, cash flows in our consolidated and combined statement of cash flows. Excess tax benefits for the nine months ended September 30, 2017 were $35.6 million. Excess tax benefits of $7.6 million for the nine months ended September 30, 2016 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.



	Three Months Ended June 30, 2019		Six Months Ended June 30, 3019
	(In thousands)
Other Information:
Right-of-use assets obtained in exchange for lease liabilities	$	23,622	$	51,484
Cash paid for amounts included in the measurement of lease liabilities	$	3,768	$	8,521

~~In January 2017, the FASB issued ASU No. 2017-04,~~ ~~Intangibles~~—~~Goodwill 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 today’s two-step impairment test to measure a goodwill impairment charge. The provisions of ASU No. 2017-04 are effective for reporting periods beginning after December 15, 2019; early adoption is permitted. The provisions of ASU No. 2017-04 are to be applied on a prospective basis. The Company early adopted the provisions of ASU No. 2017-04 on January 1, 2017 and the adoption of this standard update did not and is not expected to have a material impact on its consolidated and combined financial statements.

NOTE 2—3—INCOME TAXES

~~ANGI Homeservices~~The Company is included within ~~IAC's~~IAC’s tax group for purposes of federal and consolidated state income tax return filings. In all periods presented, current and deferred income ~~taxes~~tax provision/benefit have been computed for the ~~entities comprising ANGI Homeservices~~Company on an as if

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

standalone, separate return ~~basis. The Company’s~~basis and payments to and refunds from IAC for ~~its~~the Company's share of IAC’s consolidated federal and state ~~income~~ tax return ~~liabilities~~liabilities/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 and as financing activities within the statement of cash flows.

At the end of each interim period, the Company ~~makes its best estimate of~~estimates the annual expected effective income tax rate and applies that rate to its ordinary year-to-date earnings or loss. The income tax provision or benefit related to significant, unusual, or extraordinary items, if applicable, that will be separately reported or reported net of their related tax effects are individually computed and recognized in the interim period in which they occur. In addition, the effect of changes in enacted tax laws or rates, tax status, judgment on the realizability of a beginning-of-the-year deferred tax asset in future years or ~~income~~unrecognized tax ~~contingencies~~benefits is recognized in the interim period in which the change occurs.

The computation of the annual expected effective income tax rate at each interim period requires certain estimates and assumptions including, but not limited to, the expected pre-tax income (or loss) for the year, projections of the proportion of income (and/or loss) earned and taxed in foreign jurisdictions, permanent and temporary differences, and the likelihood of the realizability of deferred tax assets generated in the current year. The accounting estimates used to compute the provision or benefit for income taxes may change as new events occur, more experience is acquired, additional information is obtained or our tax environment changes. To the extent that the expected annual effective income tax rate changes during a quarter, the effect of the change on prior quarters is included in income tax provision in the quarter in which the change occurs.

For the three ~~and nine~~ months ended ~~September~~June 30, ~~2017,~~2019, the Company recorded an income tax provision of $2.3 million, which represents an effective income tax rate of 24% and is higher than the statutory rate of 21% due primarily to unbenefited foreign losses and state taxes, partially offset by excess tax benefits generated by the exercise and vesting of stock-based awards. For the six months ended June 30, 2019, the Company recorded an income tax benefit of ~~$40.8~~$12.0 million ~~and $71.1 million, respectively. The income tax benefit for the three months ended September 30, 2017 represents an effective income tax rate of 36%, higher than the statutory rate of 35%~~ due primarily to state taxes, partially offset by unbenefited losses in separate jurisdictions. The income tax benefit for the nine months ended September 30, 2017 is due primarily to the effect of adopting the provisions of ASU No. 2016-09 on January 1, 2017 and state taxes, partially offset by unbenefited losses in separate jurisdictions. Under ASU No. 2016-09, excess tax benefits generated by the ~~settlement or~~ exercise and vesting of stock-based ~~awards of $35.6 million for the nine months ended September 30, 2017 are recognized as a reduction to the income tax provision rather than as an increase to additional paid-in capital.~~awards. For the three and ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2018, the Company recorded an income tax ~~provision~~benefits, despite pre-tax income, of ~~$4.4~~$1.8 million and ~~$8.7~~$5.7 million, respectively, ~~which represents an effective income tax rate of 50% in each period. The effective income tax rate for the three and nine months ended September 30, 2016 is higher~~

~~ANGI HOMESERVICES INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

~~than the statutory rate of 35%~~ due primarily to ~~unbenefited losses~~excess tax benefits generated by the exercise and vesting of stock-based awards.

The Company recognizes interest and, if applicable, penalties related to unrecognized tax benefits in ~~separate jurisdictions~~the income tax provision. Accruals for interest and ~~state taxes, partially offset by research credits.~~penalties are not material.

~~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 IAC’s federal income tax returns for the years ended December 31, 2010 through ~~2012,~~2016, which includes the operations of the HomeAdvisor business. The statute of limitations for the years 2010 through ~~2013~~2012 has been extended to ~~June 30, 2018.~~July 31, 2020 and the statute of limitations for the years 2013 through 2015 has been extended to December 31, 2020. Returns filed in various other jurisdictions are open to examination for various tax years beginning with 2009. Income taxes payable include ~~reserves~~unrecognized tax benefits considered sufficient to pay assessments that may result from examination of prior year tax returns. ~~Changes to reserves~~We consider many factors when evaluating and estimating our tax positions and tax benefits, which may not accurately anticipate actual outcomes and, therefore, may require periodic adjustment. Although management currently believes changes in unrecognized tax benefits from period to period and differences between amounts paid, if any, upon ~~the~~ resolution of issues raised in audits and amounts previously provided ~~may be material. Differences between the reserves for income tax contingencies and the amounts owed by~~will not have a material impact on liquidity, results of operations, or financial condition of the Company, these matters are ~~recorded~~subject to inherent uncertainties and management’s view of these matters may change in the ~~period they become known.~~future.

~~The Company recognizes interest~~At June 30, 2019 and ~~if applicable, penalties related to~~December 31, 2018, unrecognized tax benefits, ~~in the income tax provision.~~including interest, are $2.6 million and $2.4 million, respectively. At ~~both September~~June 30, ~~2017~~2019 and December 31, ~~2016, the Company has not accrued any amount for the payment of either interest or penalties.~~

~~At September 30, 2017 and December 31, 2016, unrecognized tax benefits are $1.3~~2018, $2.3 million and ~~$0.6~~$2.2 million, ~~respectively. Included~~respectively, was included in unrecognized tax ~~benefits at September 30, 2017 and December 31, 2016, is $1.3 million and $0.6 million, respectively,~~positions for tax positions included in IAC’s consolidated tax return filings. If unrecognized tax benefits at ~~September~~June 30, ~~2017~~2019 are subsequently recognized, the income tax provision would be reduced by ~~$1.3~~$2.5 million. The comparable

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

amount as of December 31, ~~2016~~2018 is ~~$0.6~~$2.4 million. The Company believes that it is reasonably possible that its unrecognized tax benefits could decrease by $1.0 million due to potential settlements, which would reduce the income tax provision.

The Company regularly assesses the realizability of deferred tax assets considering all available evidence including, ~~among other things,~~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, to the extent these items are applicable.~~experience. As of ~~September~~June 30, ~~2017,~~2019, the Company has a U.S. gross deferred tax asset of ~~$124.1~~$128.3 million that the Company expects to fully utilize on a more likely than not basis. ~~However,~~Of this amount, $33.6 million will be utilized upon the future reversal of deferred tax sharing agreement between ANGI Homeservices and IAC governs the parties’ respective rights, responsibilities and obligations with respect to tax matters, including responsibility for taxes attributable to ANGI Homeservices, entitlement to refunds, allocation of tax attributes and other matters. Any differences between taxes currently due or receivable under the tax sharing agreementliabilities and the ~~current~~remaining net deferred tax ~~provision computed~~asset of $94.7 million will be utilized based on ~~an as if standalone, separate return basis are reflected as adjustments to additional paid-in capital.~~forecasts of future taxable income.

NOTE 3—4—BUSINESS ~~COMBINATIONS~~COMBINATION

~~Angie's List Combination~~

~~Through the Combination,~~On October 19, 2018, the Company acquired 100% of Handy Technologies, Inc. ("Handy"), a leading platform in the ~~common stock~~United States for connecting individuals looking for household services. The Company's purchase accounting is not yet complete, including the determination 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~~indemnified liabilities and related assets and the allocation of ~~Angie's List common stock outstanding immediately prior~~purchase price 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

~~ANGI HOMESERVICES INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

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 stock 1,913
Fair value of vested and pro rata portion of unvested stock options attributable to pre-combination services 11,749
Fair value of the pro rata portion of unvested restricted stock units attributable to pre-combination services 4,038
Total purchase price $ 781,384

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 both the three and nine months ended September 30, 2017, the Company included $0.7 million of revenue and $19.5 million of net losses, respectively, in its consolidated and combined statement of operations related to Angie's List. The Company is in the process of completing its determination of the fair values of assets acquired and liabilities ~~assumed~~assumed. There were no material adjustments recorded during the first six months of 2019 related to purchase accounting and the preliminary ~~fair~~ values ~~are subject to revision. These fair values are expected to~~will be finalized inno later than the fourth quarter of ~~2017.~~2019.

~~The table below summarizes the preliminary estimated 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 assets 10,641
Property and equipment 16,341
Goodwill 546,851
Intangible assets 317,300
Total assets 935,403
Deferred revenue (32,130 )
Other current liabilities (46,106 )
Long-term debt - related party (61,498 )
Deferred income taxes (12,933 )
Other long-term liabilities (1,352 )
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 preliminary estimated fair values of the identifiable intangible assets acquired at the date of combination are as follows:~~

~~ANGI HOMESERVICES INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

Angie's List
(In thousands)
Weighted-average useful life
(years)
Indefinite-lived trade names and trademarks $ 137,000
Indefinite
Service providers 90,500
3
Developed technology 63,900
6
Memberships 15,900
3
User base 10,000
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 values of trade names and trademarks were 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 providers and 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 three and nine months ended September 30, 2017, the Company included $2.0 million and $4.2 million of revenue, respectively, and less than $0.1 million and $1.0 million of net losses, respectively, 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 assets 165
Goodwill 9,841
Intangible assets 6,414
Total assets 16,601
Current liabilities (649 )
Other long-term liabilities (1,873 )
Net assets acquired $ 14,079

~~ANGI HOMESERVICES INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

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 relationships 2,435
2
Developed technology 1,522
2
User base 99
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 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 three and nine months ended September 30, 2017, the Company included $2.7 million and $5.4 million of revenue, respectively, and $0.7 million and $1.0 million of net losses, respectively, 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:~~

~~ANGI HOMESERVICES INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

MyBuilder
(In thousands)
Cash and cash equivalents $ 6,004
Other current assets 344
Goodwill 38,521
Intangible assets 13,490
Total assets 58,359
Current liabilities (2,065 )
Other long-term liabilities (2,296 )
Net assets acquired $ 53,998

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 $ 6,245
Indefinite
Contractor relationships 4,122
2
Developed technology 1,499
2
User base 1,624
1
Total identifiable intangible assets acquired $ 13,490

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.

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 three and nine months ended September 30, 2017, the Company included $3.3 million and $9.2 million of revenue, respectively, and $0.2 million and $0.6 million of net losses, 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:~~

~~ANGI HOMESERVICES INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

MyHammer
(In thousands)
Cash and cash equivalents $ 4,041
Other current assets 790
Goodwill 22,277
Intangible assets 8,107
Total assets 35,215
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:~~

MyHammer
(In thousands)
Weighted-average useful life
(years)
Indefinite-lived trade name $ 4,553
Indefinite
Contractor relationships 1,444
4
Developed technology 1,222
3
User base 888
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.

~~Pro~~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~~Handy as if ~~these acquisitions~~this acquisition had occurred on January 1, ~~2016.~~2017. 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~~acquisition actually occurred on January 1, ~~2016.~~ 2017.



	Three Months Ended June 30, 2018		Six Months Ended June 30, 2018
	(In thousands, except per share data)
Revenue	$	301,988	$	563,892
Net earnings attributable to ANGI Homeservices Inc. shareholders	$	20,565	$	9,842
Basic earnings per share attributable to ANGI Homeservices Inc. shareholders	$	0.04	$	0.02
Diluted earnings per share attributable to ANGI Homeservices Inc. shareholders	$	0.04	$	0.02

NOTE 5—FINANCIAL INSTRUMENTS

Marketable Debt Securities

The Company did not hold any available-for sale marketable debt securities at June 30, 2019.

At December 31, 2018, current available-for-sale marketable debt securities were as follows:



	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In thousands)
Treasury discount notes	$	24,947	$	1	$	(1	)	$	24,947
Total available-for-sale marketable debt securities	$	24,947	$	1	$	(1	)	$	24,947

For the ~~three and nine~~six months ended ~~September~~June 30, ~~2017, pro forma adjustments include (i) reductions in stock-based compensation expense~~2019, proceeds from maturities of ~~$85.1 million and $52.9 million, respectively, and transaction related costs~~available-for-sale marketable debt securities were $25.0 million. The specific-identification method is used to determine the cost of ~~$22.1 million and $26.8 million, respectively, because they are one-time in nature and will not have a continuing impact on operations; and (ii) an increase in amortization~~available-for-sale marketable debt securities

Table of intangibles of $11.3 million and $34.4 million, respectively. 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 $12.0 million related to the Combination. For the three and nine months ended September 30, 2016, pro forma adjustments include a reduction in revenue of $5.1 million and $32.3 million, respectively, due to the write-off

Contents

ANGI HOMESERVICES INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED ~~AND COMBINED~~ FINANCIAL STATEMENTS (Continued)

(Unaudited)

sold and the amount of ~~deferred revenue at~~unrealized gains and losses reclassified out of accumulated other comprehensive income (loss) into earnings. There were no gross realized gains or losses from the ~~date~~maturities of ~~acquisition as well as increases in stock-based compensation expense of $19.7 million and $51.6 million, respectively, and amortization of intangibles of $16.0 million and $48.3 million, respectively.~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(In thousands, except per share data)
Revenue $ 251,995
$ 214,212
$ 731,920
$ 607,802
Net loss attributable to ANGI Homeservices Inc. shareholders $ (7,172 ) $ (25,159 ) $ (2,178 ) $ (68,345 )
Basic and diluted loss per share attributable to ANGI Homeservices Inc. shareholders $ (0.02 ) $ (0.06 ) $ (0.01 ) $ (0.16 )

~~NOTE 4—GOODWILL AND INTANGIBLE ASSETS~~

~~Goodwill and intangible assets, net are as follows:~~

September 30,
2017
December 31, 2016
(In thousands)
Goodwill $ 774,191
$ 170,990
Intangible assets with indefinite lives 151,735
4,884
Intangible assets with definite lives, net 191,658
5,908
Total goodwill and intangible assets, net $ 1,117,584
$ 181,782

~~The following table presents the balance of goodwill by reportable segment, including the changes in the carrying value of goodwill,~~available-for-sale marketable debt securities for the ~~nine~~three and six months ended ~~September~~June 30, ~~2017:~~

Balance at
December 31,
2016 Additions Deductions Foreign
exchange
translation Balance at September 30,
2017
(In thousands)
North America $ 140,930
$ 556,692
$ —
$ 640
$ 698,262
Europe 30,060
38,643
—
7,226
75,929
Total goodwill $ 170,990
$ 595,335
$ —
$ 7,866
$ 774,191

~~Additions relate~~2019. The Company did not hold any available-for-sale marketable debt securities prior to the ~~acquisitions~~third quarter of ~~Angie's List and HomeStars (included in the North America segment) and MyBuilder (included in the Europe segment).~~2018.

~~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:~~

Balance at
December 31,
2015 Additions (Deductions) Foreign
exchange
translation Balance at
December 31,
2016
(In thousands)
North America $ 140,930
$ —
$ —
$ —
$ 140,930
Europe 9,700
21,985
—
(1,625 ) 30,060
Total goodwill $ 150,630
$ 21,985
$ —
$ (1,625 ) $ 170,990

~~ANGI HOMESERVICES INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

~~Additions relate to the acquisition of MyHammer (included in the Europe segment).~~

Intangible assets with indefinite lives are trade names and trademarks acquired in various acquisitions. At September 30, 2017 and December 31, 2016, intangible assets with definite lives are as follows:

September 30, 2017
Gross
carrying
amount Accumulated
amortization Net Weighted-average useful life
(years)
(Dollars in thousands)
Contractor and service provider relationships $ 99,628
$ (2,989 ) $ 96,639
3.0
Technology 78,761
(10,714 ) 68,047
5.6
Memberships 15,900
(15 ) 15,885
3.0
Customer lists and user base 13,911
(2,973 ) 10,938
1.1
Trade names 5,612
(5,463 ) 149
3.1
Total $ 213,812
$ (22,154 ) $ 191,658
3.8

December 31, 2016
Gross
carrying
amount Accumulated
amortization Net Weighted-average
useful life
(years)
(Dollars in thousands)
Contractor relationships $ 1,830
$ (495 ) $ 1,335
4.0
Technology 11,377
(7,834 ) 3,543
4.3
Customer lists and user base 4,136
(3,432 ) 704
1.8
Trade names 5,260
(4,934 ) 326
2.9
Total $ 22,603
$ (16,695 ) $ 5,908
3.5

~~At September 30, 2017, amortization of intangible assets with definite lives for each of the next five years and thereafter is estimated to be as follows:~~

Year Ending September 30, (In thousands)
2018 $ 64,155
2019 49,101
2020 46,446
2021 10,685
2022 10,650
Thereafter 10,621
Total $ 191,658

~~NOTE 5—FAIR VALUE MEASUREMENTS AND FINANCIAL INSTRUMENTS~~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.

~~ANGI HOMESERVICES INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

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:


	September 30, 2017								June 30, 2019
	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		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)								(In thousands)
Assets:
Cash equivalents:
Money market funds	$	1,670	$	—	$	—	$	1,670	$	228,402	$	—	$	—	$	228,402
Treasury discount notes	1,199		—		—		1,199		—		12,495		—		12,495
Certificates of deposit	—		6,199		—		6,199
Commercial paper									—		15,983		—		15,983
Time deposits									—		30,000		—		30,000
Total	$	2,869	$	6,199	$	—	$	9,068	$	228,402	$	58,478	$	—	$	286,880

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ANGI HOMESERVICES INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

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



	December 31, 2018
	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	$	137,359	$	—	$	—	$	137,359
Treasury discount notes	—		99,914		—		99,914
Commercial paper	—		52,931		—		52,931
Time deposits	—		15,000		—		15,000
Marketable securities:
Treasury discount notes	—		24,947		—		24,947
Total	$	137,359	$	192,792	$	—	$	330,151

Assets measured at fair value on a nonrecurring basis

The Company’s non-financial assets, such as goodwill, intangible assets and property 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.

Financial instruments measured at fair value only for disclosure purposes

September 30, 2017 December 31, 2016
Carrying
value Fair
value Carrying
value Fair
value
(In thousands)
Current portion of long-term debt—related party $ —
$ —
$ (2,838 ) $ (2,776 )
Long-term debt—related party, net of current portion (79,504 ) (79,611 ) (47,000 ) (46,324 )
The following table presents the carrying value and the fair value of financial instruments measured at fair value only for disclosure purposes:



	June 30, 2019						December 31, 2018
	Carrying value			Fair value			Carrying value			Fair value
	(In thousands)
Current portion of long-term debt	$	(13,750	)	$	(13,681	)	$	(13,750	)	$	(12,753	)
Long-term debt, net ^(a)	(238,357		)	(239,422		)	(244,971		)	(229,556		)
Long-term debt—related party	—			—			(1,015		)	(1,092		)

_________________


^(a)	At June 30, 2019 and December 31, 2018, the carrying value of long-term debt, net includes unamortized debt issuance costs of $2.3 million and $2.5 million, respectively.

~~ANGI HOMESERVICES INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

At June 30, 2019 and December 31, 2018, the fair value of long-term debt, including the current portion, is estimated using observable market prices or indices for similar liabilities, which are Level 2 inputs. The fair value of ~~the Company’s~~ long-term debt—related party ~~including current portion, is~~was based on Level 3 inputs and iswas estimated by discounting the future cash flows based on current market conditions.

NOTE 6—LONG-TERM DEBT

Long-term debt consists of:

Table of Contents

ANGI HOMESERVICES INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)



	June 30, 2019		December 31, 2018
	(In thousands)
Term Loan due November 5, 2023	$	254,375	$	261,250
Less: current portion of Term Loan	13,750		13,750
Less: unamortized debt issuance costs	2,268		2,529
Total long-term debt, net	$	238,357	$	244,971

See "Note 12—Related Party Transactions with IAC" for a description of long-term debt—related party.

Term Loan and Credit Facility

At June 30, 2019 and December 31, 2018, the outstanding balance of the five-year term loan facility ("Term Loan") was $254.4 million and $261.3 million, respectively. At both June 30, 2019 and December 31, 2018, the Term Loan bears interest at LIBOR plus 1.50%. The spread over LIBOR is subject to change in future periods based on the Company's consolidated net leverage ratio. The interest rate was 4.00% and 3.98% at June 30, 2019 and December 31, 2018, respectively. Interest payments are due at least quarterly through the term of the loan. Additionally, there are quarterly principal payments of $3.4 million through December 31, 2021, $6.9 million for the one-year period ending December 31, 2022 and $10.3 million through maturity of the loan when the final amount of $161.6 million is due.

The terms of the Term Loan require the Company to maintain a consolidated net leverage ratio of not more than 4.5 to 1.0 and a minimum interest coverage ratio of not less than 2.0 to 1.0 (in each case as defined in the credit agreement). The Term Loan also contains covenants that would limit the Company's ability to pay dividends, make distributions or repurchase its stock in the event a default has occurred or its consolidated net leverage ratio exceeds 4.25 to 1.0. There are additional covenants under the Term Loan that limit the ability of the Company and its subsidiaries to, among other things, incur indebtedness, pay dividends or make distributions.

On November 5, 2018, the Company entered into a five-year $250 million revolving credit facility (the "Credit Facility"). At June 30, 2019 and December 31, 2018, there were no outstanding borrowings under the Credit Facility. The annual commitment fee on undrawn funds is based on the consolidated net leverage ratio most recently reported and is 25 basis points at both June 30, 2019 and December 31, 2018. Borrowings under the Credit Facility bear interest, at the Company's option, at either a base rate or LIBOR, in each case plus an applicable margin, which is based on the Company's consolidated net leverage ratio. The financial and other covenants are the same as those for the Term Loan.

The Term Loan and Credit Facility are guaranteed by the Company's wholly-owned material domestic subsidiaries and are secured by substantially all assets of the Company and the guarantors, subject to certain exceptions.

NOTE 7—ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME ~~(LOSS)~~

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



	Three Months Ended June 30, 2019
	Foreign Currency Translation Adjustment			Accumulated Other Comprehensive Loss
	(In thousands)
Balance at April 1	$	(191	)	$	(191	)
Other comprehensive loss	(1,291		)	(1,291		)
Balance at June 30	$	(1,482	)	$	(1,482	)

Table of Contents

ANGI HOMESERVICES INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Three Months Ended September 30, 2017
Foreign
currency
translation
adjustment Accumulated
other
comprehensive
(loss) income
(In thousands)
Balance at July 1 $ (230 ) $ (230 )
Other comprehensive income 3,578
3,578
Balance at September 30 $ 3,348
$ 3,348

Three Months Ended September 30, 2016
Foreign
currency
translation
adjustment Accumulated
other
comprehensive
(loss) income
(In thousands)
Balance at July 1 $ (486 ) $ (486 )
Other comprehensive income 32
32
Balance at September 30 $ (454 ) $ (454 )



	Three Months Ended June 30, 2018
	Foreign Currency Translation Adjustment			Accumulated Other Comprehensive Income (Loss)
	(In thousands)
Balance at April 1	$	6,224		$	6,224
Other comprehensive loss before reclassifications	(4,942		)	(4,942		)
Amounts reclassified to earnings	(191		)	(191		)
Net current period other comprehensive loss	(5,133		)	(5,133		)
Balance at June 30	$	1,091		$	1,091

Nine Months Ended September 30, 2017
Foreign
currency
translation
adjustment Accumulated
other
comprehensive
(loss) income
(In thousands)
Balance at January 1 $ (1,721 ) $ (1,721 )
Other comprehensive income 5,069
5,069
Balance at September 30 $ 3,348
$ 3,348

Nine Months Ended September 30, 2016
Foreign
currency
translation
adjustment Accumulated
other
comprehensive
(loss) income
(In thousands)
Balance at January 1 $ (1,064 ) $ (1,064 )
Other comprehensive income 610
610
Balance at September 30 $ (454 ) $ (454 )



	Six Months Ended June 30, 2019
	Foreign Currency Translation Adjustment			Unrealized Gains (Losses) On Available-For-Sale Debt Securities			Accumulated Other Comprehensive (Loss) Income
	(In thousands)
Balance at January 1	$	(1,864	)	$	3		$	(1,861	)
Other comprehensive income (loss)	382			(3		)	379
Balance at June 30	$	(1,482	)	$	—		$	(1,482	)



	Six Months Ended June 30, 2018
	Foreign Currency Translation Adjustment			Accumulated Other Comprehensive Income (Loss)
	(In thousands)
Balance at January 1	$	2,232		$	2,232
Other comprehensive loss before reclassifications	(1,089		)	(1,089		)
Amounts reclassified to earnings	(52		)	(52		)
Net current period other comprehensive loss	(1,141		)	(1,141		)
Balance at June 30	$	1,091		$	1,091

The amount reclassified out of foreign currency translation adjustment into earnings for the three and six months ended June 30, 2018 relate to the liquidation of an international subsidiary.

At ~~September~~both June 30, ~~2017~~2019 and ~~2016,~~2018, there was no tax benefit or provision on the accumulated other comprehensive ~~income~~ (loss). income.

~~ANGI HOMESERVICES INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

NOTE ~~7—(LOSS)~~ 8—EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted ~~(loss)~~ earnings per share attributable to ANGI Homeservices shareholders:

Three Months Ended September 30,
2017 2016
Basic Diluted Basic Diluted
(In thousands, except per share data)
Numerator:
Net (loss) earnings $ (72,158 ) $ (72,158 ) $ 4,468
$ 4,468
Net loss attributable to noncontrolling interests 397
397
607
607
Net (loss) earnings attributable to ANGI Homeservices Inc. shareholders $ (71,761 ) $ (71,761 ) $ 5,075
$ 5,075

Denominator:
Weighted average basic shares outstanding 415,420
415,420
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)
415,420
415,420
414,754
414,754

(Loss) earnings per share attributable to ANGI Homeservices Inc. shareholders:
(Loss) earnings per share $ (0.17 ) $ (0.17 ) $ 0.01
$ 0.01

Nine Months Ended September 30,
2017 2016
Basic Diluted Basic Diluted
(In thousands, except per share data)
Numerator:
Net (loss) earnings $ (46,296 ) $ (46,296 ) $ 8,575
$ 8,575
Net loss attributable to noncontrolling interests 1,402
1,402
1,833
1,833
Net (loss) earnings attributable to ANGI Homeservices Inc. shareholders $ (44,894 ) $ (44,894 ) $ 10,408
$ 10,408

Denominator:
Weighted average basic shares outstanding 414,978
414,978
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)
414,978
414,978
414,754
414,754

(Loss) earnings per share attributable to ANGI Homeservices Inc. shareholders:
(Loss) earnings per share $ (0.11 ) $ (0.11 ) $ 0.03
$ 0.03

~~________________________~~

Table of Contents

ANGI HOMESERVICES INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED ~~AND COMBINED~~ FINANCIAL STATEMENTS (Continued)

(Unaudited)



	Three Months Ended June 30,
	2019						2018
	Basic			Diluted			Basic			Diluted
	(In thousands, except per share data)
Numerator:
Net earnings	$	7,234		$	7,234		$	23,023		$	23,023
Net earnings attributable to noncontrolling interests	(266		)	(266		)	(124		)	(124		)
Net earnings attributable to ANGI Homeservices Inc. shareholders	$	6,968		$	6,968		$	22,899		$	22,899

Denominator:
Weighted average basic shares outstanding	506,725			506,725			480,618			480,618
Dilutive securities ^{(a) (b)}	—			13,904			—			28,145
Denominator for earnings per share—weighted average shares	506,725			520,629			480,618			508,763

Earnings per share attributable to ANGI Homeservices Inc. shareholders:
Earnings per share	$	0.01		$	0.01		$	0.05		$	0.05



	Six Months Ended June 30,
	2019						2018
	Basic			Diluted			Basic		Diluted
	(In thousands, except per share data)
Numerator:
Net earnings	$	17,085		$	17,085		$	13,909	$	13,909
Net (earnings) loss attributable to noncontrolling interests	(148		)	(148		)	105		105
Net earnings attributable to ANGI Homeservices Inc. shareholders	$	16,937		$	16,937		$	14,014	$	14,014

Denominator:
Weighted average basic shares outstanding	505,548			505,548			479,470		479,470
Dilutive securities ^{(a) (b)}	—			16,313			—		27,544
Denominator for earnings per share—weighted average shares	505,548			521,861			479,470		507,014

Earnings per share attributable to ANGI Homeservices Inc. shareholders:
Earnings per share	$	0.03		$	0.03		$	0.03	$	0.03

________________________

^(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 appreciation rights, stock options and subsidiary denominated equity and vesting of restricted stock units. For both the three and six months ended June 30, 2019, 4.2 million potentially dilutive securities are excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive. For the three and ~~nine~~six months ended ~~September~~June 30, ~~2017, the Company had a loss from operations~~2018, 0.1 million and ~~as a result, approximately 58.3~~0.3 million potentially dilutive securities, ~~were~~respectively, are excluded from ~~computing dilutive~~the calculation of diluted earnings per share because ~~the impact~~their inclusion 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~~

Performance-based stock units (“PSUs”) are considered contingently issuable shares. Shares issuable upon vesting of PSUs are included in the denominator for earnings per share if (i) the applicable performance condition(s) has been met and (ii) the inclusion of the PSUs is dilutive for the respective reporting periods. For both the three and six months ended June 30, 2019, 2.8 million shares underlying PSUs were excluded from the calculation of diluted earnings per share ~~for~~because the performance condition(s) had not been met. For both the three and ~~nine~~six months ended ~~September~~June 30, ~~2016 using~~2018, 1.3 million shares underlying PSUs were excluded from the ~~shares issued to IAC for~~calculation of diluted earnings per share because the ~~contribution of the HomeAdvisor business.~~performance condition(s) had not been met.

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ANGI HOMESERVICES INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

NOTE 8—9—SEGMENT INFORMATION

The overall concept that the Company ~~has two~~employs in determining its operating segments ~~North America and Europe, which are also~~is to present the ~~Company’s reportable segments. Each segment manager reports to~~financial information in a manner consistent with: how the ~~Company’s chief operating decision maker. The~~ chief operating decision maker ~~allocates resources~~views the businesses; how the businesses are organized as to segment management; and ~~assesses performance at~~ the ~~segment level.~~focus of the businesses with regards to the types of services or products offered or the target market.

The following table presents revenue by reportable segment:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016		2019		2018		2019		2018
	(In thousands)								(In thousands)
Revenue:
North America	$	167,104	$	125,226	$	470,667	$	348,287	$	324,400	$	277,505	$	606,394	$	513,531
Europe	14,613		8,334		42,506		26,935		19,496		17,317		40,945		36,602
Total	$	181,717	$	133,560	$	513,173	$	375,222	$	343,896	$	294,822	$	647,339	$	550,133

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


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended June 30,				Six Months Ended June 30,
	2017			2016			2017			2016			2019		2018		2019		2018
	(In thousands)												(In thousands)
Operating (Loss) Income:
North America	$	(107,687	)	$	11,573		$	(99,479	)	$	23,202
Marketplace:
Consumer connection revenue^(a)													$	241,236	$	187,172	$	442,818	$	336,232
Membership subscription revenue													16,485		16,565		33,002		32,192
Other revenue													1,807		998		3,633		1,919
Total Marketplace revenue													259,528		204,735		479,453		370,343
Advertising & Other revenue^(b)													64,872		72,770		126,941		143,188
Total North America revenue													324,400		277,505		606,394		513,531
Europe	(4,818		)	(2,730		)	(14,474		)	(5,360		)
Total	$	(112,505	)	$	8,843		$	(113,953	)	$	17,842
Consumer connection revenue													15,232		12,496		32,355		26,863
Membership subscription revenue													3,613		4,517		7,355		9,188
Advertising and other revenue													651		304		1,235		551
Total Europe revenue													19,496		17,317		40,945		36,602
Total revenue													$	343,896	$	294,822	$	647,339	$	550,133

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(In thousands)
Adjusted EBITDA^(a):

North America $ 60
$ 16,119
$ 31,356
$ 35,990
Europe (2,326 ) (2,133 ) (8,439 ) (3,368 )
Total $ (2,266 ) $ 13,986
$ 22,917
$ 32,622

~~___________________________~~________________________


^(a)	Includes fees paid by HomeAdvisor service professionals for consumer matches and revenue from completed jobs sourced through the Handy platform.


^(b)	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, Fixd Repair and Felix. Felix was sold on December 31, 2018 and its revenue for the three and six months ended June 30, 2018 was $10.0 million and $18.5 million, respectively.

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

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ANGI HOMESERVICES INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)



	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
	(In thousands)
Revenue
United States	$	320,701	$	274,785	$	599,179	$	508,260
All other countries	23,195		20,037		48,160		41,873
Total	$	343,896	$	294,822	$	647,339	$	550,133



	June 30, 2019		December 31, 2018
	(In thousands)
Long-lived assets (excluding goodwill and intangible assets)
United States	$	93,748	$	65,510
All other countries	6,135		5,349
Total	$	99,883	$	70,859

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



	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
	(In thousands)
Operating Income (Loss):
North America	$	12,473		$	26,110		$	13,215		$	20,745
Europe	(1,070		)	(2,848		)	(5,453		)	(8,239		)
Total	$	11,403		$	23,262		$	7,762		$	12,506



	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
	(In thousands)
Adjusted EBITDA^(c):
North America	$	51,606		$	68,088		$	91,295		$	107,693
Europe	$	(174	)	$	(1,109	)	$	(2,684	)	$	(4,074	)

________________________

^(c)

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,~~businesses, and this measure is one of the primary metrics byon 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.nature. Adjusted EBITDA has certain limitations ~~in that~~because it ~~does not take into account~~excludes the impact ~~to ANGI Homeservices Inc.'s statement~~ of ~~operations of certain~~these expenses.

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ANGI HOMESERVICES INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED ~~AND COMBINED~~ FINANCIAL STATEMENTS (Continued)

(Unaudited)

Nine Months Ended September 30,
2017 2016
(In thousands)
Capital expenditures:
North America $ 14,472
$ 12,238
Europe 1,806
1,504
Total $ 16,278
$ 13,742

The following tables ~~present revenue disaggregated by service~~reconcile operating income (loss) to Adjusted EBITDA for the ~~Company's~~Company’s reportable segments:

Three Months Ended September 30,
2017 2016
North America Europe Total North America Europe Total
(In thousands)
Consumer connection revenue ^(b)
$ 141,055
$ 10,001
$ 151,056
$ 104,427
$ 6,447
$ 110,874
Membership subscription revenue 17,826
4,320
22,146
12,379
1,704
14,083
Other revenue 8,223
292
8,515
8,420
183
8,603
Total $ 167,104
$ 14,613
$ 181,717
$ 125,226
$ 8,334
$ 133,560



	Three Months Ended June 30, 2019
	Operating income (loss)			Stock-based compensation expense		Depreciation		Amortization of intangibles		Adjusted EBITDA
	(In thousands)
North America	$	12,473		$	17,387	$	8,227	$	13,519	$	51,606
Europe	(1,070		)	$	133	$	569	$	194	$	(174	)
Operating income	11,403
Interest expense—third party	(2,963		)
Interest expense—related party	—
Other income, net	1,047
Earnings before income taxes	9,487
Income tax provision	(2,253		)
Net earnings	7,234
Net earnings attributable to noncontrolling interests	(266		)
Net earnings attributable to ANGI Homeservices Inc. shareholders	$	6,968



	Three Months Ended June 30, 2018
	Operating income (loss)			Stock-based compensation expense		Depreciation		Amortization of intangibles		Adjusted EBITDA
	(In thousands)
North America	$	26,110		$	21,821	$	5,354	$	14,803	$	68,088
Europe	(2,848		)	$	232	$	532	$	975	$	(1,109	)
Operating income	23,262
Interest expense—third party	(3,011		)
Interest expense—related party	(34		)
Other income, net	1,053
Earnings before income taxes	21,270
Income tax benefit	1,753
Net earnings	23,023
Net earnings attributable to noncontrolling interests	(124		)
Net earnings attributable to ANGI Homeservices Inc. shareholders	$	22,899

Nine Months Ended September 30,
2017 2016
North America Europe Total North America Europe Total
(In thousands)
Consumer connection revenue ^(b)
$ 398,218
$ 29,636
$ 427,854
$ 289,952
$ 21,010
$ 310,962
Membership subscription revenue 48,947
12,198
61,145
34,774
5,234
40,008
Other revenue 23,502
672
24,174
23,561
691
24,252
Total $ 470,667
$ 42,506
$ 513,173
$ 348,287
$ 26,935
$ 375,222

~~___________________________~~


^(b)	~~Fees paid by services professionals for consumer matches.~~

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

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(In thousands)
Revenue
United States $ 164,999
$ 125,124
$ 466,134
$ 347,934
All other countries 16,718
8,436
47,039
27,288
Total $ 181,717
$ 133,560
$ 513,173
$ 375,222

Table of Contents

ANGI HOMESERVICES INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED ~~AND COMBINED~~ FINANCIAL STATEMENTS (Continued)

(Unaudited)

~~The United States is the only country whose revenue is greater than 10% of total revenue of the Company for the three and nine months ended September 30, 2017 and 2016.~~

September 30, December 31,
2017 2016
(In thousands)
Long-lived assets (excluding goodwill and intangible assets)
United States $ 44,027
$ 21,775
All other countries 3,608
1,870
Total $ 47,635
$ 23,645

~~The following tables reconcile operating (loss) income for the Company’s reportable segments and net (loss) earnings attributable to ANGI Homeservices Inc. shareholders to Adjusted EBITDA:~~



	Six Months Ended June 30, 2019
	Operating income (loss)			Stock-based compensation expense		Depreciation		Amortization of intangibles		Adjusted EBITDA
	(In thousands)
North America	$	13,215		$	36,459	$	14,434	$	27,187	$	91,295
Europe	(5,453		)	$	343	$	1,361	$	1,065	$	(2,684	)
Operating loss	7,762
Interest expense—third party	(5,957		)
Interest expense—related party	(16		)
Other income, net	3,334
Earnings before income taxes	5,123
Income tax benefit	11,962
Net earnings	17,085
Net earnings attributable to noncontrolling interests	(148		)
Net earnings attributable to ANGI Homeservices Inc. shareholders	$	16,937



	Six Months Ended June 30, 2018
	Operating income (loss)			Stock-based compensation expense		Depreciation		Amortization of intangibles		Adjusted EBITDA
	(In thousands)
North America	$	20,745		$	46,396	$	10,928	$	29,624	$	107,693
Europe	(8,239		)	$	563	$	1,142	$	2,460	$	(4,074	)
Operating income	12,506
Interest expense—third party	(5,665		)
Interest expense—related party	(79		)
Other income, net	1,409
Earnings before income taxes	8,171
Income tax benefit	5,738
Net earnings	13,909
Net loss attributable to noncontrolling interests	105
Net earnings attributable to ANGI Homeservices Inc. shareholders	$	14,014

Three Months Ended September 30, 2017
Operating
loss Stock-based
compensation Depreciation Amortization
of intangibles Adjusted EBITDA
(In thousands)
North America $ (107,687 ) $ 103,565
$ 3,085
$ 1,097
$ 60
Europe (4,818 ) 415
406
1,671
(2,326 )
Total (112,505 ) $ 103,980
$ 3,491
$ 2,768
$ (2,266 )
Interest expense—related party (1,864 )
Other income, net 1,364

Loss before income taxes (113,005 )
Income tax benefit 40,847

Net loss (72,158 )
Net loss attributable to noncontrolling interests 397

Net loss attributable to ANGI Homeservices Inc. shareholders $ (71,761 )

NOTE 10—CONSOLIDATED FINANCIAL STATEMENT DETAILS

Table of Contents

ANGI HOMESERVICES INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED ~~AND COMBINED~~ FINANCIAL STATEMENTS (Continued)

(Unaudited)

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheet to the total amounts shown in the consolidated statement of cash flows:



	June 30, 2019		December 31, 2018
	(In thousands)
Cash and cash equivalents	$	380,563	$	336,984
Restricted cash included in other current assets	1,419		1,417
Restricted cash included in other non-current assets	420		420
Total cash, cash equivalents, and restricted cash as shown on the consolidated statement of cash flows	$	382,402	$	338,821

Three Months Ended September 30, 2016
Operating
income
(loss) Stock-based
compensation Depreciation Amortization
of intangibles Adjusted EBITDA
(In thousands)
North America $ 11,573
$ 1,977
$ 1,944
$ 625
$ 16,119
Europe (2,730 ) 414
82
101
(2,133 )
Total 8,843
$ 2,391
$ 2,026
$ 726
$ 13,986
Interest expense—related party (156 )
Other income, net 195

Earnings before income taxes 8,882

Income tax provision (4,414 )
Net earnings 4,468

Net loss attributable to noncontrolling interests 607

Net earnings attributable to ANGI Homeservices Inc. shareholders $ 5,075

Nine Months Ended September 30, 2017
Operating
loss Stock-based
compensation Depreciation Amortization
of intangibles Adjusted EBITDA
(In thousands)
North America $ (99,479 ) $ 118,961
$ 8,862
$ 3,012
$ 31,356
Europe (14,474 ) 1,319
843
3,873
(8,439 )
Total (113,953 ) $ 120,280
$ 9,705
$ 6,885
$ 22,917
Interest expense—related party (5,538 )
Other income, net 2,100

Loss before income taxes (117,391 )
Income tax benefit 71,095

Net loss (46,296 )
Net loss attributable to noncontrolling interests 1,402

Net loss attributable to ANGI Homeservices Inc. shareholders $ (44,894 )

~~ANGI HOMESERVICES INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

Nine Months Ended September 30, 2016
Operating
income
(loss) Stock-based
compensation Depreciation Amortization
of intangibles Adjusted EBITDA
(In thousands)
North America $ 23,202
$ 5,351
$ 5,469
$ 1,968
$ 35,990
Europe (5,360 ) 1,334
355
303
(3,368 )
Total 17,842
$ 6,685
$ 5,824
$ 2,271
$ 32,622
Interest expense—related party (240 )
Other expense, net (304 )
Earnings before income taxes 17,298

Income tax provision (8,723 )
Net earnings 8,575

Net loss attributable to noncontrolling interests 1,833

Net earnings attributable to ANGI Homeservices Inc. shareholders $ 10,408

Restricted cash at June 30, 2019 and December 31, 2018 primarily consists of a cash collateralized letter of credit and a deposit related to corporate credit cards.

NOTE 9—11—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. Management has also identified certain other legal matters where we believe an unfavorable outcome is not probable and, therefore, no reserve is established. 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 2—3—Income Taxes" for additional information related to income tax contingencies.

NOTE ~~10—~~12—RELATED PARTY TRANSACTIONS WITH IAC

~~Relationship with IAC prior to the Combination~~

For periods prior to the Combination, the Company’s consolidated and 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 $1.7 million and $4.8 million for the three and nine months ended September 30, 2017, respectively, and $1.1 million and $3.2 million for the three and nine months ended September 30, 2016, 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:~~

~~ANGI HOMESERVICES INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

September 30,
2017 2016
(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 ) $ 21,094
Taxes 38,162
(1,948 )
Interest income^(a)
656
170
Allocation of general and administrative expense (4,789 ) (3,173 )
Net (increase) decrease in IAC’s investment in HomeAdvisor $ (46,339 ) $ 16,143


^(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 of 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.~~

~~Guarantee of IAC Senior Notes and Revolving Credit Facility~~

Upon completion of the Combination, HomeAdvisor (US) and its wholly-owned domestic subsidiaries no longer guarantee any debt of IAC and the pledge of the stock of HomeAdvisor (US) and certain of its domestic and foreign entities that had secured the IAC revolving credit facility was released.

~~Intercompany Loans entered into in Connection with the Combination and Relationship with IAC following the Combination~~

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 approximately $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 12—Subsequent Event" for additional information.~~

~~ANGI HOMESERVICES INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~

Additionally, immediately prior to the Combination, the Company, through a foreign subsidiary, sold a promissory note due December 31, 2019 in the amount of €2.4 million ($2.8 million at September 30, 2017) to a foreign subsidiary of IAC that is not part of the HomeAdvisor business.

~~In connection with the Combination, ANGI Homeservices~~ and IAC entered into certain agreements to govern ~~the~~our relationship ~~between them~~ following the ~~Combination.~~combination of IAC's HomeAdvisor business and Angie's List, Inc. on September 29, 2017 (the "Combination"). 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~~For the ~~agreements between IAC~~three and six months ended June 30, 2019 and 2018, the Company ~~regarding the principal transactions necessary~~was charged $1.3 million and $2.7 million; and $1.2 million and $2.7 million, respectively, by IAC for ~~IAC to separate the HomeAdvisor business from IAC's other businesses and cause the HomeAdvisor business to be transferred to ANGI Homeservices prior~~services rendered pursuant to the ~~Combination, as well as governs certain aspects of our relationship with IAC following the Combination. Under the contribution~~services agreement, ~~the Company agrees to assume all of the assets and liabilities related to the HomeAdvisor business and agrees to indemnify IAC against any losses arising out of any breach~~which were paid in full by the Company ~~of the contribution agreement or the other transaction related agreements described below. IAC also agrees to indemnify~~at June 30, 2019 and 2018, respectively. At December 31, 2018, the Company ~~against losses arising out of any breach by~~had an outstanding receivable due from IAC of $0.1 million, pursuant to the ~~contribution agreement or any of~~services agreement. This amount was deducted from the ~~other transaction related agreements described below.~~

~~Investor Rights Agreement~~

~~The investor rights agreement sets forth certain registration, anti-dilution and governance rights of~~charges due to IAC ~~with respect~~pursuant to ~~ANGI Homeservices, as well as certain governance rights for~~ the ~~benefit of ANGI Homeservices stockholders other than IAC, in each case following the Combination.~~

~~Services Agreement~~

~~The~~ services agreement ~~governs services that IAC provides to~~discussed above during the first quarter of 2019.

At June 30, 2019 and December 31, 2018, the Company ~~including, among others: (i) assistance with certain legal, M&A, human resources, finance, risk management, internal audit~~had outstanding payables of $0.7 million and treasury functions, health and wellness, 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$12.1 million due to ~~which~~ IAC and the Company may agree. The services agreement has an initial term of one year from the date of the Combination, and will automatically renew for additional one-year periods thereafter for so long as IAC continuespursuant to ~~own a majority of the outstanding shares of the Company's common stock.~~

~~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, which is included in "Accrued expenses and other current liabilities" in the ~~Company is generally responsible~~accompanying consolidated balance sheet. During the first quarter of 2019, $11.4 million was paid to IAC pursuant to this agreement.

For the three and ~~required~~six months ended June 30, 2019, less than 0.1 million and 0.3 million shares, respectively, of ANGI Homeservices Class B common stock were issued to ~~indemnify~~ IAC, ~~for: (i) all taxes imposed with respect~~respectively, pursuant 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~~

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 as reimbursement for shares of IAC common stock issued in connection with the ~~Company's employees participate in IAC’s U.S. health~~exercise and ~~welfare plans, 401(k) plan and flexible benefits plan and~~vesting of IAC equity awards held by ANGI Homeservices employees. There were no shares issued to IAC pursuant to the ~~Company reimburses IAC~~employee matters agreement for the ~~costs~~three months ended June 30, 2018. For the six months ended June 30, 2018, 0.7 million shares 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 Homeservices ~~will no longer participate in IAC’s employee benefit plans, but will establish its own employee benefit plans that will be substantially similar~~Class B common stock were issued to IAC pursuant to the ~~plans sponsored by IAC prior to the Combination.~~employee matters agreement.

Table of Contents

ANGI HOMESERVICES INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED ~~AND COMBINED~~ FINANCIAL STATEMENTS (Continued)

(Unaudited)

The ~~employee matters agreement~~Company also requires the Company to reimburse IAC for the cost of any IAC equity awards held by ANGI Homeservices’ employees and former employees, with IAC electing to receive payment either in cash or in the Company's Class B shares. With respect to former HomeAdvisor (US) stock appreciation rights that have been converted to Company stock appreciation rights and equity awards in the Company's subsidiaries, 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 issuingsubleases office space to IAC ~~additional Class B shares~~and charged IAC $0.5 million of rent for both the ~~Company's common stock.~~

~~Long-term debt—related party for periods prior~~three and ~~subsequent~~six months ended June 30, 2019. There were no outstanding amounts due from IAC at June 30, 2019 pursuant to ~~the Combination~~two sublease agreements.

Long-term debt—related party

~~Long-term debt—related party consists of:~~

September 30,
2017 December 31, 2016
(In thousands)
Long-term debt—related party
Intercompany note due September 29, 2024 $ 61,498
$ —
Intercompany note due September 29, 2024 15,000
—
Promissory note due October 14, 2023 —
42,000
Promissory note due August 29, 2018 —
5,000
Other 3,006
2,838
Total long-term debt—related party 79,504
49,838
Less: Current portion of long-term debt—related party —
2,838
Total long-term debt—related party, net of current portion $ 79,504
$ 47,000

~~Long-term debt—related party maturities:~~

(In thousands)
2019 $ 3,006
2024 76,498
Total long-term debt—related party, net of current portion $ 79,504

~~NOTE 11—CONSOLIDATED AND COMBINED FINANCIAL STATEMENT DETAILS~~

September 30,
2017
December 31, 2016
(In thousands)
Other current assets:
Prepaid expenses $ 20,324
$ 6,456
Other 3,062
2,283
Other current assets $ 23,386
$ 8,739

~~ANGI HOMESERVICES INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued)~~

~~(Unaudited)~~Immediately prior to the Combination, the Company, through a foreign subsidiary, sold a promissory note in the amount of €2.4 million to a foreign subsidiary of IAC. During the first quarter of 2019, the amount outstanding on the promissory note at December 31, 2018 of €0.9 million, or $1.0 million, was repaid.

September 30,
2017
December 31, 2016
(In thousands)
Other non-current assets:
Deferred income taxes $ 72,195
$ 15,211
Other 723
11,067
Other non-current assets $ 72,918
$ 26,278

~~NOTE 12—SUBSEQUENT EVENT~~

On November 1, 2017, ANGI Homeservices entered into a credit agreement which provides for a five-year term loan A facility of $275 million ("Term Loan"). The Term Loan is guaranteed by ANGI Homeservices' wholly-owned material domestic subsidiaries and is secured by substantially all assets of ANGI Homeservices and the guarantors, subject to certain exceptions. The Term Loan currently bears interest at LIBOR plus 200 basis points, 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. The Term Loan also requires quarterly amortization payments of 1.25% of the original principal amount thereof in the first three years, 2.5% in the fourth year and 3.75% thereafter. A portion of the proceeds of the loan were used to repay the Intercompany Notes outstanding to IAC and its subsidiaries and the remaining proceeds will be used for general corporate purposes. See "~~Note 10—Related Party Transactions with IAC" for further information on the Intercompany Notes outstanding between the Company and IAC.~~

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

~~General~~GENERAL

Management Overview

ANGI Homeservices Inc. ("ANGI Homeservices," the "Company," "ANGI," "we," "our," or "us") ~~is creating the world's largest digital marketplace for home services, connecting millions of homeowners across the globe with~~connects quality home service ~~professionals.~~pros across 500 different categories, from repairing and remodeling to cleaning and landscaping, with consumers. Over 250,000 domestic service professionals find work through ANGI Homeservices, ~~operates 10~~and consumers turn to at least one of our brands ~~in eight countries, including HomeAdvisor®, Angie's List, mHelpDesk, HomeStars (Canada), Travaux.com (France), MyHammer (Germany), MyBuilder (UK), Werkspot (Netherlands) and Instapro (Italy).~~

~~The Company’s marketplace provides the tools and resources to allow homeowners~~ to find local pre-screened service professionals and instantly book appointments online or through its award-winning HomeAdvisor mobile application. The Company’s marketplace also provides consumers with other home services-related resources, including access to average project costs using its HomeAdvisor True Cost Guide. Effective September 29, 2017, the Company also owns Angie's List, a ~~nationwide marketplace~~pro for local services where consumers can research, hire, rate and review providers of these services in markets located across the continental United States. In addition to its market‑leading U.S. operations, ANGI Homeservices owns the leading home services online marketplaces in Canada (HomeStars), which was acquired on February 8, 2017, Germany (MyHammer), which was acquired on November 3, 2016, France (Travaux.com) and the Netherlands (Werkspot), as well as operations in Italy (Instapro) and the United Kingdom (MyBuilder), which was acquired on March 24, 2017. ANGI Homeservices also owns Felix, a pay-per-call advertising service, and mHelpDesk, a provider of cloud-based field service software for small to mid-size businesses.

~~As of September 30, 2017, the Company’s network of service professionals in the United States consisted of approximately 172,000 Marketplace Paying Service Professionals providing services in~~ more than ~~500 categories ranging from simple home repairs to larger home remodeling~~20 million projects in more than 400 discrete geographies. The Company generated approximately 13.9 million Marketplace Service Requests from homeowners in the United States during the nine months ended September 30, 2017. As of September 30, 2017, the Company also had 47,000 Angie'seach year. We’ve established category-transforming products with brands such as HomeAdvisor, Angie’s List, ~~service professionals under contract for advertising.~~Handy and Fixd Repair.

The Company has two operating segments: (i) North America (United States and Canada), which includes ~~HomeAdvisor's operations in the United States,~~HomeAdvisor, Angie's List, Handy, mHelpDesk, HomeStars, Fixd Repair, LLC and ~~HomeStars,~~Fixd Services LLC (collectively, "Fixd Repair") and Felix, for periods prior to its sale on December 31, 2018, and (ii) Europe, which includes ~~Travaux.com,~~Travaux, MyHammer, MyBuilder, Werkspot and Instapro.

The Company markets its services to homeowners through search engine marketing, television advertising and affiliate agreements with third parties. Pursuant to these affiliate agreements, third parties agree to advertise and promote on their websites HomeAdvisor’s services and those of service professionals that participate in the HomeAdvisor network, and in exchange HomeAdvisor agrees to pay these third partiesFor a fixed fee when visitors from their websites click through to the HomeAdvisor website and submit a valid service request through the HomeAdvisor platform, or when visitors submit a valid service request on the affiliate website and the affiliate transmits the service request to HomeAdvisor, both on a cost‑per‑acquisition basis. The Company also markets its services to consumers through emails, digital display advertisements, partnerships with other contextually related websites and, to a lesser extent, through direct mail and radio advertising. The Company markets HomeAdvisor's subscription packages 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 online and offline advertising to homeowners to promote our services and drive traffic to our platform and to service professionals to expand our network.

~~Factors Affecting the Comparability of Our Results~~

On September 29, 2017, IAC and Angie's List Inc. combined IAC's HomeAdvisor business and Angie's List under a new publicly traded company called ANGI Homeservices (the "Combination"). At September 30, 2017, IAC owned 87.1% and 98.5%more detailed description of the ~~economic and voting interest, respectively, of ANGI Homeservices. See "Note 3—Business Combinations" to~~Company's operating businesses, see the ~~consolidated and combined financial statements included in "Item 1. Consolidated and Combined Financial Statements~~"Company's Annual Report on Form 10-K for ~~additional information related to~~ the ~~Combination. During the three and nine months~~year ended September 30, 2017, the Company incurred $26.0 million and $29.7 million, respectively, in costs related to this transaction (including severance, retention, transaction and integration related costs). The Company expects the aggregate amount of transaction-related expenses during 2017 and 2018 (including those previously recognized) to be less than $75 million. The Company also incurred $96.9 millionDecember 31, 2018.

in stock-based compensation expense during the third quarter of 2017 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.

~~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.~~

~~Key Metrics~~Operating Metrics:

In connection with the management of our businesses, we identify, measure and assess a variety of ~~key~~operating metrics. The principal metrics we use in managing our ~~business~~businesses are set forth below:


•	Marketplace Revenue includes revenue from the HomeAdvisor and Handy domestic marketplace, including consumer connection revenue for consumer matches, membership subscription revenue from HomeAdvisor service professionals and revenue from completed jobs sourced through the Handy platform. It excludes revenue from Angie's List, mHelpDesk, HomeStars, Fixd Repair and Felix.


•	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, HomeStars, Fixd Repair (acquired on January 25, 2019) and, for periods prior to its sale on December 31, 2018, Felix.


•	Marketplace Service Requests are fully completed and submitted domestic customer service requests to HomeAdvisor and completed jobs sourced through the Handy platform.

•

Marketplace Paying Service Professionals ("Marketplace Paying SPs") are the number of HomeAdvisor and Handy domestic service professionals that had an active subscription and/or paid for consumer matches or completed a job sourced through the Handy platform in the last month of the period. An active HomeAdvisor subscription is a subscription for which HomeAdvisor was recognizing revenue on the last day of the relevant period.


•	Advertising Service Professionals are the total number of Angie’s List service professionals under contract for advertising at the end of the period.

~~Marketplace (formerly Domestic) Revenue~~ ~~reflects the domestic HomeAdvisor branded marketplace service. It excludes the other businesses within the North America segment.~~

~~Marketplace (formerly Domestic) Service Requests~~ ~~are fully completed and submitted domestic customer service requests.~~

~~Marketplace (formerly Domestic) Paying Service Professionals (or “Marketplace Paying SPs”)~~ ~~are the number of domestic service professionals that had an active membership and/or paid for consumer matches in the last month of the period.~~

~~Key~~ Components of Results of Operations

Revenue

Marketplace Revenue is primarily derived from (i) consumer connection revenue, which comprises fees paid by HomeAdvisor service professionals for consumer matches (regardless of whether the service professional ultimately provides the requested service) and booking fees from completed jobs sourced through the Handy platform, and (ii) membership subscription fees paid by HomeAdvisor service professionals. Consumer connection revenue varies based upon ~~certain~~several factors, including the service requested, ~~type~~product experience offered and geographic location of ~~match (such as Instant Booking or Instant Connect)~~service. Advertising & Other Revenue is primarily derived from Angie's List (i) sales of time-based website, mobile and ~~where the service is provided.~~

The Company’s consumer connection revenue is generated and recognized when an in‑network service professional is delivered a consumer match. Membership subscription revenue is generated through subscription salescall center advertising 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. Deferred revenue is $60.1 million and $18.8 million at September 30, 2017 and December 31, 2016, respectively. The balance at September 30, 2017 includes the fair value of Angie's List deferred revenue at the date of Combination of $33.3 million related to (i) time-based sales of advertising to service providers and (ii) membership subscription fees from consumers. Service providers generally pay for advertisements, which carry an early termination penalty, in advance on a monthly or annual basis at the option of the service provider with the average advertising contract term being approximately one year. Angie's List 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 ListMagazine~~ publication is recognized in the period in which the publication, and therefore 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.

~~Cost of revenue~~

~~Cost of revenue consists primarily of traffic acquisition costs, credit card processing fees and hosting fees. Traffic acquisition costs consist of amounts based on revenue share arrangements.~~

~~Selling~~Operating Costs and ~~marketing expense~~Expenses:

Selling and marketing expense consists primarily of advertising expenditures and compensation (including stock-based compensation expense) and other employee‑related costs for personnel engaged in selling and marketing, and sales support. Advertising and promotional expense includes online marketing, including fees paid to search engines, and offline marketing, which is primarily television advertising, and partner-related payments to those who direct traffic to our brands.

~~General and administrative expense~~

General and administrative expense consists primarily of compensation (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, bad debt expense, facilities costs and fees for professional services.

~~Product development expense~~

Product development expense consists primarily of compensation (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.


•	Cost of revenue - consists primarily of credit card processing fees, compensation expense and other employee-related costs at Fixd Repair for service work performed, hosting fees and traffic acquisition costs. Traffic acquisition costs include amounts based on revenue share arrangements, which relate to Felix for periods prior to its sale.

•

Selling and marketing expense - consists primarily of advertising expenditures, which include 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 brands, compensation expense (including stock-based compensation expense) and other employee-related costs for our sales force and marketing personnel, and facilities costs.

•

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 (including transaction-related costs related to acquisitions), bad debt expense, 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 - 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, 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 “~~ANGI Homeservices Inc.’s~~ Principles of Financial Reporting” for the definition of Adjusted ~~EBITDA.~~

~~Results~~EBITDA and a reconciliation of ~~operations~~net earnings attributable to ANGI Homeservices Inc. shareholders to operating income to consolidated Adjusted EBITDA for the three and ~~nine~~six months ended June 30, 2019 and 2018.

The Combination

On September 29, 2017, IAC/InterActiveCorp's ("IAC") HomeAdvisor business and Angie's List, Inc. ("Angie's List") combined under a new publicly traded company called ANGI Homeservices Inc. (the "Combination"). At June 30, ~~2017 compared to~~2019, IAC owned 83.1% and 98.0% of the economic and voting interest, respectively, of ANGI Homeservices.

During the three and ~~nine~~six months ended ~~September~~June 30, ~~2016~~2019, the Company incurred $8.2 million and $17.8 million, respectively, in stock-based compensation expense related to the modification of previously issued HomeAdvisor equity awards and previously issued Angie's List equity awards, both of which were converted into ANGI Homeservices' equity awards in the Combination, and the acceleration of certain converted equity awards resulting from the termination of Angie's List employees in connection with the Combination. The comparable amounts incurred by the Company during the three and six months ended June 30, 2018 were $16.7 million and $35.8 million, respectively. Stock-based compensation expense arising from the Combination is expected to be approximately $15 million for the remainder of 2019 and $20 million in 2020.

~~Revenue~~2019 Developments

On January 25, 2019, the Company completed the acquisition of Fixd Repair, a home warranty and service company.

Three Months Ended September 30, Nine Months Ended September 30,
2017 $ Change % Change 2016 2017 $ Change % Change 2016
(Amounts in thousands)
Revenue
North America $ 167,104
$ 41,878
33 % $ 125,226
$ 470,667
$ 122,380
35 % $ 348,287
Europe 14,613
6,279
75 % 8,334
42,506
15,571
58 % 26,935
Total Revenue $ 181,717
$ 48,157
36 % $ 133,560
$ 513,173
$ 137,951
37 % $ 375,222

Percentage of Total Revenue:
Revenue
North America 92 % 94 % 92 % 93 %
Europe 8 % 6 % 8 % 7 %
Total Revenue 100 % 100 % 100 % 100 %

Key metrics:

Marketplace Revenue $ 156,595
$ 40,120
34 % $ 116,475
$ 442,024
$ 118,460
37 % $ 323,564
Marketplace Service Requests 5,023
1,339
36 % 3,684
13,902
3,791
37 % 10,111
Marketplace Paying SPs 172
35
25 % 137
172
35
25 % 137
Second Quarter 2019 and Year to Date June 2019 Consolidated Results

For the three months ended ~~September~~June 30, ~~2017~~2019:

Revenue increased $49.1 million, or 17%, which was primarily driven by Marketplace Revenue growth of $54.8 million, or 27%, and growth in Europe of $2.2 million, or 13%, partially offset by a decrease of $7.9 million, or 11%, in Advertising & Other Revenue driven principally by the sale of Felix on December 31, 2018.

Operating income decreased $11.9 million, or 51%, due primarily to a decrease in Adjusted EBITDA of $15.5 million described below, and an increase of $2.9 million in depreciation, partially offset by decreases of $4.5 million in stock-based compensation expense and $2.1 million in amortization of intangibles. The decrease in stock-based

compensation expense was due primarily to a decrease of $8.5 million in modification and acceleration charges related to the Combination ($8.2 million in 2019 compared to $16.7 million in 2018), partially offset by $2.7 million of expense related to new awards issued in connection with the acquisitions of Handy (acquired on October 19, 2018) and Fixd Repair and the issuance of new equity awards since 2018. The decrease in amortization of intangibles was due primarily to lower expense from the Combination, partially offset by an increase in amortization expense related to the acquisition of Handy.

Adjusted EBITDA decreased 23% to $51.4 million, despite higher revenue, due primarily to higher selling and marketing expense as a percentage of revenue, an increase of $6.7 million in bad debt expense due, in part, to higher Marketplace Revenue, and investments in Handy and Fixd Repair, partially offset by the inclusion in 2018 of $2.6 million in costs related to the Combination (including deferred revenue write-offs, severance, retention and integration related costs).

For the six months ended June 30, 2019:

Revenue increased $97.2 million, or 18%, which was primarily driven by Marketplace Revenue growth of $109.1 million, or 29%, and growth in Europe of $4.3 million, or 12%, partially offset by a decrease of $16.2 million, or 11%, in Advertising & Other Revenue driven principally by the sale of Felix.

Operating income decreased $4.7 million, or 38%, due primarily to a decrease in Adjusted EBITDA of $15.0 million described below, and an increase of $3.7 million in depreciation, partially offset by decreases of $10.2 million in stock-based compensation expense and $3.8 million in amortization of intangibles. The decrease in stock-based compensation expense was due primarily to a decrease of $18.1 million in modification and acceleration charges related to the Combination ($17.8 million in 2019 compared to $35.8 million in 2018), partially offset by $5.7 million of expense related to new awards issued in connection with the acquisitions of Handy and Fixd Repair and the issuance of new equity awards since 2018. The decrease in amortization of intangibles was due primarily to the factors described above in the three-month discussion.

Adjusted EBITDA decreased 14% to $88.6 million, despite higher revenue, due primarily to higher selling and marketing expense as a percentage of revenue, an increase of $11.6 million in bad debt expense due, in part, to higher Marketplace Revenue, and investments in Handy and Fixd Repair, partially offset by the inclusion in 2018 of $7.9 million in costs related to the Combination (including deferred revenue write-offs, severance, retention and integration related costs).

Results of Operations for the three and six months ended June 30, 2019 compared to the three and six months ended June 30, 2018

Revenue



	Three Months Ended June 30,										Six Months Ended June 30,
	2019			$ Change			% Change	2018			2019			$ Change			% Change	2018
	(Dollars in thousands)
Revenue:
Marketplace:
Consumer connection revenue	$	241,236		$	54,064		29%	$	187,172		$	442,818		$	106,586		32%	$	336,232
Membership subscription revenue	16,485			(80		)	NM	16,565			33,002			810			3%	32,192
Other revenue	1,807			809			81%	998			3,633			1,714			89%	1,919
Total Marketplace Revenue	259,528			54,793			27%	204,735			479,453			109,110			29%	370,343
Advertising & Other Revenue	64,872			(7,898		)	(11)%	72,770			126,941			(16,247		)	(11)%	143,188
North America	324,400			46,895			17%	277,505			606,394			92,863			18%	513,531
Europe	19,496			2,179			13%	17,317			40,945			4,343			12%	36,602
Total Revenue	$	343,896		$	49,074		17%	$	294,822		$	647,339		$	97,206		18%	$	550,133

Percentage of Total Revenue:
North America	94		%					94		%	94		%					93		%
Europe	6		%					6		%	6		%					7		%
Total Revenue	100		%					100		%	100		%					100		%

	Three Months Ended June 30,										Six Months Ended June 30,
	2019			Change			% Change	2018			2019			$ Change			% Change	2018
	(Amounts in thousands)
Operating metrics:
Marketplace Service Requests	7,925			1,126			17%	6,799			13,722			1,893			16%	11,829
Marketplace Paying SPs	223			22			11%	202
Advertising Service Professionals	36			(2		)	(6)%	39

For the three months ended June 30, 2019 compared to the three months ended ~~September~~June 30, ~~2016~~

~~Revenue increased $48.2 million, or 36%, in 2017 versus 2016.~~

2018

North America revenue increased ~~$41.9~~$46.9 million, or ~~33%~~17%, driven by an increase in Marketplace Revenue of $54.8 million, or 27%, partially offset by a decrease of $7.9 million, or 11%, in ~~2017 versus 2016,~~Advertising & Other Revenue. The increase in Marketplace Revenue was due ~~primarily~~ to an increase ~~of $36.6 million, or 35%,~~ in consumer connection revenue of $54.1 million, or 29%, which was driven by a ~~25% increase in Marketplace Paying SPs to 172,000 and a 36%~~17% increase in Marketplace Service Requests to ~~5.0 million. North America revenue~~7.9 million, including the contribution from Handy. The decrease in ~~2017 includes $0.7 million from Angie's List.~~Advertising & Other Revenue was driven principally by the sale of Felix on December 31, 2018.

Europe revenue grew ~~$6.3~~$2.2 million, or ~~75%~~13%, ~~in 2017 versus 2016, driven~~due to growth across several regions, partially offset by the ~~acquisitions~~unfavorable impact from the strengthening of ~~controlling interests in MyHammer on November 3, 2016~~the U.S. dollar relative to the Euro and ~~MyBuilder on March 24, 2017, as well as organic growth across other regions.~~British Pound.

For the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2016~~

~~Revenue increased $138.0 million, or 37%, in 2017 versus 2016.~~2018

North America revenue increased ~~$122.4~~$92.9 million, or ~~35%~~18%, driven by an increase in Marketplace Revenue of $109.1 million or 29%, partially offset by a decrease of $16.2 million, or 11%, in ~~2017 versus 2016,~~Advertising & Other Revenue. The increase in Marketplace Revenue was due ~~primarily~~ to an increase ~~of $108.3 million, or 37%,~~ in consumer connection revenue of $106.6 million, or 32%, which was driven by a ~~25% increase in Marketplace Paying SPs to 172,000 and a 37%~~16% increase in Marketplace Service Requests to ~~13.9 million. North America revenue~~13.7 million, including the contribution from Handy. The decrease in ~~2017 includes $0.7 million from Angie's List.~~Advertising & Other Revenue was driven principally by the sale of Felix.

Europe revenue grew ~~$15.6~~$4.3 million, or ~~58%~~12%, ~~in 2017 versus 2016, driven~~due to growth across several regions, partially offset by the ~~acquisitions~~unfavorable impact from the strengthening of ~~controlling interests in MyHammer on November 3, 2016~~the U.S. dollar relative to the Euro and ~~MyBuilder on March 24, 2017, as well as organic growth across other regions.~~British Pound.

Cost of revenue (exclusive of ~~depreciation)~~depreciation shown separately below)

For the three months ended ~~September~~June 30, ~~2017~~2019 compared to the three months ended ~~September~~June 30, ~~2016~~2018

Three Months Ended September 30,
2017 $ Change % Change 2016
(Dollars in thousands)
Cost of revenue $7,999 $1,173 17% $6,826
Percentage of revenue 4% 5%



	Three Months Ended June 30,
	2019	$ Change	% Change	2018
	(Dollars in thousands)
Cost of revenue (exclusive of depreciation shown separately below)	$10,722	$(3,981)	(27)%	$14,703
As a percentage of revenue	3%			5%

~~Cost of revenue increased $1.2 million, or 17%, in 2017 versus 2016.~~

North America cost of revenue ~~increased $0.4~~decreased $4.0 million, or 5%28%, due primarily to a decrease of $6.6 million in ~~2017 versus 2016, driven~~traffic acquisition costs due to the sale of Felix, partially offset by ~~increases~~$1.9 million of ~~$0.7~~expense from the inclusion of Handy and Fixd Repair and an increase of $1.0 million in credit card processing fees due to higher ~~revenue and $0.1 million in hosting fees, partially offset by a reduction in traffic acquisition costs of $0.6 million.~~

~~Europe cost of revenue increased $0.8 million, or 1395%, in 2017 versus 2016, driven by an increase of $0.6 million in hosting fees.~~Marketplace Revenue.

For the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2018

Nine Months Ended September 30,
2017 $ Change % Change 2016
(Dollars in thousands)
Cost of revenue $22,391 $2,826 14% $19,565
Percentage of revenue 4% 5%

~~Cost of revenue increased $2.8 million, or 14%, in 2017 versus 2016.~~



	Six Months Ended June 30,
	2019	$ Change	% Change	2018
	(Dollars in thousands)
Cost of revenue (exclusive of depreciation shown separately below)	$20,733	$(7,565)	(27)%	$28,298
As a percentage of revenue	3%			5%

North America cost of revenue ~~increased $2.0~~decreased $7.6 million, or ~~10%~~28%, due primarily to a decrease of $12.2 million in ~~2017 versus 2016, driven~~traffic acquisition costs due to the sale of Felix, partially offset by ~~increases~~$4.1 million of ~~$2.1~~expense from the inclusion of Handy and Fixd Repair and an increase of $1.4 million in credit card processing fees due to higher ~~revenue and $0.6 million in hosting fees, partially offset by a reduction in traffic acquisition costs of $0.7 million.~~

~~Europe cost of revenue increased $0.8 million, or 388%, in 2017 versus 2016, driven by an increase of $0.6 million in hosting fees.~~Marketplace Revenue.

Selling and marketing expense

For the three months ended ~~September~~June 30, ~~2017~~2019 compared to the three months ended ~~September~~June 30, ~~2016~~2018

Three Months Ended September 30,
2017 $ Change % Change 2016
(Dollars in thousands)
Selling and marketing expense $130,866 $50,592 63% $80,274
Percentage of revenue 72% 60%

~~Selling and marketing expense increased $50.6 million, or 63%, in 2017 versus 2016.~~



	Three Months Ended June 30,
	2019	$ Change	% Change	2018
	(Dollars in thousands)
Selling and marketing expense	$196,167	$54,324	38%	$141,843
As a percentage of revenue	57%			48%

North America selling and marketing expense increased ~~$46.0~~$54.3 million, or ~~61%~~41%, ~~in 2017 versus 2016,~~ driven by an increase in advertising expense of ~~$28.6~~$38.3 million, ~~in compensation~~ expense ~~an increase in online and offline marketing~~ of ~~$18.8~~$8.8 million ~~as well as $0.9 million of expense~~ from the inclusion of ~~HomeStars.~~Handy and Fixd Repair, and increases in compensation expense of $6.2 million and facilities costs of $1.2 million. The increase in advertising expense was due primarily to increased investments in online marketing and television spend. Efficiency of online marketing spend was negatively impacted by traffic sourced through Google. Service requests from free search engine traffic were down from the prior year, while service requests from paid search engine marketing efforts were up, and were considerably more expensive than the prior year. We expect this trend to continue for the near-term. Compensation expense increased due primarily to ~~an increase of $19.5 million~~growth in ~~stock-based compensation expense, an increase in~~the sales force headcount and the inclusion of $4.1 million in severance and retention costs related to the Combination. The increase in stock-based compensation expense was due 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.

Europe selling and marketing expense increased $4.6 million, or 99%, in 2017 versus 2016, driven by organic growth of $1.3 million in online and offline marketing and $1.1 million in compensation expense, as well as $2.1 million of expense from the inclusion of MyHammer and MyBuilder.force.

For the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2018


	Nine Months Ended September 30,				Six Months Ended June 30,
	2017	$ Change	% Change	2016	2019	$ Change	% Change	2018
	(Dollars in thousands)				(Dollars in thousands)
Selling and marketing expense	$337,654	$103,310	44%	$234,344	$371,469	$91,694	33%	$279,775
Percentage of revenue	66%			62%
As a percentage of revenue					57%			51%

~~Selling and marketing expense increased $103.3 million, or 44%, in 2017 versus 2016.~~

North America selling and marketing expense increased ~~$91.3~~$90.2 million, or ~~42%~~35%, ~~in 2017 versus 2016,~~ driven by an increase in ~~online and offline marketing~~advertising expense of ~~$53.6~~$62.6 million, ~~an increase~~expense of ~~$37.9~~$14.1 million ~~in compensation expense, as well as $2.2 million of expense~~ from the inclusion of ~~HomeStars.~~Handy and Fixd Repair, and increases in compensation expense of $12.0 million and facilities costs of $1.4 million. The increase in advertising expense was due primarily to increased investments in online marketing and television spend. Compensation expense increased due primarily to an increase of $19.8 million in stock-based compensation expense, an increase in sales force headcount and the inclusion of $4.1 million in severance and retention costs related to the Combination. The increase in stock-based compensation expense was due to the modification and acceleration of equity awards as described abovegrowth in the ~~three-month discussion.~~sales force.

Europe selling and marketing expense increased ~~$12.0~~$1.5 million, or ~~75%~~7%, ~~in 2017 versus 2016,~~ driven by ~~organic growth~~an increase in advertising expense of ~~$4.6~~$2.5 million, ~~in online and offline marketing and $2.4 million~~partially offset by a decrease in compensation expense ~~as well as $4.9 million~~ of ~~expense from the inclusion of MyHammer and MyBuilder.~~$0.8 million.

General and administrative expense

For the three months ended ~~September~~June 30, ~~2017~~2019 compared to the three months ended ~~September~~June 30, ~~2016~~2018

Three Months Ended September 30,
2017 $ Change % Change 2016
(Dollars in thousands)
General and administrative expense $129,088 $99,579 337% $29,509
Percentage of revenue 71% 22%

~~General and administrative expense increased $99.6 million, or 337%, in 2017 versus 2016.~~



	Three Months Ended June 30,
	2019	$ Change	% Change	2018
	(Dollars in thousands)
General and administrative expense	$88,013	$8,325	10%	$79,688
As a percentage of revenue	26%			27%

North America general and administrative expense increased ~~$99.0~~$7.2 million, or ~~411%~~10%, ~~in 2017 versus 2016,~~ due primarily to ~~higher~~expense of $7.3 million from the inclusion of Handy and Fixd Repair, which includes $2.5 million of stock-based compensation expense ~~of $78.9 million and $13.9 million in costs~~ related to ~~the Angie's List transaction including transaction related costs of $9.5 million and integration related costs of $3.9 million. The increase~~new awards issued in ~~compensation expense is due principally to~~connection with these acquisitions, an increase of $69.8 million in stock-based compensation expense and the inclusion of $7.7 million in severance and retention costs related to the Combination, and an increase in headcount from business growth. The increase in stock-based compensation expense was due principally to the modification of 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. North America general and administrative expense also includes increases of $2.4$6.2 million in bad debt expense due, in part, to higher ~~revenue~~Marketplace Revenue, and ~~$1.0~~increases of $1.1 million in ~~outsourced customer service~~facilities costs and $0.8 million in software license and maintenance costs, partially offset by a decrease in compensation expense ~~as well as $1.0~~of $6.1 million ~~of expense from~~and the inclusion in 2018 of ~~HomeStars.~~$0.8 million in integration-related costs in connection with the Combination. The decrease in compensation expense was due primarily to a decrease of $7.0 million in stock-based compensation expense, partially offset by an increase in headcount resulting from existing business growth. The decrease in stock-based compensation expense reflects a decrease of $8.1 million in expense due to the modification and acceleration charges related to the Combination ($6.7 million in 2019 compared to $14.8 million in 2018), partially offset by the issuance of new equity awards since 2018.

Europe general and administrative expense increased ~~$0.6~~$1.1 million, or ~~10%~~18%, ~~in 2017 versus 2016,~~ due primarily to ~~$1.9~~increases in bad debt expense of $0.5 million and facilities costs of ~~expense from the inclusion of MyHammer and MyBuilder,~~$0.2 million, partially offset by ~~a reduction in transaction related costs of $1.2 million.~~lower stock-based compensation expense.

For the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2018

Nine Months Ended September 30,
2017 $ Change % Change 2016
(Dollars in thousands)
General and administrative expense $217,962 $137,728 172% $80,234
Percentage of revenue 42% 21%

~~General and administrative expense increased $137.7 million, or 172%, in 2017 versus 2016.~~



	Six Months Ended June 30,
	2019	$ Change	% Change	2018
	(Dollars in thousands)
General and administrative expense	$172,442	$16,484	11%	$155,958
As a percentage of revenue	27%			28%

North America general and administrative expense increased ~~$131.0~~$15.8 million, or ~~195%~~11%, ~~in 2017 versus 2016,~~ due primarily to ~~higher~~expense of $14.8 million from the inclusion of Handy and Fixd Repair, which includes $5.0 million of stock-based compensation expense ~~of $94.7 million and $17.6 million in costs~~ related to ~~the Angie's List transaction including transaction related costs of $13.1 million and integration related costs of $4.0 million. The increase~~new awards issued in ~~compensation expense is due principally to~~connection with these acquisitions, an increase of $81.2 million in stock-based compensation expense, an increase in headcount from business growth and the inclusion of $7.7 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 and acceleration of equity awards as described above in the three-month discussion as well as a modification charge related to a HomeAdvisor equity award recorded in the second quarter of 2017. North America general and administrative expense also includes increases of $7.7$10.9 million in bad debt expense due, in part, to higher ~~revenue,~~Marketplace Revenue, and increases of $1.4 million in software license and maintenance costs and $1.3 million in facilities costs, partially offset by a decrease in compensation expense of $12.3 million and the inclusion in 2018 of $3.3 million in ~~outsourced customer service~~integration-related costs in connection with the Combination. The decrease in compensation expense ~~and $1.6~~was due primarily to a decrease of $15.1 million in ~~software maintenance costs, as well as $2.2~~stock-based compensation expense, partially offset by an increase in headcount resulting from existing business growth. The decrease in stock-based compensation expense reflects a decrease of $16.9 million in expense due to the modification and acceleration charges related to the Combination ($14.7 million in 2019 compared to $31.5 million in 2018), partially offset by the issuance of new equity awards since 2018.

Europe general and administrative expense increased $0.7 million, or 5%, due primarily to increases in bad debt expense of $0.7 million and compensation expense of $0.3 million due, in part, to increased headcount, partially offset by lower stock-based compensation expense.

Product development expense

For the three months ended June 30, 2019 compared to the three months ended June 30, 2018



	Three Months Ended June 30,
	2019	$ Change	% Change	2018
	(Dollars in thousands)
Product development expense	$15,082	$1,420	10%	$13,662
As a percentage of revenue	4%			5%

North America product development expense increased $1.4 million, or 13%, due primarily to $1.5 million of expense from the inclusion of ~~HomeStars.~~Handy.

~~Europe general and administrative~~For the six months ended June 30, 2019 compared to the six months ended June 30, 2018



	Six Months Ended June 30,
	2019	$ Change	% Change	2018
	(Dollars in thousands)
Product development expense	$30,886	$1,444	5%	$29,442
As a percentage of revenue	5%			5%

North America product development expense increased ~~$6.8~~$0.9 million, or ~~51%~~4%, ~~in 2017 versus 2016,~~ due primarily to ~~$5.6~~$3.1 million of expense from the inclusion of ~~MyHammer~~Handy, partially offset by decreases in compensation expense of $1.2 million, software license and ~~MyBuilder~~maintenance costs of $0.8 million and ~~an increase~~facilities costs of ~~$0.8~~$0.2 million.

Europe product development expense increased $0.5 million, or 11%, due primarily to increases of $0.3 million in compensation expense due, in part, to increased headcount, ~~partially offset by a reduction in transaction related~~and facilities costs of ~~$0.5~~$0.2 million.

~~Product development expense~~

~~For the three months ended September 30, 2017 compared to the three months ended September 30, 2016~~

Three Months Ended September 30,
2017 $ Change % Change 2016
(Dollars in thousands)
Product development expense $20,010 $14,654 274% $5,356
Percentage of revenue 11% 4%

~~Product development expense increased $14.7 million, or 274%, in 2017 versus 2016.~~

North America product development expense increased $14.2 million, or 305%, in 2017 versus 2016, due primarily to an increase of $12.2 million in stock-based compensation expense due to the modification of HomeAdvisor vested equity awards in connection with the Combination. North America product development expense also includes an increase in compensation expense due, in part, to increased headcount, as well as $0.4 million of expense from the inclusion of HomeStars.

~~Europe product development expense increased $0.5 million, or 66%, in 2017 versus 2016, due to $0.5 million of compensation expense from the inclusion of MyHammer and MyBuilder.~~

~~For the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016~~

Nine Months Ended September 30,
2017 $ Change % Change 2016
(Dollars in thousands)
Product development expense $32,529 $17,387 115% $15,142
Percentage of revenue 6% 4%

~~Product development expense increased $17.4 million, or 115%, in 2017 versus 2016.~~

North America product development expense increased $16.3 million, or 126%, in 2017 versus 2016, due primarily to an increase of $12.2 million in stock-based compensation expense due to the modification and acceleration of equity awards as described above in the three-month discussion. North America product development expense also includes an increase in compensation expense due, in part, to increased headcount, as well as $0.9 million of expense from the inclusion of HomeStars.

~~Europe product development expense increased $1.0 million, or 48%, in 2017 versus 2016, driven by $1.3 million of compensation expense from the inclusion of MyHammer and MyBuilder.~~

Depreciation

For the three months ended ~~September~~June 30, ~~2017~~2019 compared to the three months ended ~~September~~June 30, ~~2016~~2018

Three Months Ended September 30,
2017 $ Change % Change 2016
(Dollars in thousands)
Depreciation $3,491 $1,465 72% $2,026
Percentage of revenue 2% 2%

~~Depreciation increased by $1.5 million, or 72%, in 2017 versus 2016.~~



	Three Months Ended June 30,
	2019	$ Change	% Change	2018
	(Dollars in thousands)
Depreciation	$8,796	$2,910	49%	$5,886
As a percentage of revenue	3%			2%

North America depreciation increased ~~$1.1~~$2.9 million, or ~~59%~~54%, ~~in 2017 versus 2016,~~ due primarily to ~~the incremental depreciation related to~~ continued ~~corporate growth.~~growth, including internally developed capitalized software and leasehold improvements.

For the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2018

Nine Months Ended September 30,
2017 $ Change % Change 2016
(Dollars in thousands)
Depreciation $9,705 $3,881 67% $5,824
Percentage of revenue 2% 2%

~~Depreciation increased by $3.9 million, or 67%, in 2017 versus 2016.~~



	Six Months Ended June 30,
	2019	$ Change	% Change	2018
	(Dollars in thousands)
Depreciation	$15,795	$3,725	31%	$12,070
As a percentage of revenue	2%			2%

North America depreciation increased ~~$3.4~~$3.5 million, or ~~62%~~32%, ~~in 2017 versus 2016,~~ due primarily to the ~~incremental~~factors described above in the three-month discussion. Europe depreciation ~~related to continued corporate growth.~~increased $0.2 million, or 19%.

Operating income (loss) ~~income~~

Three Months Ended September 30, Nine Months Ended September 30,
2017
$
Change

%
Change
2016 2017
$
Change

%
Change
2016
(Dollars in thousands)
Operating (loss) income $(112,505) $(121,348) NM $8,843 $(113,953) $(131,795) NM $17,842
Percentage of revenue (62)% 7% (22)% 5%



	Three Months Ended June 30,										Six Months Ended June 30,
	2019			$ Change			% Change	2018			2019			$ Change			% Change	2018
	(Dollars in thousands)
North America	$	12,473		$	(13,637	)	(52)%	$	26,110		$	13,215		$	(7,530	)	(36)%	$	20,745
Europe	(1,070		)	1,778			62%	(2,848		)	(5,453		)	2,786			34%	(8,239		)
Total	$	11,403		$	(11,859	)	(51)%	$	23,262		$	7,762		$	(4,744	)	(38)%	$	12,506

As a percentage of revenue	3%							8%			1%							2%

For the three months ended ~~September~~June 30, ~~2017~~2019 compared to the three months ended ~~September~~June 30, ~~2016~~

~~Operating income decreased $121.3 million to an operating loss of $112.5 million in 2017 versus operating income of $8.8 million in 2016.~~2018

North America operating income decreased ~~$119.3~~$13.6 million, ~~to an operating loss of $107.7 million in 2017 versus operating income of $11.6 million in 2016, primarily~~ due to the decrease in Adjusted EBITDA of $16.5 million described below, and an increase of ~~$101.6~~$2.9 million in depreciation, partially offset by decreases of $4.4 million in stock-based compensation expense ~~a decrease of $16.1 million in Adjusted EBITDA described below, an increase of $1.1 million in depreciation~~ and ~~an increase of $0.5~~$1.3 million in amortization of intangibles. The ~~increase~~decrease in stock-based compensation expense was due primarily to a decrease of $8.5 million in modification and acceleration charges ~~of $96.9 million~~ related to the ~~Angie's List transaction described above.~~Combination ($8.2 million in 2019 compared to $16.7 million in 2018), partially offset by $2.7 million of expense related to new awards issued in connection with the acquisitions of Handy and Fixd Repair and the issuance of new equity awards since 2018. The decrease in amortization of intangibles was due primarily to lower expense from the Combination, partially offset by an increase in amortization expense related to the acquisition of Handy.

Europe operating loss ~~increased $2.1~~decreased $1.8 million, or ~~76%~~62%, due primarily to the decrease in ~~2017 versus 2016, primarily due to an increase~~Adjusted EBITDA loss of ~~$1.6~~$0.9 million described below, and decreases of $0.8 million in amortization of intangibles and $0.1 million in stock-based compensation expense.

For the six months ended June 30, 2019 compared to the six months ended June 30, 2018

North America operating income decreased $7.5 million, due to the decrease in Adjusted EBITDA of $16.4 million described below, and an increase of ~~$0.3~~$3.5 million in depreciation, partially offset by decreases of $9.9 million in stock-based compensation expense and ~~an increase~~$2.4 million in amortization of intangibles. The decrease in stock-based compensation expense was due primarily to a decrease of $18.1 million in modification and acceleration charges related to the Combination ($17.8 million in 2019 compared to $35.8 million in 2018), partially offset by $5.7 million of expense related to new awards issued in connection with the acquisitions of Handy and Fixd Repair and the issuance of new equity awards since 2018. The decrease in amortization of intangibles was due primarily to the factors described above in the three-month discussion.

Europe operating loss decreased $2.8 million, or 34%, due primarily to the decrease in Adjusted EBITDA loss of $1.4 million described below, and decreases of $1.4 million in amortization of intangibles and $0.2 million ~~described below.~~in stock-based compensation expense, partially offset by an increase of $0.2 million in depreciation.

At ~~September~~June 30, ~~2017,~~2019, there ~~was $215.4~~is $133.1 million of unrecognized compensation cost, net of estimated forfeitures, related to all equity-based awards, which is expected to be recognized over a weighted average period of approximately 2.5 years.

Adjusted EBITDA



	Three Months Ended June 30,										Six Months Ended June 30,
	2019			$ Change			% Change	2018			2019			$ Change			% Change	2018
	(Dollars in thousands)
North America	$	51,606		$	(16,482	)	(24)%	$	68,088		$	91,295		$	(16,398	)	(15)%	$	107,693
Europe	(174		)	935			84%	(1,109		)	(2,684		)	1,390			34%	(4,074		)
Total	$	51,432		$	(15,547	)	(23)%	$	66,979		$	88,611		$	(15,008	)	(14)%	$	103,619

As a percentage of revenue	15%							23%			14%							19%

For ~~the nine months ended September 30, 2017 compared~~a reconciliation of net earnings attributable to ~~the nine months ended September 30, 2016~~

~~Operating income decreased $131.8 million~~ANGI Homeservices Inc. shareholders to ~~an operating loss of $114.0 million in 2017 versus~~ operating income ~~of $17.8 million in 2016.~~

~~North America operating income decreased $122.7 million~~ to an operating loss of $99.5 million in 2017 versus operating income of $23.2 million in 2016, primarily due to an increase of $113.6 million in stock-based compensation expense, a decrease of $4.6 million inconsolidated Adjusted EBITDA, described below, an increase of $3.4 million in depreciation and an increase of $1.0 million in amortization of intangibles. The increase in stock-based compensation expense was due primarily to modification and acceleration charges of $96.9 million related to the Angie's List transaction described above.

Europe operating loss increased $9.1 million, or 170%, in 2017 versus 2016, primarily due to an increase of $3.6 million in amortization of intangibles, an increase in Adjusted EBITDA loss of $5.1 million described below and an increase of $0.5 million in depreciation.

~~Adjusted EBITDA~~

~~Adjusted EBITDA is a non-GAAP financial measure and is defined below in the section entitled "ANGI Homeservices Inc.'s~~ see "Principles of Financial ~~Reporting.~~Reporting." For a reconciliation of operating income (loss) ~~income~~to Adjusted EBITDA for the Company's reportable segments, ~~and net (loss) earnings attributable to ANGI Homeservices Inc.'s shareholders to Adjusted EBITDA,~~ see "Note 8—9—Segment Information" to the consolidated ~~and combined~~ financial statements included in "Item 1. Consolidated ~~and Combined~~ Financial Statements."

Three Months Ended September 30, Nine Months Ended September 30,
2017 $ Change % Change 2016 2017 $ Change % Change 2016
(Dollars in thousands)
Adjusted EBITDA $(2,266) $(16,252) NM $13,986 $22,917 $(9,705) (30)% $32,622
Percentage of revenue (1)% 10% 4% 9 %

For the three months ended ~~September~~June 30, ~~2017~~2019 compared to the three months ended ~~September~~June 30, ~~2016~~

~~Adjusted EBITDA decreased $16.3 million to an Adjusted EBITDA loss of $2.3 million in 2017 versus Adjusted EBITDA of $14.0 million in 2016.~~2018

North America Adjusted EBITDA ~~declined $16.1~~decreased $16.5 million ~~or 100%, in 2017 versus 2016,~~to $51.6 million, despite higher revenue, due to higher selling and marketing expense as a percentage of revenue, an increase of ~~$41.9~~$6.2 million in ~~revenue,~~bad debt expense, due, ~~primarily~~in part, to higher Marketplace Revenue, and investments in Handy and Fixd Repair, partially offset by the inclusion in ~~2017~~2018 of ~~$26.0~~$2.6 million in costs related to the ~~Angie's List transaction~~Combination (including deferred revenue write-offs, severance, retention ~~transaction~~ and ~~integration related~~integration-related costs).

Europe Adjusted EBITDA loss decreased $0.9 million, or 84%, due primarily to the increase of $2.2 million in revenue, partially offset by increases in advertising expense of $0.8 million and bad debt expense of $0.5 million.

For the six months ended June 30, 2019 compared to the six months ended June 30, 2018

North America Adjusted EBITDA decreased $16.4 million to $91.3 million, despite higher revenue, due primarily to higher selling and marketing expense as ~~well as increased investment in online and offline marketing~~a percentage of ~~$18.8 million, higher compensation expense due, in part, to increased headcount, and increases~~revenue, an increase of ~~$2.4~~$10.9 million in bad debt expense, due, in part, to higher ~~revenue~~Marketplace Revenue, and ~~$1.0 million~~investments in ~~outsourced customer service expense. Adjusted EBITDA was further impacted by a write-off of deferred revenue related to the acquisitions of HomeStars of $0.1 million~~Handy and ~~Angie's List of $0.1 million in 2017.~~

Europe Adjusted EBITDA loss increased $0.2 million, or 9%, in 2017 versus 2016, driven primarily by our European expansion strategy including increased investment in online and offline marketing of $3.1 million and higher compensation expense of $3.0 million due primarily to the inclusion of MyHammer and MyBuilder in 2017 as well as increased headcount,Fixd Repair, partially offset by ~~a reduction in transaction related costs of $1.2 million.~~

~~For the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016~~

~~Adjusted EBITDA decreased $9.7 million, or 30%, in 2017 versus 2016.~~

~~North America Adjusted EBITDA declined $4.6 million, or 13%, in 2017 versus 2016, despite an increase of $122.4 million in revenue, due primarily to~~ the inclusion in ~~2017~~2018 of ~~$29.7~~$7.9 million in costs related to the ~~Angie's List transaction~~Combination (including deferred revenue write-offs, severance, retention ~~transaction~~ and ~~integration related~~integration-related costs), as well as increased investment in online and offline marketing of $53.6 million, higher compensation expense due, in part, to increased headcount, and increases of $7.7 million in bad debt expense due to higher revenue, $3.3 million in outsourced customer service expense and $1.6 million in software maintenance costs. Adjusted EBITDA was further impacted by a write-off of deferred revenue related to the acquisitions of HomeStars of $0.7 million and Angie's List of $0.1 million in 2017..

Europe Adjusted EBITDA loss ~~increased $5.1~~decreased $1.4 million, or ~~151%~~34%, ~~in 2017 versus 2016, driven primarily by our European expansion strategy including increased investment in online and offline marketing of $8.7 million and higher compensation expense of $8.0 million~~ due primarily to the ~~inclusion~~increase of ~~MyHammer and MyBuilder~~$4.3 million in ~~2017 as well as increased headcount,~~revenue, partially offset by ~~a reduction~~an increase in ~~transaction related costs~~advertising expense of ~~$0.5~~$2.5 million.

Interest ~~expense—related party~~expense

Interest expense—third party relates to interest on a five-year term loan, which is due on November 5, 2023, and commitment fees on an undrawn five-year revolving credit facility of $250 million, which commenced on November 5, 2018.

Interest expense—related party includes interest ~~charged by~~on a loan from a foreign subsidiary of IAC, ~~and its subsidiaries on related party notes,~~ which ~~are primarily related to acquisitions.~~ was settled during the first quarter of 2019.

For a detailed description of long-term debt, net and long-term debt—related party, see "Note ~~10—~~6—Long-term Debt" and "Note 12—Related Party Transactions with IAC," respectively, to the consolidated ~~and combined~~ financial statements included in "Item 1. Consolidated ~~and Combined~~ Financial Statements."

For the three months ended ~~September~~June 30, ~~2017~~2019 compared to the three months ended ~~September~~June 30, ~~2016~~2018

Three Months Ended September 30,
2017 $ Change % Change 2016
(Dollars in thousands)
Interest expense—related party $1,864 $1,708 1095% $156



	Three Months Ended June 30,
	2019		$ Change			% Change	2018
	(Dollars in thousands)
Interest expense—third party	$	2,963	$	(48	)	(2)%	$	3,011
Interest expense—related party	$	—	$	(34	)	NM	$	34

For the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2018

Nine Months Ended September 30,
2017 $ Change % Change 2016
(Dollars in thousands)
Interest expense—related party $5,538 $5,298 2208% $240



	Six Months Ended June 30,
	2019		$ Change			% Change	2018
	(Dollars in thousands)
Interest expense—third party	$	5,957	$	292		5%	$	5,665
Interest expense—related party	$	16	$	(63	)	(80)%	$	79

Other income, ~~(expense),~~ net

For the three months ended ~~September~~June 30, ~~2017~~2019 compared to the three months ended ~~September~~June 30, ~~2016~~2018

Three Months Ended September 30,
2017 $ Change % Change 2016
(Dollars in thousands)
Other income, net $1,364 $1,169 599% $195



	Three Months Ended June 30,
	2019	$ Change	% Change	2018
	(Dollars in thousands)
Other income, net	$1,047	$(6)	(1)%	$1,053

Other income, net in ~~2017 and 2016~~2019 principally ~~include~~includes third party interest income of $2.2 million, partially offset by a $1.1 million mark-to-market charge for an indemnification claim related to the Handy acquisition that will be settled in ANGI shares held in escrow.

Other income, net ~~foreign currency exchange gains.~~in 2018 principally includes third party interest income of $0.9 million.

For the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2018

Nine Months Ended September 30,
2017 $ Change % Change 2016
(Dollars in thousands)
Other income (expense), net $2,100 $2,404 NM $(304)



	Six Months Ended June 30,
	2019	$ Change	% Change	2018
	(Dollars in thousands)
Other income, net	$3,334	$1,925	137%	$1,409

Other income, ~~(expense),~~ net in ~~2017~~2019 principally includes third party interest income of $4.3 million and ~~2016 principally include~~ net foreign currency exchange gains ~~and~~of $0.3 million, partially offset by a $1.1 million mark-to-market charge for an indemnification claim related to the Handy acquisition that will be settled in ANGI shares held in escrow.

Other income, net in 2018 includes third party interest income of $1.6 million, partially offset by net foreign currency exchange losses ~~respectively.~~of $0.2 million.

Income tax (provision) benefit ~~(provision)~~

For the three months ended ~~September~~June 30, ~~2017~~2019 compared to the three months ended ~~September~~June 30, ~~2016~~2018


	Three Months Ended September 30,				Three Months Ended June 30,
	2017	$ Change	% Change	2016	2019	$ Change	% Change	2018
	(Dollars in thousands)				(Dollars in thousands)
Income tax benefit (provision)	$40,847	$45,261	NM	$(4,414)
Income tax (provision) benefit					$(2,253)	$(4,006)	NM	$1,753
Effective income tax rate	36%			50%	24%			NM


~~For the Quarterly Period Ended September 30, 2017~~
Or
¨☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from__________to__________



Delaware ~~(State~~		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 80401~~ ~~(Address of registrant's principal executive offices)~~
~~(303) 963-7200~~



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



Large accelerated filero	☒	Accelerated filero	☐	Non-accelerated filero ~~(Do not check if a smaller~~ ~~reporting company)~~	☐	Smaller reporting companyo	☐	Emerging growth companyý	☐



		Page Number
PART I
Item 1.	Consolidated ~~and Combined~~ Financial Statements	3
	Consolidated Balance Sheet	3
	~~Item 2.~~Consolidated Statement of Operations	4
	Consolidated Statement of Comprehensive Operations	5
	Consolidated Statement of Shareholders' Equity	6
	Consolidated Statement of Cash Flows	8
	Note 1—The Company and Summary of Significant Accounting Policies	9
	Note 2—Leases	11
	Note 3—Income Taxes	12
	Note 4—Business Combination	14
	Note 5—Financial Instruments	14
	Note 6—Long-term Debt	16
	Note 7—Accumulated Other Comprehensive (Loss) Income	17
	Note 8—Earnings per Share	18
	Note 9—Segment Information	20
	Note 10—Consolidated Financial Statement Details	23
	Note 11—Contingencies	24
	Note 12—Related Party Transactions with IAC	24
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	3226
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	43
Item 4.	Controls and Procedures	44
PART II
Item 1.	Legal Proceedings	45
Item 1A.	Risk Factors	46
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	46
Item 6.	Exhibits	47
	Signatures	48
~~Item 4.~~	~~Controls and Procedures~~	49
~~PART II~~
~~Item 1.~~	~~Legal Proceedings~~	50
~~Item 1A.~~	~~Risk Factors~~	52
~~Item 6.~~	~~Exhibits~~	53
	~~Signatures~~	55



ý☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



Class A Common Stock	~~62,656,140~~85,989,523
Class B Common Stock	~~414,753,615~~421,452,903
Class C Common Stock	—
Total outstanding Common Stock	~~477,409,755~~507,442,426


	September 30, 2017			December 31, 2016			June 30, 2019			December 31, 2018
	(In thousands, except par value amounts)						(In thousands, except par value amounts)
ASSETS
Cash and cash equivalents	$	59,543		$	36,377		$	380,563		$	336,984
Accounts receivable, net of allowance and reserves of $9,839 at September 30, 2017 and $9,177 at December 31, 2016	30,684			18,696
Marketable securities							—			24,947
Accounts receivable, net of allowance and reserves of $22,790 and $16,603, respectively							56,835			27,263
Other current assets	23,386			8,739			63,478			84,933
Total current assets	113,613			63,812			500,876			474,127
Property and equipment, net of accumulated depreciation and amortization of $26,503 at September 30, 2017 and $18,077 at December 31, 2016	47,635			23,645

Right-of-use assets							103,997			—
Property and equipment, net of accumulated depreciation and amortization of $49,053 and $36,473, respectively							99,883			70,859
Goodwill	774,191			170,990			914,505			894,709
Intangible assets, net	343,393			10,792
Intangible assets, net of accumulated amortization of $113,958 and $85,589, respectively							276,238			304,295
Deferred income taxes							52,842			40,837
Other non-current assets	72,918			26,278			8,662			23,200
TOTAL ASSETS	$	1,351,750		$	295,517		$	1,957,003		$	1,808,027

LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Current portion of long-term debt—related party	$	—		$	2,838
Current portion of long-term debt							$	13,750		$	13,750
Accounts payable	50,041			11,544			34,187			20,083
Deferred revenue	58,955			18,828			65,334			61,417
Accrued expenses and other current liabilities	90,008			34,438			112,876			105,987
Total current liabilities	199,004			67,648			226,147			201,237

Long-term debt, net							238,357			244,971
Long-term debt—related party	79,504			47,000			—			1,015
Deferred income taxes	5,363			2,228			3,435			3,808
Other long-term liabilities	4,942			2,247			121,097			16,846

Redeemable noncontrolling interests	18,844			13,781			23,421			18,163

Commitments and contingencies

SHAREHOLDERS' EQUITY:
Class A common stock, $0.001 par value; authorized 2,000,000 shares; 61,291 shares issued and outstanding	61			—
Class B common stock, $0.001 par value; authorized 1,500,000 shares; 414,754 shares issued and outstanding	415			—
Class C common stock, $0.001 par value; authorized 1,500,000 shares; no shares issued and outstanding	—			—
Class A common stock, $0.001 par value; authorized 2,000,000 shares; 85,803 and 80,515 shares issued and outstanding							86			81
Class B convertible common stock, $0.001 par value; authorized 1,500,000 shares; 421,453 and 421,118 shares issued and outstanding							421			421
Class C common stock, $0.001 par value; authorized 1,500,000 shares; no shares issued and outstanding							—			—
Additional paid-in capital	1,094,046			—			1,338,280			1,333,097
Accumulated deficit	(63,540		)	—			(1,860		)	(18,797		)
Invested capital	—			154,852
Accumulated other comprehensive income (loss)	3,348			(1,721		)
Total ANGI Homeservices Inc. shareholders' equity and invested capital, respectively	1,034,330			153,131
Accumulated other comprehensive loss							(1,482		)	(1,861		)
Total ANGI Homeservices Inc. shareholders' equity							1,335,445			1,312,941
Noncontrolling interests	9,763			9,482			9,101			9,046
Total shareholders' equity	1,044,093			162,613			1,344,546			1,321,987
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	1,351,750		$	295,517		$	1,957,003		$	1,808,027



					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
	Redeemable Noncontrolling Interests				$		Shares	$		Shares	$		Shares	Additional Paid-in Capital		Accumulated Deficit			Invested Capital									Noncontrolling Interests
				(In thousands)
Balance as of December 31, 2016	$	13,781			$	—	—	$	—	—	$	—	—	$	—	$	—		$	154,852		$	(1,721	)	$	153,131		$	9,482		$	162,613
Net (loss) earnings	(1,256		)		—		—	—		—	—		—	—		(63,540		)	18,646			—			(44,894		)	(146		)	(45,040		)
Other comprehensive income	280				—		—	—		—	—		—	—		—			—			5,069			5,069			243			5,312
Stock-based compensation expense	1,577				—		—	—		—	—		—	96,939		—			—			—			96,939			—			96,939
Redeemable noncontrolling interests created in acquisitions	14,692				—		—	—		—	—		—	—		—			—			—			—			—			—
Purchase of redeemable noncontrolling interests	(11,991		)		—		—	—		—	—		—	—		—			—			—			—			—			—
Purchase of noncontrolling interests	—				—		—	—		—	—		—	—		—			—			—			—			(633		)	(633		)
Adjustment of redeemable noncontrolling interests to fair value	1,725				—		—	—		—	—		—	—		—			(1,725		)	—			(1,725		)	—			(1,725		)
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
Other	36				—		—	—		—	—		—	—		—			—			—			—			817			817
Balance as of September 30, 2017	$	18,844			$	61	61,291	$	415	414,754	$	—	—	$	1,094,046	$	(63,540	)	$	—		$	3,348		$	1,034,330		$	9,763		$	1,044,093



	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 stock	1,913
Fair value of vested and pro rata portion of unvested stock options attributable to pre-combination services	11,749
Fair value of the pro rata portion of unvested restricted stock units attributable to pre-combination services	4,038
Total purchase price	$	781,384



	Angie's List
	(In thousands)		Weighted-average useful life (years)
Indefinite-lived trade names and trademarks	$	137,000	Indefinite
Service providers	90,500		3
Developed technology	63,900		6
Memberships	15,900		3
User base	10,000		1
Total identifiable intangible assets acquired	$	317,300



	HomeStars
	(In thousands)
Cash and cash equivalents	$	181
Other current assets	165
Goodwill	9,841
Intangible assets	6,414
Total assets	16,601
Current liabilities	(649		)
Other long-term liabilities	(1,873		)
Net assets acquired	$	14,079



	MyBuilder
	(In thousands)
Cash and cash equivalents	$	6,004
Other current assets	344
Goodwill	38,521
Intangible assets	13,490
Total assets	58,359
Current liabilities	(2,065		)
Other long-term liabilities	(2,296		)
Net assets acquired	$	53,998



	MyHammer
	(In thousands)
Cash and cash equivalents	$	4,041
Other current assets	790
Goodwill	22,277
Intangible assets	8,107
Total assets	35,215
Current liabilities	(2,642		)
Other long-term liabilities	(2,447		)
Net assets acquired	$	30,126



	September 30, 2017		December 31, 2016
	(In thousands)
Goodwill	$	774,191	$	170,990
Intangible assets with indefinite lives	151,735		4,884
Intangible assets with definite lives, net	191,658		5,908
Total goodwill and intangible assets, net	$	1,117,584	$	181,782



	Balance at December 31, 2016		Additions		Deductions		Foreign exchange translation		Balance at September 30, 2017
	(In thousands)
North America	$	140,930	$	556,692	$	—	$	640	$	698,262
Europe	30,060		38,643		—		7,226		75,929
Total goodwill	$	170,990	$	595,335	$	—	$	7,866	$	774,191



	Balance at December 31, 2015		Additions		(Deductions)		Foreign exchange translation			Balance at December 31, 2016
	(In thousands)
North America	$	140,930	$	—	$	—	$	—		$	140,930
Europe	9,700		21,985		—		(1,625		)	30,060
Total goodwill	$	150,630	$	21,985	$	—	$	(1,625	)	$	170,990



	September 30, 2017
	Gross carrying amount		Accumulated amortization			Net		Weighted-average useful life (years)
	(Dollars in thousands)
Contractor and service provider relationships	$	99,628	$	(2,989	)	$	96,639	3.0
Technology	78,761		(10,714		)	68,047		5.6
Memberships	15,900		(15		)	15,885		3.0
Customer lists and user base	13,911		(2,973		)	10,938		1.1
Trade names	5,612		(5,463		)	149		3.1
Total	$	213,812	$	(22,154	)	$	191,658	3.8



Year Ending September 30,	(In thousands)
2018	$	64,155
2019	49,101
2020	46,446
2021	10,685
2022	10,650
Thereafter	10,621
Total	$	191,658



	September 30, 2017						December 31, 2016
	Carrying value			Fair value			Carrying value			Fair value
	(In thousands)
Current portion of long-term debt—related party	$	—		$	—		$	(2,838	)	$	(2,776	)
Long-term debt—related party, net of current portion	(79,504		)	(79,611		)	(47,000		)	(46,324		)



	Three Months Ended September 30, 2017
	Foreign currency translation adjustment			Accumulated other comprehensive (loss) income
	(In thousands)
Balance at July 1	$	(230	)	$	(230	)
Other comprehensive income	3,578			3,578
Balance at September 30	$	3,348		$	3,348

	Three Months Ended September 30, 2016
	Foreign currency translation adjustment			Accumulated other comprehensive (loss) income
	(In thousands)
Balance at July 1	$	(486	)	$	(486	)
Other comprehensive income	32			32
Balance at September 30	$	(454	)	$	(454	)



	Nine Months Ended September 30, 2017
	Foreign currency translation adjustment			Accumulated other comprehensive (loss) income
	(In thousands)
Balance at January 1	$	(1,721	)	$	(1,721	)
Other comprehensive income	5,069			5,069
Balance at September 30	$	3,348		$	3,348

	Nine Months Ended September 30, 2016
	Foreign currency translation adjustment			Accumulated other comprehensive (loss) income
	(In thousands)
Balance at January 1	$	(1,064	)	$	(1,064	)
Other comprehensive income	610			610
Balance at September 30	$	(454	)	$	(454	)



	September 30,		December 31,
	2017		2016
	(In thousands)
Long-lived assets (excluding goodwill and intangible assets)
United States	$	44,027	$	21,775
All other countries	3,608		1,870
Total	$	47,635	$	23,645



	Three Months Ended September 30, 2017
	Operating loss			Stock-based compensation		Depreciation		Amortization of intangibles		Adjusted EBITDA
	(In thousands)
North America	$	(107,687	)	$	103,565	$	3,085	$	1,097	$	60
Europe	(4,818		)	415		406		1,671		(2,326		)
Total	(112,505		)	$	103,980	$	3,491	$	2,768	$	(2,266	)
Interest expense—related party	(1,864		)
Other income, net	1,364
Loss before income taxes	(113,005		)
Income tax benefit	40,847
Net loss	(72,158		)
Net loss attributable to noncontrolling interests	397
Net loss attributable to ANGI Homeservices Inc. shareholders	$	(71,761	)



	Three Months Ended September 30, 2016
	Operating income (loss)			Stock-based compensation		Depreciation		Amortization of intangibles		Adjusted EBITDA
	(In thousands)
North America	$	11,573		$	1,977	$	1,944	$	625	$	16,119
Europe	(2,730		)	414		82		101		(2,133		)
Total	8,843			$	2,391	$	2,026	$	726	$	13,986
Interest expense—related party	(156		)
Other income, net	195
Earnings before income taxes	8,882
Income tax provision	(4,414		)
Net earnings	4,468
Net loss attributable to noncontrolling interests	607
Net earnings attributable to ANGI Homeservices Inc. shareholders	$	5,075



	(In thousands)
2019	$	3,006
2024	76,498
Total long-term debt—related party, net of current portion	$	79,504


^(a)	Domestically, cash equivalents primarily consist of certificates of deposit and treasury discount notes. Prior to the Combination, domestically, we participated in IAC’s centrally managed U.S. treasury management function in which IAC swept domestic cash of HomeAdvisor (US).


^(b)	~~Internationally, cash equivalents primarily consist of AAA rated government money market funds.~~



	Payments due by period
	Less than 1 year		1 to 3 years		3 to 5 years		More than 5 years		Total
	(in thousands)
Long-term debt—related party^(a)	$	3,475	$	10,345	$	6,953	$	83,460	$	104,233
Operating leases^(b)	9,786		24,113		17,734		33,933		85,566
Purchase obligations^(c)	509		89		—		—		598
Total contractual obligations^(d)	$	13,770	$	34,547	$	24,687	$	117,393	$	190,397


^(b)	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.


^(c)	~~Purchase obligations primarily consist of advertising commitments.~~


^(d)	We have excluded $1.3 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 2—Income Taxes" to the consolidated and combined financial statements included in "Item 1. Consolidated and Combined Financial Statements~~."



Exhibit Number		Description	Location
~~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.	~~Annex B to the Proxy Statement/Prospectus of Angie's List, Inc. and ANGI Homeservices Inc., filed on August 30, 2017 pursuant to Rule 424(b)(3)~~.
3.1		Amended and Restated Certificate of Incorporation of ANGI Homeservices Inc.	Exhibit 3.1 to the Registrant's Current Report on Form 8-K, filed on October 2, 2017.
3.2		Amended and Restated Bylaws of ANGI Homeservices Inc.	Exhibit 3.2 to the Registrant's Current Report on Form 8-K, filed on October 2, 2017.
~~4.1~~		~~Investor Rights Agreement, dated as of September 29, 2017, by and between ANGI Homeservices Inc. and IAC/InterActiveCorp.~~	~~Exhibit 2.2 to the Registrant's Current Report on Form 8-K, filed on October 2, 2017~~.
~~10.1~~		~~Contribution Agreement, dated as of September 29, 2017, by and between ANGI Homeservices Inc. and IAC/InterActiveCorp.(1)~~	~~Exhibit 2.1 to the Registrant's Current Report on Form 8-K, filed on October 2, 2017~~.
~~10.2~~		~~Services Agreement, dated as of September 29, 2017, by and between ANGI Homeservices Inc. and IAC/InterActiveCorp.(1)~~	~~Exhibit 2.3 to the Registrant's Current Report on Form 8-K, filed on October 2, 2017~~.
~~10.3~~		~~Tax Sharing Agreement, dated as of September 29, 2017, by and between ANGI Homeservices Inc. and IAC/InterActiveCorp.~~	~~Exhibit 2.4 to the Registrant's Current Report on Form 8-K, filed on October 2, 2017~~.
~~10.4~~		~~Employee Matters Agreement, dated as of September 29, 2017, by and between ANGI Homeservices Inc. and IAC/InterActiveCorp. (1)~~	~~Exhibit 2.5 to the Registrant's Current Report on Form 8-K, filed on October 2, 2017~~.
~~10.5~~		~~Intercompany Note, dated as of September 29, 2017, by and between ANGI Homeservices Inc. and IAC Group, LLC. (1)~~	~~Exhibit 2.6 to the Registrant's Current Report on Form 8-K, filed on October 2, 2017~~.
~~10.6~~		~~Intercompany Note, dated as of September 29, 2017, by and between ANGI Homeservices Inc. and IAC Group, LLC. (1)~~	~~Exhibit 2.7 to the Registrant's Current Report on Form 8-K, filed on October 2, 2017~~.
~~10.7~~		~~ANGI Homeservices Inc. 2017 Stock and Annual Incentive Plan. (2)~~	~~Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed on October 2, 2017~~.
~~10.8~~10.1		~~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)~~
~~10.9~~		~~Form of Notice and Terms and Conditions for Stock Options granted under the ANGI Homeservices Inc. 2017 Stock and Annual Incentive Plan. (2)(3)~~
~~10.10~~		~~Form of Terms and Conditions for Stock Appreciation Rights granted under the ANGI Homeservices Inc. 2017 Stock and Annual Incentive Plan. (2)~~	~~Exhibit 10.2 to the Registration Statement on Form S-4, as amended (SEC File No. 333-219064), filed on August 28, 2017~~.
~~10.11~~		Employment Agreement between ~~Chris Terrill~~Oisin Hanrahan and ANGI Homeservices Inc., dated as of ~~September 28, 2017. (2)~~	~~Exhibit 10.2 to the Registrant's Current Report on Form 8-K, filed on October 2, 2017~~.
~~10.12~~	June 26, 2019. (1)	~~Employment Agreement between William B. Ridenour and ANGI Homeservices Inc., dated as of August 24, 2017. (2)~~	~~Exhibit 10.6 to the Registration Statement on Form S-4, as amended (SEC File No. 333-219064), filed on August 28, 2017~~.
~~10.13~~		~~Employment Agreement between Craig Smith and ANGI Homeservices Inc., dated as of August 24, 2017. (2)~~	~~Exhibit 10.7 to the Registration Statement on Form S-4, as amended (SEC File No. 333-219064), filed on August 28, 2017~~.



~~10.14~~		~~Employment Agreement between Allison Lowrie and ANGI Homeservices Inc., dated as of August 24, 2017. (2)~~		~~Exhibit 10.8 to the Registration Statement on Form S-4, as amended (SEC File No. 333-219064), filed on August 28, 2017~~.
31.1		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)
31.2		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)
32.1		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)~~(2)
32.2		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)~~(2)
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101.SCH	Inline XBRL Taxonomy Extension Schema (1)
101.CAL	Inline XBRL Taxonomy Extension Calculation (1)
101.DEF	Inline XBRL Taxonomy Extension Definition (1)
101.LAB	Inline XBRL Taxonomy Extension Labels (1)
101.PRE	Inline XBRL Taxonomy Extension Presentation (1)
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)


(1)	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.Filed herewith.