As filed with the Securities and Exchange Commission on November ~~6, 2020~~ 5, 2021

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


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

For the Quarterly Period Ended September 30, ~~2020~~2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from__________to__________

Commission File No. 001-38220

~~ANGI HOMESERVICES INC.~~Angi Inc.

(Exact name of ~~registrant~~Registrant as specified in its charter)


Delaware						82-1204801
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

3601 Walnut Street, Denver, CO 80205

(Address of ~~registrant's~~Registrant’s principal executive offices)

(303) 963-7200

(~~Registrant's~~Registrant’s telephone number, including area code)

(Former name or former address, if changed since last report)

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

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

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

Indicate by check mark whether the ~~registrant~~Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of ~~"large~~“large accelerated filer,~~" "accelerated~~” “accelerated filer,~~" "smaller~~” “smaller reporting company,"” and ~~"emerging~~“emerging growth ~~company"~~company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the ~~registrant~~Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

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

As ofof October ~~30, 2020,~~29, 2021, the following shares of the ~~registrant's~~Registrant’s common stock were outstanding:


Class A Common Stock			~~77,938,213~~80,373,715
Class B Common Stock			~~421,859,085~~422,019,247
Class C Common Stock			0—
Total outstanding Common Stock			~~499,797,298~~502,392,962

TABLE OF CONTENTS


		Page Number
PART I
Item 1.	Consolidated Financial Statements	3
	Consolidated Balance Sheet	3
	Consolidated Statement of Operations	4
	Consolidated Statement of Comprehensive Operations	5
	Consolidated Statement of ~~Shareholders'~~Shareholders’ Equity	6
	Consolidated Statement of Cash Flows	8
	Note 1—The Company and Summary of Significant Accounting Policies	9
	Note 2—Income Taxes	12
	Note 3—Financial Instruments and Fair Value Measurements	1413
	Note 4—Long-term Debt	15
	Note 5—Accumulated Other Comprehensive ~~Loss~~Income (Loss)	1716
	Note 6—(Loss) Earnings Per Share	1817
	Note 7—Segment Information	1918
	Note 8—Consolidated Financial Statement Details	2321
	Note 9—Contingencies	2423
	Note 10—Related Party Transactions with IAC	2423

Item 2.	~~Management's~~Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	4241
Item 4.	Controls and Procedures	4342
PART II
Item 1.	Legal Proceedings	4443
Item 1A.	Risk Factors	4543
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4745
Item 6.	Exhibits	4846
	Signatures	4947

Table of Contents

PART I

FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

ANGI ~~HOMESERVICES~~ INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(Unaudited)

September 30, 2020 December 31, 2019
(In thousands, except par value amounts)
ASSETS
Cash and cash equivalents $ 855,044 $ 390,565
Marketable debt securities 49,992 0
Accounts receivable, net of allowance and reserves of $29,787 and $20,293, respectively 51,721 41,669
Other current assets 69,500 67,759
Total current assets 1,026,257 499,993
Capitalized software, leasehold improvements and equipment, net of accumulated depreciation and amortization 104,323 103,361
Goodwill 884,696 883,960
Intangible assets, net of accumulated amortization 212,927 251,725
Other non-current assets 186,398 182,572
TOTAL ASSETS $ 2,414,601 $ 1,921,611
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Current portion of long-term debt $ 13,750 $ 13,750
Accounts payable 42,973 25,987
Deferred revenue 58,169 58,220
Accrued expenses and other current liabilities 153,566 116,997
Total current liabilities 268,458 214,954
Long-term debt, net 715,408 231,946
Deferred income taxes 2,088 3,441
Other long-term liabilities 119,112 121,055
Redeemable noncontrolling interests 25,774 26,663
Commitments and contingencies
SHAREHOLDERS' EQUITY:
Class A common stock, $0.001 par value; authorized 2,000,000 shares; issued 92,660 and 87,007 shares, respectively, and outstanding77,537 and 79,681, respectively 93 87
Class B common stock, $0.001 par value; authorized 1,500,000 shares; 421,859 and 421,570 shares issued and outstanding 422 422
Class C common stock, $0.001 par value; authorized 1,500,000 shares; 0 shares issued and outstanding 0 0
Additional paid-in capital 1,362,977 1,357,075
Retained earnings 24,213 16,032
Accumulated other comprehensive loss (985) (1,379)
Treasury stock, 15,123 and 7,326 shares, respectively (112,808) (57,949)
Total ANGI Homeservices Inc. shareholders' equity 1,273,912 1,314,288
Noncontrolling interests 9,849 9,264
Total shareholders' equity 1,283,761 1,323,552
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 2,414,601 $ 1,921,611


	September 30, 2021		December 31, 2020
	(In thousands, except par value amounts)
ASSETS
Cash and cash equivalents	$	476,625	$	812,705
Marketable debt securities	—		49,995
Accounts receivable, net of reserves of $40,276 and $27,839, respectively	98,538		43,148
Other current assets	75,818		71,958
Total current assets	650,981		977,806

Capitalized software, leasehold improvements and equipment, net	116,825		108,842
Goodwill	917,081		891,797
Intangible assets, net	198,024		209,717

Other non-current assets, net	192,127		180,020
TOTAL ASSETS	$	2,075,038	$	2,368,182

LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES:

Accounts payable	$	39,491	$	30,805
Deferred revenue	60,025		54,654
Accrued expenses and other current liabilities	203,752		148,219
Total current liabilities	303,268		233,678

Long-term debt, net	494,373		712,277
Deferred income taxes	1,633		1,296
Other long-term liabilities	102,434		111,710

Redeemable noncontrolling interests	4,524		26,364

Commitments and contingencies	0		0

SHAREHOLDERS’ EQUITY:
Class A common stock, $0.001 par value; authorized 2,000,000 shares; issued 99,252 and 94,238 shares, respectively, and outstanding 80,146 and 78,333, respectively	99		94
Class B convertible common stock, $0.001 par value; authorized 1,500,000 shares; 422,019 and 421,862 shares issued and outstanding	422		422
Class C common stock, $0.001 par value; authorized 1,500,000 shares; no shares issued and outstanding	—		—
Additional paid-in capital	1,345,549		1,379,469
(Accumulated deficit) retained earnings	(35,608)		9,749
Accumulated other comprehensive income	4,933		4,637
Treasury stock, 19,107 and 15,905 shares, respectively	(157,484)		(122,081)
Total Angi Inc. shareholders’ equity	1,157,911		1,272,290
Noncontrolling interests	10,895		10,567
Total shareholders’ equity	1,168,806		1,282,857
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	2,075,038	$	2,368,182

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

Table of Contents

ANGI ~~HOMESERVICES~~ INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS

(Unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2020		2019		2020		2019			2021		2020		2021		2020
		(In thousands, except per share data)									(In thousands, except per share data)
Revenue	Revenue	$	389,913	$	357,358	$	1,108,624	$	1,004,697	Revenue	$	461,565	$	389,913	$	1,269,582	$	1,108,624
Operating costs and expenses:	Operating costs and expenses:									Operating costs and expenses:
Cost of revenue (exclusive of depreciation shown separately below)	Cost of revenue (exclusive of depreciation shown separately below)	48,253		13,312		122,524		34,045		Cost of revenue (exclusive of depreciation shown separately below)	99,467		48,253		222,999		122,524
Selling and marketing expense	Selling and marketing expense	210,171		195,542		590,114		567,011		Selling and marketing expense	237,755		210,171		682,626		590,114
General and administrative expense	General and administrative expense	90,122		82,344		270,129		254,786		General and administrative expense	103,086		90,122		298,734		270,129
Product development expense	Product development expense	17,577		16,021		50,068		46,907		Product development expense	17,675		17,577		54,474		50,068
Depreciation	Depreciation	13,921		11,244		38,614		27,039		Depreciation	14,701		13,921		45,728		38,614
Amortization of intangibles	Amortization of intangibles	12,888		14,169		38,846		42,421		Amortization of intangibles	3,854		12,888		12,616		38,846
Total operating costs and expenses	Total operating costs and expenses	392,932		332,632		1,110,295		972,209		Total operating costs and expenses	476,538		392,932		1,317,177		1,110,295
Operating (loss) income		(3,019)		24,726		(1,671)		32,488
Operating loss										Operating loss	(14,973)		(3,019)		(47,595)		(1,671)
Interest expense	Interest expense	(3,699)		(3,007)		(7,593)		(8,964)		Interest expense	(6,032)		(3,699)		(18,463)		(7,593)
Other income, net		223		1,505		856		4,823
(Loss) earnings before income taxes		(6,495)		23,224		(8,408)		28,347
Income tax benefit (provision)		11,698		(4,900)		17,638		7,062
Net earnings		5,203		18,324		9,230		35,409
Other (expense) income, net										Other (expense) income, net	(479)		223		(1,882)		856
Loss before income taxes										Loss before income taxes	(21,484)		(6,495)		(67,940)		(8,408)
Income tax benefit										Income tax benefit	4,791		11,698		23,209		17,638
Net (loss) earnings										Net (loss) earnings	(16,693)		5,203		(44,731)		9,230
Net earnings attributable to noncontrolling interests	Net earnings attributable to noncontrolling interests	(731)		(325)		(1,049)		(473)		Net earnings attributable to noncontrolling interests	(302)		(731)		(626)		(1,049)
Net earnings attributable to ANGI Homeservices Inc. shareholders		$	4,472	$	17,999	$	8,181	$	34,936
Net (loss) earnings attributable to Angi Inc. shareholders										Net (loss) earnings attributable to Angi Inc. shareholders	$	(16,995)	$	4,472	$	(45,357)	$	8,181

Earnings per share information attributable to ANGI Homeservices Inc. shareholders:
Basic earnings per share		$	0.01	$	0.04	$	0.02	$	0.07
Diluted earnings per share		$	0.01	$	0.04	$	0.02	$	0.07
Per share information attributable to Angi Inc. shareholders:										Per share information attributable to Angi Inc. shareholders:
Basic (loss) earnings per share										Basic (loss) earnings per share	$	(0.03)	$	0.01	$	(0.09)	$	0.02
Diluted (loss) earnings per share										Diluted (loss) earnings per share	$	(0.03)	$	0.01	$	(0.09)	$	0.02

Stock-based compensation expense by function:	Stock-based compensation expense by function:									Stock-based compensation expense by function:

Selling and marketing expense	Selling and marketing expense	$	2,346	$	796	$	4,069	$	2,801	Selling and marketing expense	$	1,256	$	2,346	$	3,138	$	4,069
General and administrative expense	General and administrative expense	10,866		6,375		46,977		37,124		General and administrative expense	5,836		10,866		13,330		46,977
Product development expense	Product development expense	1,485		1,613		3,985		5,661		Product development expense	1,721		1,485		3,922		3,985
Total stock-based compensation expense	Total stock-based compensation expense	$	14,697	$	8,784	$	55,031	$	45,586	Total stock-based compensation expense	$	8,813	$	14,697	$	20,390	$	55,031

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

Table of Contents

ANGI ~~HOMESERVICES~~ INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE OPERATIONS

(Unaudited)

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
(In thousands)
Net earnings $ 5,203 $ 18,324 $ 9,230 $ 35,409
Other comprehensive income (loss), net of income taxes:
Change in foreign currency translation adjustment 3,053 (3,071) 971 (2,880)
Change in unrealized gains and losses on available-for-sale debt securities 0 0 0 (3)
Total other comprehensive income (loss), net of income taxes 3,053 (3,071) 971 (2,883)
Comprehensive income, net of income taxes 8,256 15,253 10,201 32,526
Components of comprehensive (income) loss attributable to noncontrolling interests:
Net earnings attributable to noncontrolling interests (731) (325) (1,049) (473)
Change in foreign currency translation adjustment attributable to noncontrolling interests (1,298) 390 (577) 581
Comprehensive (income) loss attributable to noncontrolling interests (2,029) 65 (1,626) 108
Comprehensive income attributable to ANGI Homeservices Inc. shareholders $ 6,227 $ 15,318 $ 8,575 $ 32,634


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(in thousands)
Net (loss) earnings	$	(16,693)	$	5,203	$	(44,731)	$	9,230
Other comprehensive (loss) income:
Change in foreign currency translation adjustment	(1,353)		3,053		722		971


Comprehensive (loss) income	(18,046)		8,256		(44,009)		10,201
Components of comprehensive loss (income) attributable to noncontrolling interests:
Net earnings attributable to noncontrolling interests	(302)		(731)		(626)		(1,049)
Change in foreign currency translation adjustment attributable to noncontrolling interests	313		(1,298)		(426)		(577)
Comprehensive loss (income) attributable to noncontrolling interests	11		(2,029)		(1,052)		(1,626)
Comprehensive (loss) income attributable to Angi Inc. shareholders	$	(18,035)	$	6,227	$	(45,061)	$	8,575

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

Table of Contents

ANGI ~~HOMESERVICES~~ INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

Three and Nine Months Ended September 30, ~~2020 and 2019~~2021

(Unaudited)

ANGI Homeservices Inc. Shareholders' Equity
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
Accumulated
Other
Comprehensive (Loss) Income Total
Shareholders'
Equity
Redeemable
Noncontrolling
Interests Additional Paid-in Capital Retained Earnings (Accumulated Deficit) Treasury
Stock Noncontrolling
Interests
$ Shares $ Shares $ Shares
(In thousands)
Balance as of June 30, 2020 $ 25,093 $ 89 89,076 $ 422 421,757 $ 0 0 $ 1,387,618 $ 19,741 $ (2,740) $ (112,808) $ 1,292,322 $ 9,604 $ 1,301,926
Net earnings 438 — — — — — — — 4,472 — — 4,472 293 4,765
Other comprehensive income, net of income taxes 920 — — — — — — — — 1,755 — 1,755 378 2,133
Stock-based compensation expense 0 — — — — — — 13,846 — — — 13,846 — 13,846
Issuance of common stock pursuant to stock-based awards, net of withholding taxes — 4 3,584 — — — — (37,842) — — — (37,838) — (37,838)
Issuance of common stock to IAC pursuant to the employee matters agreement — — — — 102 — — (632) — — — (632) — (632)
Adjustment of redeemable noncontrolling interests to fair value (677) — — — — — — 677 — — — 677 — 677
Purchase of noncontrolling interests — — — — — — — — — — — (1,115) (1,115)
Other — — — — — — — (690) — — — (690) 689 (1)
Balance as of September 30, 2020 $ 25,774 $ 93 92,660 $ 422 421,859 $ 0 0 $ 1,362,977 $ 24,213 $ (985) $ (112,808) $ 1,273,912 $ 9,849 $ 1,283,761


Balance as of June 30, 2019		$	23,421	$	86	85,803	$	421	421,453	$	0	0	$	1,338,280	$	(1,860)	$	(1,482)		$	0		$	1,335,445			$	9,101		$	1,344,546
Net earnings		233		—		—	—		—	—		—	—		17,999		—			—			17,999				92			18,091
																									Angi Inc. Shareholders’ Equity
																									Class A Common Stock $0.001 Par Value								Class B Convertible Common Stock $0.001 Par Value						Class C Common Stock $0.001 Par Value																				Total Angi Inc. Shareholders' Equity

																																											Accumulated Other Comprehensive Income (Loss)												Total Shareholders' Equity
																					Redeemable Noncontrolling Interests																														Additional Paid-in Capital						(Accumulated Deficit) Retained Earnings								Treasury Stock				Total Angi Inc. Shareholders' Equity		Noncontrolling Interests
																								$				Shares			$				Shares		$								Shares																Total Angi Inc. Shareholders' Equity
																									(In thousands)
Balance as of June 30, 2021																			Balance as of June 30, 2021		$	4,536			$	99			99,111				$	422		421,977			$	—		—			$	1,338,208		$	(18,613)				$	5,973			$	(127,718)					$	1,198,371	$	11,054	$	1,209,425
Net earnings (loss)																			Net earnings (loss)		61				—				—				—			—			—			—			—			(16,995)			—				—				(16,995)				241		(16,754)
Other comprehensive loss	Other comprehensive loss	(365)		—		—	—		—	—		—	—		—		(2,681)			—			(2,681)				(25)			(2,706)		Other comprehensive loss		(73)				—			—			—			—			—				—				—					—				(1,040)				—		(1,040)		(240)	(1,280)
Stock-based compensation expense	Stock-based compensation expense	36		—		—	—		—	—		—	8,748		—		—			—			8,748				—			8,748		Stock-based compensation expense		—				—			—			—			—			—				—				8,817				—				—				—		8,817		—			8,817
Issuance of common stock pursuant to stock-based awards, net of withholding taxes	Issuance of common stock pursuant to stock-based awards, net of withholding taxes	—		0		272	—		—	—		—	(2,357)		—		—			—			(2,357)				—			(2,357)		Issuance of common stock pursuant to stock-based awards, net of withholding taxes		—				—			139			—			—			—				—				(1,066)				—				—				—		(1,066)		—			(1,066)
Issuance of common stock to IAC pursuant to the employee matters agreement	Issuance of common stock to IAC pursuant to the employee matters agreement	—		—		—	1		117	—		—	(971)		—		—			—			(970)				—			(970)		Issuance of common stock to IAC pursuant to the employee matters agreement		—				—			3			—			42			—				—				—				—				—				—		—		—			—
Purchase of treasury stock	Purchase of treasury stock	—		—		—	—		—	—		—	—		—		—			(34,157)			(34,157)				—			(34,157)		Purchase of treasury stock		—				—			—			—			—			—				—				—				—				—				(29,766)		(29,766)		—			(29,766)
Purchase of redeemable noncontrolling interests		(71)		—		—	—		—	—		—	—		—		—			—			—				—			—
Adjustment of redeemable noncontrolling interests to fair value		(1,255)		—		—	—		—	—		—	1,255		—		—			—			1,255				—			1,255
Purchase of noncontrolling interests																			Purchase of noncontrolling interests		—				—				—				—			—			—			—						—			—				—				—					(160)				(160)

Other	Other	—		—		—	—		—	—		—	1		—		—			—			1				—			1		Other		—				—			—			—			—			—				—				(410)				—				—				—		(410)		—			(410)
Balance as of September 30, 2019		$	21,999	$	86	86,075	$	422	421,570	$	0	0	$	1,344,956	$	16,139	$	(4,163)		$	(34,157)		$	1,323,283			$	9,168		$	1,332,451
Balance as of September 30, 2021																			Balance as of September 30, 2021		$	4,524			$	99			99,253				$	422		422,019			$	—		—			$	1,345,549		$	(35,608)		$	4,933			$	(157,484)			$	1,157,911			$	10,895			$	1,168,806

Balance as of December 31, 2020																			Balance as of December 31, 2020		$	26,364			$	94			94,238				$	422		421,862			$	—		—			$	1,379,469		$	9,749		$	4,637			$	(122,081)			$	1,272,290			$	10,567			$	1,282,857
Net earnings (loss)																			Net earnings (loss)		49				—				—				—			—			—			—			—			(45,357)			—				—				(45,357)				577				(44,780)
Other comprehensive income (loss)																			Other comprehensive income (loss)		515				—				—				—			—			—			—			—			—			296				—				296				(89)				207
Stock-based compensation expense																			Stock-based compensation expense		—				—				—				—			—			—			—			22,836			—			—				—				22,836				—				22,836
Issuance of common stock pursuant to stock-based awards, net of withholding taxes																			Issuance of common stock pursuant to stock-based awards, net of withholding taxes		—				2				2,427				—			—			—			—			(55,809)			—			—				—				(55,807)				—				(55,807)
Issuance of common stock to IAC pursuant to the employee matters agreement																			Issuance of common stock to IAC pursuant to the employee matters agreement		—				3				2,588				—			157			—			—			(3)			—			—				—				—				—				—
Purchase of treasury stock																			Purchase of treasury stock		—				—				—				—			—			—			—			—			—			—				(35,403)				(35,403)				—				(35,403)
Purchase of noncontrolling interests																			Purchase of noncontrolling interests		(22,938)				—				—				—			—			—			—			—			—			—				—				—				(160)				(160)
Adjustment of noncontrolling interests to fair value																			Adjustment of noncontrolling interests to fair value		534				—				—				—			—			—			—			(534)			—			—				—				(534)				—				(534)

Other																			Other		—				—				—				—			—			—			—			(410)			—			—				—				(410)				—				(410)
Balance as of September 30, 2021																			Balance as of September 30, 2021		$	4,524			$	99			99,253				$	422		422,019			$	—		—			$	1,345,549		$	(35,608)		$	4,933			$	(157,484)			$	1,157,911			$	10,895			$	1,168,806

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

Table of Contents

ANGI ~~HOMESERVICES~~ INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

Three and Nine Months Ended September 30, 2020 ~~and 2019~~

(Unaudited)


					ANGI Homeservices Inc. Shareholders' Equity																																																		Angi Inc. Shareholders’ Equity
					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																						Class A Common Stock $0.001 Par Value										Class B Convertible Common Stock $0.001 Par Value												Class C Common Stock $0.001 Par Value																															Total Angi Inc. Shareholders' Equity

																		Accumulated Other Comprehensive (Loss) Income										Total Shareholders' Equity																																			Accumulated Other Comprehensive (Loss) Income																													Total Shareholders' Equity
		Redeemable Noncontrolling Interests																																	Additional Paid-in Capital					Retained Earnings (Accumulated Deficit)								Treasury Stock						Total ANGI Homeservices Inc. Shareholders' Equity				Noncontrolling Interests									Redeemable Noncontrolling Interests																																											Additional Paid-in Capital			Retained Earnings			Treasury Stock		Total Angi Inc. Shareholders' Equity	Noncontrolling Interests
				$			Shares		$							Shares					$			Shares														Total ANGI Homeservices Inc. Shareholders' Equity													$									Shares										$						Shares												$						Shares																	Total Angi Inc. Shareholders' Equity
							(In thousands)																																											(In thousands)
Balance as of June 30, 2020																											Balance as of June 30, 2020				$	25,093											$	89						89,076						$	422					421,757						$	—					—								$	1,387,618					$	19,741					$	(2,740)				$	(112,808)				$	1,292,322	$	9,604	$	1,301,926
Net earnings																											Net earnings				438												—					—								—					—					—						—						—						4,472						—							—					4,472		293		4,765
Other comprehensive income																											Other comprehensive income		920							—								—					—							—					—					—						—						—						1,755						—							1,755					378		2,133
Stock-based compensation expense																											Stock-based compensation expense		—							—						—					—						—						—					—					13,846						—						—						—						13,846					—					13,846
Issuance of common stock pursuant to stock-based awards, net of withholding taxes																											Issuance of common stock pursuant to stock-based awards, net of withholding taxes		—							4					3,584					—						—						—					—					(37,842)						—						—						—						(37,838)					—					(37,838)
Issuance of common stock to IAC pursuant to the employee matters agreement																											Issuance of common stock to IAC pursuant to the employee matters agreement		—							—					—					—						102						—					—					(632)						—						—						—						(632)					—					(632)

Adjustment of redeemable noncontrolling interests to fair value																											Adjustment of redeemable noncontrolling interests to fair value		(677)							—					—					—						—					—					—					677						—						—						—						677					—					677

Purchase of noncontrolling interests																											Purchase of noncontrolling interests		—							—					—					—						—					—					—					—						—						—						—						—					(1,115)					(1,115)
Other																											Other		—							—					—					—						—					—					—					(690)						—						—						—						(690)					689					(1)
Balance as of September 30, 2020																											Balance as of September 30, 2020		$	25,774						$	93				92,660					$	422					421,859					$	—				—					$	1,362,977					$	24,213					$	(985)					$	(112,808)					$	1,273,912				$	9,849				$	1,283,761

Balance as of December 31, 2019	Balance as of December 31, 2019	$	26,663		$	87		87,007				$	422	421,570		$	0		0			$	1,357,075		$	16,032		$	(1,379)				$	(57,949)				$	1,314,288				$	9,264				$	1,323,552		Balance as of December 31, 2019		$	26,663						$	87				87,007						$	422					421,570						$	—					—					$	1,357,075				$	16,032				$	(1,379)			$	(57,949)		$	1,314,288		$	9,264	$	1,323,552
Net earnings	Net earnings	383			—			—		—		—		—		—			—			8,181			—			—					8,181					666					8,847		Net earnings		383								—					—					—						—						—						—						—					8,181					—					—				8,181			666			8,847
Other comprehensive income, net of income taxes		233			—			—		—		—		—		—			—			—			394			—					394					344					738
Other comprehensive income																											Other comprehensive income		233							—					—					—						—					—					—					—						—						394						—						394					344					738
Stock-based compensation expense	Stock-based compensation expense	15			—			—		—		—		—		—			54,664			—			—			—					54,664					—					54,664		Stock-based compensation expense		15								—					—					—						—						—						—						54,664					—					—					—				54,664			—			54,664
Issuance of common stock pursuant to stock-based awards, net of withholding taxes	Issuance of common stock pursuant to stock-based awards, net of withholding taxes	—			6			5,653		—		—		—		—			(48,615)			—			—			—					(48,609)					—					(48,609)		Issuance of common stock pursuant to stock-based awards, net of withholding taxes		—								6					5,653					—						—						—						—						(48,615)					—					—					—				(48,609)			—			(48,609)
Issuance of common stock to IAC pursuant to the employee matters agreement	Issuance of common stock to IAC pursuant to the employee matters agreement	—			—			—		—		289		—		—			(1,423)			—			—			—					(1,423)					—					(1,423)		Issuance of common stock to IAC pursuant to the employee matters agreement		—								—					—					—						289						—						—						(1,423)					—					—					—				(1,423)			—			(1,423)
Purchase of treasury stock	Purchase of treasury stock	—			—			—		—		—		—		—			—			—			—			(54,859)					(54,859)					—					(54,859)		Purchase of treasury stock		—								—					—					—						—						—						—						—					—					—					(54,859)				(54,859)			—			(54,859)
Purchase of redeemable noncontrolling interests	Purchase of redeemable noncontrolling interests	(3,165)			—			—		—		—		—		—			—			—			—			—					—					—					—		Purchase of redeemable noncontrolling interests		(3,165)								—					—					—						—						—						—						—					—					—					—				—			—			—
Adjustment of redeemable noncontrolling interests to fair value	Adjustment of redeemable noncontrolling interests to fair value	1,645			—			—		—		—		—		—			(1,645)			—			—			—					(1,645)					—					(1,645)		Adjustment of redeemable noncontrolling interests to fair value		1,645								—					—					—						—						—						—						(1,645)					—					—					—				(1,645)			—			(1,645)
Purchase of noncontrolling interests	Purchase of noncontrolling interests	—			—			—		—		—		—		—			—			—			—			—					—					(1,115)					(1,115)		Purchase of noncontrolling interests		—								—					—					—						—						—						—						—					—					—					—				—			(1,115)			(1,115)

Adjustment pursuant to the tax sharing agreement	Adjustment pursuant to the tax sharing agreement	—			—			—		—		—		—		—			3,613			—			—			—					3,613					—					3,613		Adjustment pursuant to the tax sharing agreement		—								—					—					—						—						—						—						3,613					—					—					—				3,613			—			3,613
Other	Other	—			—			—		—		—		—		—			(692)			—			—			—					(692)					690					(2)		Other		—								—					—					—						—						—						—						(692)					—					—					—				(692)			690			(2)
Balance as September 30, 2020		$	25,774		$	93		92,660		$	422	421,859		$	0	0			$	1,362,977		$	24,213		$	(985)		$	(112,808)				$	1,273,912				$	9,849				$	1,283,761
Balance as of September 30, 2020																											Balance as of September 30, 2020		$	25,774						$	93				92,660					$	422					421,859					$	—				—					$	1,362,977					$	24,213					$	(985)					$	(112,808)					$	1,273,912				$	9,849				$	1,283,761

Balance as of December 31, 2018 $ 18,163 $ 81 80,515 $ 421 421,118 $ 0 0 $ 1,333,097 $ (18,797) $ (1,861) $ 0 $ 1,312,941 $ 9,046 $ 1,321,987
Net earnings 284 — — — — — — — 34,936 — — 34,936 189 35,125
Other comprehensive loss (514) — — — — — — — — (2,302) — (2,302) (67) (2,369)
Stock-based compensation expense 113 — — — — — — 45,473 — — — 45,473 — 45,473
Issuance of common stock pursuant to stock-based awards, net of withholding taxes — 5 5,560 — — — — (27,805) — — — (27,800) — (27,800)
Issuance of common stock to IAC pursuant to the employee matters agreement — — — 1 452 — — (1,766) — — — (1,765) — (1,765)
Purchase of treasury stock — — — — — — — — — — (34,157) (34,157) — (34,157)
Purchase of redeemable noncontrolling interests (71) — — — — — — — — — — — — —
Adjustment of redeemable noncontrolling interests to fair value 4,024 — — — — — — (4,024) — — — (4,024) — (4,024)
Other — — — — — — — (19) — — — (19) — (19)
Balance as of September 30, 2019 $ 21,999 $ 86 86,075 $ 422 421,570 $ 0 0 $ 1,344,956 $ 16,139 $ (4,163) $ (34,157) $ 1,323,283 $ 9,168 $ 1,332,451

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

Table of Contents

ANGI ~~HOMESERVICES~~ INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)


		Nine Months Ended September 30,					Nine Months Ended September 30,
		2020		2019			2021		2020
		(In thousands)					(In thousands)
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net earnings		$	9,230	$	35,409
Adjustments to reconcile net earnings to net cash provided by operating activities:
Net (loss) earnings						Net (loss) earnings	$	(44,731)	$	9,230
Adjustments to reconcile net (loss) earnings to net cash provided by operating activities:						Adjustments to reconcile net (loss) earnings to net cash provided by operating activities:
Provision for credit losses						Provision for credit losses	66,081		60,090
Stock-based compensation expense	Stock-based compensation expense	55,031		45,586		Stock-based compensation expense	20,390		55,031
Depreciation						Depreciation	45,728		38,614
Amortization of intangibles	Amortization of intangibles	38,846		42,421		Amortization of intangibles	12,616		38,846
Provision for credit losses		60,090		49,294
Depreciation		38,614		27,039
Deferred income taxes	Deferred income taxes	(18,081)		(8,294)		Deferred income taxes	(25,435)		(18,081)

Impairment of long-lived and right-of-use assets						Impairment of long-lived and right-of-use assets	12,280		188
Non-cash lease expense						Non-cash lease expense	9,587		10,166
Revenue reserves						Revenue reserves	6,392		6,998
Other adjustments, net	Other adjustments, net	8,694		6,371		Other adjustments, net	4,226		1,508
Changes in assets and liabilities, net of effects of acquisitions and dispositions:	Changes in assets and liabilities, net of effects of acquisitions and dispositions:					Changes in assets and liabilities, net of effects of acquisitions and dispositions:
Accounts receivable	Accounts receivable	(70,705)		(66,596)		Accounts receivable	(106,234)		(70,705)
Other assets	Other assets	5,200		15,701		Other assets	(3,342)		(4,966)
Accounts payable and other liabilities	Accounts payable and other liabilities	46,941		30,609		Accounts payable and other liabilities	23,271		46,941
Income taxes payable and receivable	Income taxes payable and receivable	(570)		1,628		Income taxes payable and receivable	499		(570)
Deferred revenue	Deferred revenue	(105)		2,916		Deferred revenue	4,560		(105)
Net cash provided by operating activities	Net cash provided by operating activities	173,185		182,084		Net cash provided by operating activities	25,888		173,185
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Acquisition, net of cash acquired	Acquisition, net of cash acquired	0		(20,341)		Acquisition, net of cash acquired	(25,357)		—
Capital expenditures	Capital expenditures	(37,637)		(54,801)		Capital expenditures	(52,056)		(37,637)
Purchases of marketable debt securities	Purchases of marketable debt securities	(49,987)		0		Purchases of marketable debt securities	—		(49,987)
Proceeds from maturities of marketable debt securities	Proceeds from maturities of marketable debt securities	—		25,000		Proceeds from maturities of marketable debt securities	50,000		—
Net proceeds from the sale of a business	Net proceeds from the sale of a business	730		23,615		Net proceeds from the sale of a business	750		730
Other, net		—		(103)

Net cash used in investing activities	Net cash used in investing activities	(86,894)		(26,630)		Net cash used in investing activities	(26,663)		(86,894)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Proceeds from the issuance of Senior Notes	Proceeds from the issuance of Senior Notes	500,000		0		Proceeds from the issuance of Senior Notes	—		500,000
Principal payments on Term Loan	Principal payments on Term Loan	(10,313)		(10,313)		Principal payments on Term Loan	(220,000)		(10,313)
Principal payments on related-party debt		0		(1,008)
Debt issuance costs	Debt issuance costs	(5,635)		0		Debt issuance costs	—		(5,635)

Purchase of treasury stock	Purchase of treasury stock	(54,400)		(33,979)		Purchase of treasury stock	(35,403)		(54,400)
Proceeds from the exercise of stock options		0		573

Withholding taxes paid on behalf of employees on net settled stock-based awards	Withholding taxes paid on behalf of employees on net settled stock-based awards	(49,993)		(30,039)		Withholding taxes paid on behalf of employees on net settled stock-based awards	(56,135)		(49,993)
Distribution from (to) IAC pursuant to the tax sharing agreement		3,071		(11,355)
Distribution from IAC pursuant to the tax sharing agreement						Distribution from IAC pursuant to the tax sharing agreement	—		3,071
Purchase of noncontrolling interests	Purchase of noncontrolling interests	(4,280)		(71)		Purchase of noncontrolling interests	(23,508)		(4,280)
Other, net		0		(3,732)
Net cash provided by (used in) financing activities		378,450		(89,924)
Total cash provided		464,741		65,530

Net cash (used in) provided by financing activities						Net cash (used in) provided by financing activities	(335,046)		378,450
Total cash (used) provided						Total cash (used) provided	(335,821)		464,741
Effect of exchange rate changes on cash and cash equivalents and restricted cash	Effect of exchange rate changes on cash and cash equivalents and restricted cash	(354)		387		Effect of exchange rate changes on cash and cash equivalents and restricted cash	373		(354)
Net increase in cash and cash equivalents and restricted cash		464,387		65,917
Net (decrease) increase in cash and cash equivalents and restricted cash						Net (decrease) increase in cash and cash equivalents and restricted cash	(335,448)		464,387
Cash and cash equivalents and restricted cash at beginning of period	Cash and cash equivalents and restricted cash at beginning of period	391,478		338,821		Cash and cash equivalents and restricted cash at beginning of period	813,561		391,478
Cash and cash equivalents and restricted cash at end of period	Cash and cash equivalents and restricted cash at end of period	$	855,865	$	404,738	Cash and cash equivalents and restricted cash at end of period	$	478,113	$	855,865

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

~~Table of Contents~~

ANGI ~~HOMESERVICES~~ INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1—THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

Angi Inc., formerly ANGI Homeservices, Inc., (“Angi Inc.,” the “Company,” “we,” “our,” or “us”) connects quality home service professionals with consumers across ~~500~~400 different categories, from repairing and remodeling homes to cleaning and ~~landscaping, with consumers.~~landscaping. Over ~~230,000~~260,000 domestic service professionals actively ~~seek~~sought consumer matches, ~~complete~~completed jobs, or ~~advertise~~advertised work through ~~ANGI Homeservices'~~Angi Inc. platforms ~~and~~during the three months ended September 30, 2021. Additionally, consumers ~~turn~~turned to at least one of our brands to find a professional for ~~more than 25~~approximately 33 million projects ~~each year. We’ve established category-transforming products with brands such as HomeAdvisor, Angie’s List, Handy and Fixd Repair.~~during the twelve months ended September 30, 2021.

The Company has 2 operating ~~segments~~segments: (i) North America (United States and Canada), which includes ~~HomeAdvisor, Angie's List, Handy, mHelpDesk, HomeStars~~Angi Ads and ~~Fixd Repair~~Leads and Angi Services; and (ii) ~~Europe, which includes Travaux, MyHammer, MyBuilder, Werkspot~~Europe. The brands for North America operate as follows: Angi Ads operates under the Angi (formerly Angie’s List) brand, Angi Leads operates primarily under the HomeAdvisor, powered by Angi brand, and ~~Instapro.~~Angi Services operates primarily under the Handy brand.

As used herein, ~~"ANGI Homeservices,"~~“Angi Inc.,” the ~~"Company," "ANGI," "we," "our" or "us"~~“Company,” “we,” “our,” “us,” and similar terms refer to ~~ANGI Homeservices~~Angi Inc. and its subsidiaries (unless the context requires otherwise).

At September 30, ~~2020,~~2021, IAC/InterActiveCorp ~~("IAC"~~(“IAC”) owned ~~84.5%~~84.6% and 98.2% of the economic interest and voting interest, respectively, of ~~ANGI Homeservices.~~

~~COVID-19 Update~~

~~The impact on~~ the Company from the COVID-19 outbreak, which has been declared a "pandemic" by the World Health Organization, has been varied. The extent to which developments related to the COVID-19 outbreak and measures designed to curb its spread continue to impact the Company’s business, financial condition and results of operations will depend on future developments, all of which are highly uncertain and many of which are beyond the Company’s control, including the speed of contagion, the development and implementation of effective preventative measures and possible treatments, the scope of governmental and other restrictions on travel, discretionary services (including those provided by certain of our service professionals) and other activity, and public reactions to these developments. For example, these developments and measures have resulted in rapid and adverse changes to the operating environment in which we do business, as well as significant uncertainty concerning the near and long term economic ramifications of the COVID-19 outbreak, which have adversely impacted our ability to forecast our results and respond in a timely and effective manner to trends related to the COVID-19 outbreak. The longer the global outbreak and measures designed to curb the spread of the virus continue to adversely affect levels of consumer confidence, discretionary spending and the willingness of consumers to interact with other consumers, vendors and service providers face-to-face (and in turn, adversely affect demand for the Company’s various products and services), the greater the adverse impact is likely to be on the Company’s business, financial condition and results of operations and the more limited will be the Company’s ability to try and make up for delayed or lost revenues.

~~In March 2020, the Company experienced a decline in demand for service requests, driven primarily by decreases in demand in certain categories of jobs (particularly discretionary indoor projects). In the second quarter of 2020, th~~e Company experienced a rebound in service requests, exceeding pre-COVID-19 growth levels, driven by increased demand from homeowners who spent more time at home due to measures taken to reduce the spread of COVID-19. The Company continued to experience strong demand for home services in the third quarter of 2020. However, many service professionals' businesses have been adversely impacted by labor and material constraints and many service professionals have limited capacity to take on new business, which has negatively impacted the Company's ability to monetize this increased level of service requests.

In addition, the United States, which represents 94% of the Company's revenue for both the three and nine months ended September 30, 2020, has experienced a significant resurgence of the COVID-19 virus with record levels of infection being reported in the weeks following September 30, 2020. Europe, which is the second largest market for the Company's products and services, has also seen a dramatic resurgence in COVID-19. This resurgence and the measures designed to curb its spread could result in continued variability in service requests and/or a reduction in our ability to monetize service requests due to service professional constraints, one or both of which could materially and adversely affect our business, financial condition and results of operations.

~~Table of Contents~~

~~ANGI HOMESERVICES INC. AND SUBSIDIARIES~~

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

~~(Unaudited)~~Company.

Basis of Presentation and Consolidation

The Company prepares its consolidated financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”).

The consolidated financial statements include the accounts of the Company, all entities that are wholly-owned by the Company and all entities in which the Company has a controlling financial interest. ~~Intercompany~~All intercompany transactions and ~~accounts~~balances between and among the Company and its subsidiaries have been eliminated. All intercompany transactions between (i) Angi Inc. and (ii) IAC and its subsidiaries are considered to be effectively settled for cash at the time the transaction is recorded. See “Note 10—Related Party Transactions with IAC” for additional information on transactions between Angi Inc. and IAC.

The Company is included within IAC’s tax group for purposes of federal and consolidated state income tax return filings. For the purpose of these financial statements, income taxes have been computed as if ~~ANGI Homeservices~~Angi Inc. filed tax returns on a standalone, separate tax return basis.Any differences between taxes currently payable to or receivable from IAC under the tax sharing agreement between the Company and IAC and the current tax provision computed on an as if standalone, separate return basis for GAAP are reflected as adjustments to additional paid-in capital and as financing activities within the statement of cash flows.

~~In management's opinion, the~~

The accompanying unaudited ~~interim consolidated~~ financial statements have been prepared onin accordance with GAAP for interim financial information and with the ~~same basis as~~rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and notes required by GAAP for complete annual ~~consolidated~~financial statements. In the opinion of management, the accompanying unaudited financial statements ~~and reflect~~include all ~~adjustments, consisting of~~ normal ~~and~~ recurring adjustments considered necessary for ~~the~~a fair ~~presentation of the Company's consolidated financial position, consolidated results of operations and consolidated cash flows for the periods presented.~~presentation. Interim results are not necessarily indicative of the results that may be expected for the full year. The accompanying unaudited interim ~~consolidated~~ financial statements should be read in conjunction with the annual audited ~~consolidated~~ financial statements and notes thereto ~~included in the Company's Annual Report on Form 10-K~~ for the year ended December 31, ~~2019.~~2020.

COVID-19 Update

The impact on the Company from the COVID-19 pandemic and the measures designed to contain its spread has been varied and volatile.

As previously disclosed, the initial impact of COVID-19 on the Company resulted in a decline in demand for service requests, driven primarily by decreases in demand in certain categories of jobs (particularly discretionary indoor projects). While we experienced a rebound in service requests in the second half of 2020 and through early 2021, service requests did start to decline in May 2021 compared to the comparable months of 2020 as a result of the surge in 2020 and due to impacts of

Table of Contents

ANGI INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

the brand integration initiative launched on March 17, 2021. Moreover, many service professionals’ businesses had been adversely impacted by labor and material constraints and many service professionals had limited capacity to take on new business, which negatively impacted our ability to monetize this increased level of service requests through the first quarter of 2021. Although our ability to monetize service requests rebounded modestly in the second and third quarters of 2021, we still have not returned back to levels we experienced pre-COVID-19. No assurances can be provided that we will continue to be able to improve monetization, or that service professionals’ businesses will not be adversely impacted in the future.

The extent to which developments related to the COVID-19 pandemic and measures designed to curb its spread continue to impact the Company’s business, financial condition and results of operations will depend on future developments, all of which are highly uncertain and many of which are beyond the Company’s control, including the continuing spread of COVID-19, the severity of resurgences of COVID-19 caused by variant strains of the virus, the effectiveness of vaccines and attitudes toward receiving them, materials and supply chain constraints, labor shortages, the scope of governmental and other restrictions on travel, discretionary services and other activity, and public reactions to these developments.

Accounting Estimates

Management of the Company is required to make certain estimates, judgments, and assumptions during the preparation of its consolidated financial statements in accordance with GAAP. These estimates, judgments, and assumptions impact the reported amounts of assets, liabilities, revenue, and expenses and the related disclosure of contingent assets and liabilities. Actual results could differ from these estimates.

On an ongoing basis, the Company evaluates its estimates and judgments, including those related to: the fair values of cash ~~equivalents;~~equivalents and marketable debt securities; the carrying value of accounts receivable, including the determination of the allowance for credit ~~losses;~~losses and the determination of revenue reserves; the determination of the customer relationship period for certain costs to obtain a contract with a customer; the carrying value of right-of-use assets ("(“ROU ~~assets"~~assets”); the useful lives and recoverability of definite-lived intangible assets and capitalized software, leasehold improvements, and equipment; the recoverability of goodwill and indefinite-lived intangible assets; unrecognized tax benefits; the valuation allowance for deferred income tax assets; and the fair value of and forfeiture rates for stock-based awards, among others. The Company bases its estimates and judgments on historical experience, its forecasts and budgets, and other factors that the Company considers relevant.

General Revenue Recognition

Revenue is recognized when control of the promised ~~services~~goods or ~~goods~~services is transferred to the ~~Company's~~Company’s customers and in the amount that reflects the consideration the Company expects to be entitled to in exchange for those ~~services~~goods or ~~goods.~~services.

The ~~Company's~~Company’s disaggregated revenue disclosures are presented in "“Note 7—Segment Information."”

Prior to January 1, 2020, Handy recorded revenue on a net basis. Effective January 1, 2020, the Company modified the Handy terms and conditions so that Handy, rather than the service professional, has the contractual relationship with the consumer to deliver the service and Handy, rather than the consumer, has the contractual relationship with the service professional. Consumers request services and pay for such services directly through the Handy platform and then Handy fulfills the request with independently established home services providers engaged in a trade, occupation and/or business that customarily provides such services. This change in contractual terms requires gross revenue accounting treatment effective January 1, 2020. Also, in the case of certain tasks, HomeAdvisor provides a pre-priced product offering, pursuant to which consumers can request services through a HomeAdvisor platform and pay HomeAdvisor for the services directly. HomeAdvisor then fulfills the request with independently established home services providers engaged in a trade, occupation and/or business that customarily provides such services. Revenue from HomeAdvisor’s pre-priced product offering is also

~~Table of Contents~~

~~ANGI HOMESERVICES INC. AND SUBSIDIARIES~~

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

~~(Unaudited)~~

recorded on a gross basis effective January 1, 2020. In addition to changing the presentation of revenue to gross from net, the timing of revenue recognition changed for HomeAdvisor pre-priced jobs and will be later than consumer connection revenue because the Company will not be able to record revenue, generally, until the service professional completes the job on the Company's behalf. The change to gross revenue reporting for Handy and HomeAdvisor’s pre-priced product offering, effective January 1, 2020, resulted in an increase in revenue of $20.8 million and $51.3 million during the three and nine months ended September 30, 2020, respectively.

Deferred Revenue

Deferred revenue consists of payments that are received or are contractually due in advance of the ~~Company's performance.~~Company’s performance obligation. The Company’s deferred revenue is reported on a ~~contract by contract~~contract-by-contract basis at the end of each reporting period.The Company classifies deferred revenue as current when the remaining term of the applicable subscription period or expected completion of ~~the Company's~~its performance obligation is one year or less. ~~The~~At December 31, 2020, the current and non-current deferred revenue balances atwere $54.7 million and $0.2 million, respectively, and during the nine months ended September 30, 2021, the Company recognized $52.3 million of revenue that was included in the deferred revenue balance as of December 31, 2020. At December 31, 2019, the current and non-current deferred revenue balances were $58.2 million and $0.2 million, ~~respectively. During~~respectively, and during the nine months ended September 30, 2020, the Company recognized $55.7 million of revenue that was included in the deferred revenue balance as of December 31, 2019. ~~During the nine months ended September 30, 2019, the Company recognized $58.5 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 September 30, ~~2020~~2021 are ~~$58.2~~$60.0 million and $0.1 million, respectively. Non-current deferred revenue is included in “Other long-term liabilities” in the accompanying consolidated balance sheet.

Table of Contents

ANGI INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Practical Expedients and Exemptions

As permitted under the practical expedient available under Accounting Standards Update ~~("ASU"~~(“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 series guidance, and (iii) contracts for which the Company recognizes revenue at the amount which the Company has the right to invoice for services performed.

Commissions Paid to Employees Pursuant to Sales Incentive Programs

The Company has determined that commissions paid to employees pursuant to certain sales incentive programs meet the requirements to be capitalized as the incremental costs to obtain a contract with a customer. When customer renewals are expected and the renewal commission is not commensurate with the initial commission, the average customer life includes renewal periods.Capitalized commissions paid to employees pursuant to these sales incentive programs are amortized over the estimated customer relationship period. The Company calculates the anticipated customer relationship period as the average customer life, which is based on historical data.

For sales incentive programs where the anticipated customer relationship period is one year or less, the Company has elected the practical expedient to expense the ~~costs~~commissions as incurred.

Assets Recognized from the Costs to Obtain a Contract with a Customer

The ~~amount~~Company uses a portfolio approach to assess the accounting treatment of the incremental costs to obtain a contract with a customer. The Company recognizes an asset for these costs if we expect to recover those costs. To the extent that these costs are capitalized, ~~sales commissions where~~ the ~~initial customer relationship period~~resultant asset is ~~greater than one year is $52.2~~amortized on a systematic basis consistent with the pattern of the transfer of the services to which the asset relates. The current contract assets are $40.3 million and ~~$39.1~~$49.2 million at September 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively. The non-current assets are $1.2 million and $0.4 million at September 30, 2021 and December 31, 2020, respectively. The current and non-current capitalized ~~sales commissions balances~~costs to obtain a contract with a customer are included in ~~"Other~~“Other current ~~assets"~~assets” and ~~"Other~~“Other non-current ~~assets"~~assets” in the accompanying ~~consolidated~~ balance ~~sheet and are $50.0 million and $2.2 million, and $35.1 million and $4.0 million, at September 30, 2020 and December 31, 2019, respectively.~~

~~Allowance for Credit Losses and Revenue Reserve~~

~~The following table presents the changes in the allowance for credit losses for the nine months ended September 30, 2020:~~


	~~September 30, 2020~~
	~~(In thousands)~~
~~Balance at January 1~~	$	~~19,066~~
~~Current period provision for credit losses~~	~~60,090~~
~~Write-offs charged against the allowance~~	~~(53,208)~~
~~Recoveries collected~~	~~1,883~~
~~Balance at September 30~~	$	~~27,831~~

~~The revenue reserve~~ ~~was~~ $2.0 million and $1.2 million at September 30, 2020 and December 31, 2019, respectively. The total allowance for credit losses and revenue reserve was $29.8 million and $20.3 million as of September 30, 2020 and December 31, 2019, respectively.

~~Table of Contents~~

~~ANGI HOMESERVICES INC. AND SUBSIDIARIES~~

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

~~(Unaudited)~~sheet.

~~Adoption of New~~Recent Accounting Pronouncements

~~Adoption~~Accounting Pronouncement Not Yet Adopted by the Company

ASU 2021-08 – Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers

In October 2021, the Financial Accounting Standards Board issued ASU No. 2021-08, which changes how entities will recognize assets acquired and liabilities assumed in a business combination, including contract assets and contract liabilities arising from revenue contracts with customers. The provisions of ASU No. ~~2016-13, Financial Instruments—Credit Losses~~2021-08 will require acquiring entities to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASU No. 2014-09 (Topic ~~326): Measurement~~606), Revenue from Contracts with Customers, as if it had originated the contracts. The provisions of ~~Credit Losses on Financial Instruments~~

ASU No. 2021-08 are effective for fiscal years beginning after December 15, 2022, with early adoption permitted, including adoption in an interim period. The Company ~~adopted~~will early adopt ASU ~~No. 2016-13~~2021-08 effective ~~January 1, 2020.~~ ~~ASU No. 2016-13 replaces~~in the ~~“incurred loss” approach with~~fourth quarter of 2021. An entity that early adopts in an ~~“expected loss” model, under~~interim period is required to apply the amendments (i) retrospectively to all business combinations for which ~~companies~~the acquisition date occurs on or after the beginning of the fiscal year that includes the interim period of early adoption and (ii) prospectively to all business combinations that occur on or after the date of initial application. Early adoption will ~~recognize allowances based~~have no material retrospective impact on ~~expected rather than incurred losses. The Company adopted~~ ~~ASU No. 2016-13~~ ~~using~~ the ~~modified retrospective approach and there was 0 cumulative effect arising from the adoption.~~Company. The adoption of ASU ~~No. 2016-13 did not~~2021-08 may have a material impact on the ~~Company's consolidated financial statements.~~

~~Adoption of ASU No. 2019-12,~~ ~~Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes~~

~~The Company adopted ASU No.~~ ~~2019-12 effective January 1, 2020, which simplifies the~~purchase accounting for ~~income taxes, eliminates certain exceptions within ASC 740,~~ ~~Income Taxes~~,~~and clarifies certain aspects of the current guidance to promote consistency among reporting entities. Most amendments within ASU No. 2019-12 are required to be applied on a~~ prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. The Company adopted ASU No. 2019-12 on January 1, 2020 using the modified retrospective basis for those amendments that are not applied on a prospective basis. The adoption of ASU No. 2019-12 did not have a material impact on the Company’s consolidated financial statements.business combinations.

Reclassifications

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

Table of Contents

ANGI INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

NOTE 2—INCOME TAXES

The Company is included within IAC’s tax group for purposes of federal and consolidated state income tax return filings. In all periods presented, the income tax ~~benefit/~~benefit and/or provision ~~have~~has been computed for the Company on an as if standalone, separate return basis and payments to and refunds from IAC for the ~~Company's~~Company’s share of IAC’s consolidated federal and state tax return liabilities/receivables calculated on this basis have been reflected within cash flows from operating activities in the accompanying consolidated statement of cash flows. The tax sharing agreement between the Company and IAC governs the parties’ respective rights, responsibilities and obligations with respect to tax matters, including responsibility for taxes attributable to the Company, entitlement to refunds, allocation of tax attributes and other matters and, therefore, ultimately governs the amount payable to or receivable from IAC with respect to income taxes. Any differences between taxes currently payable to or receivable from IAC under the tax sharing agreement and the current tax provision computed on an as if standalone, separate return basis for GAAP are reflected as adjustments to additional paid-in capital ~~in the consolidated statement of shareholders' equity~~ and as financing activities within the ~~consolidated~~ statement of cash flows.

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

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

~~Table~~ Included in the income tax benefit for the three months ended September 30, 2021 is a benefit of ~~Contents~~

~~ANGI HOMESERVICES INC. AND SUBSIDIARIES~~

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

~~(Unaudited)~~$0.6 million due to a higher estimated annual effective tax rate from that applied to the second quarter’s year to date ordinary loss from continuing operations. The higher estimated annual effective tax rate was primarily due to the reduced impact of forecasted nondeductible stock-based compensation expense had on the increase in forecasted ordinary pre-tax losses.

For the three and nine months ended September 30, 2021, the Company recorded an income tax benefit of $4.8 million and $23.2 million, which represents an effective income tax rate of 22% and 34%, respectively.For the three months ended September 30, 2021, the effective income tax rate is higher than the statutory rate of 21% due primarily to benefits related to a change in the annual expected effective income tax rate, partially offset by foreign income taxed at different tax rates.For the nine months ended September 30, 2021, the effective income tax rate is higher than the statutory rate of 21% due primarily to excess tax benefits generated by the exercise and vesting for stock-based awards, partially offset by foreign income taxed at different tax rates. For the three months ended September 30, 2020, the Company recorded an income tax benefit of $11.7 million due primarily to excess tax benefits generated by the exercise and vesting of stock-based awards. For the nine months ended September 30, 2020, the Company recorded an income tax benefit of $17.6 million due primarily to excess tax benefits generated by the exercise and vesting of stock-based awards and a reduction to deferred taxes due to the true-up of the state tax rate for an indefinite-lived intangible ~~asset~~asset.

. For the three months ended September 30, 2019, the Company recorded an income tax provision of $4.9 million, which represents an effective income tax rate of 21% and approximates the statutory rate of 21% due primarily to unbenefited foreign losses and state taxes, offset by research credits and excess tax benefits generated by the exercise and vesting of stock-based awards. For the nine months ended September 30, 2019, the Company recorded an income tax benefit, despite pre-tax income, of $7.1 million due primarily to 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 the income tax provision. ~~Accruals~~There are currently no accruals for interest and ~~penalties are not material.~~penalties.

The Company is routinely under audit by federal, state, local and foreign authorities in the area of income tax as a result of previously filed separate company and consolidated tax returns with IAC. These audits include questioning the timing and the amount of income and deductions and the allocation of income and deductions among various tax jurisdictions. The Internal Revenue Service (“IRS”) has substantially completed its audit of IAC’s federal income tax returns for the years ended December 31, ~~2010~~2013 through ~~2016,~~2017, and has begun its audit of the years December 31, 2018 through 2019, which includes the operations of the Company. The ~~IRS began its audit of the year ended December 31, 2017 in the second quarter of 2020. The~~ statutes of limitations ~~for the years 2010 through 2012 and~~ for the years 2013 through 2017 have been extended to ~~May 31, 2021 and December 31, 2021, respectively.~~June 30, 2022. Returns filed in various other jurisdictions are open to examination for various tax years beginning with 2009. Income taxes

Table of Contents

ANGI INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

payable include unrecognized tax benefits considered sufficient to pay assessments that may result from examination of prior year tax returns. The Company considers many factors when evaluating and estimating its tax positions and tax benefits, which may not accurately anticipate actual outcomes and, therefore, may require periodic adjustment. Although management currently believes changes in unrecognized tax benefits from period to period and differences between amounts paid, if any, upon resolution of issues raised in audits and amounts previously provided will not have a material impact on ~~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.

At September 30, ~~2020~~2021 and December 31, ~~2019,~~2020, the Company has unrecognized tax benefits ~~including interest~~ of ~~$4.2~~$5.8 million and ~~$4.1~~$5.3 million, ~~respectively, were included in unrecognized tax positions~~respectively; all of which are for tax positions included in IAC’s consolidated tax return filings. If unrecognized tax benefits at September 30, ~~2020~~2021 are subsequently recognized, the income tax provision would be reduced by ~~$4.1~~$5.6 million. The comparable amount as of December 31, ~~2019~~2020 is ~~$4.0~~$5.1 million. The Company believes it is reasonably possible that its unrecognized tax benefits could decrease by $0.5 million by September 30, 2021 due to settlements, all of which would reduce the income tax provision.

The Company regularly assesses the realizability of deferred tax assets considering all available evidence including, to the extent applicable, the nature, frequency and severity of prior cumulative losses, forecasts of future taxable income, tax filing status, the duration of statutory carryforward periods, available tax planning and historical experience. As of September 30, ~~2020,~~2021, the Company has a U.S. ~~federal and state~~ gross deferred tax asset of ~~$190.1~~$203.6 million that the Company expects to fully utilize on a more likely than not basis. Of this amount, ~~$65.2~~$54.4 million will be utilized upon the future reversal of deferred tax liabilities and the remaining net deferred tax asset of ~~$124.9~~$149.2 million will be utilized based on forecasts of future taxable income.

~~Table~~ The Company’s most significant net deferred tax asset relates to U.S. federal net operating loss (“NOL”) carryforwards of ~~Contents~~

~~ANGI HOMESERVICES INC. AND SUBSIDIARIES~~

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

~~(Unaudited)~~$89.5 million. The Company expects to generate sufficient future taxable income of at least $426.2 million prior to the expiration of these NOLs, the majority of which expire between 2030 and 2037, and a portion of which never expire, to fully realize this deferred tax asset.

NOTE 3—FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

Marketable Debt Securities

~~At September 30, 2020, current available-for-sale marketable debt securities are as follows:~~

Amortized
Cost Gross
Unrealized
Gains Gross
Unrealized
Losses Fair Value
(In thousands)
Treasury discount notes $ 49,991 $ 1 $ 0 $ 49,992
Total available-for-sale marketable debt securities $ 49,991 $ 1 $ 0 $ 49,992

The Company did 0tnot hold any available-for-sale marketable debt securities at September 30, 2021.

At December 31, ~~2019.~~2020, 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	$	49,995	$	—	$	—	$	49,995
Total available-for-sale marketable debt securities	$	49,995	$	—	$	—	$	49,995

The contractual maturities of debt securities classified as current available-for-sale at ~~September 30,~~December 31, 2020 ~~are~~were within one year.

Fair Value Measurements

The Company categorizes its financial instruments measured at fair value into a fair value hierarchy that prioritizes the inputs used in pricing the asset or liability. The three levels of the fair value hierarchy are:

•Level 1: Observable inputs obtained from independent sources, such as quoted market prices for identical assets and liabilities in active markets.

•Level 2: Other inputs, which are observable directly or indirectly, such as quoted market prices for similar assets or liabilities in active markets, quoted market prices for identical or similar assets or liabilities in markets that are not active and inputs that are derived principally from or corroborated by observable market data. The fair values of the ~~Company's~~Company’s Level 2 financial assets are primarily obtained from observable market prices for identical underlying securities that may not be actively

Table of Contents

ANGI INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

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, 2020									September 30, 2021
		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 for Identical Assets in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value Measurements
		(In thousands)									(In thousands)
Assets:	Assets:									Assets:
Cash equivalents:	Cash equivalents:									Cash equivalents:
Money market funds	Money market funds	$	269,013	$	0	$	0	$	269,013	Money market funds	$	314,040	$	—	$	—	$	314,040
Treasury discount notes		0		474,976		0		474,976
Time deposits		0		2,988		0		2,988
Marketable debt securities:
Treasury discount notes		0		49,992		0		49,992

Total	Total	$	269,013	$	527,956	$	0	$	796,969	Total	$	314,040	$	—	$	—	$	314,040

~~Table of Contents~~

~~ANGI HOMESERVICES INC. AND SUBSIDIARIES~~

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

~~(Unaudited)~~


		December 31, 2019									December 31, 2020
		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 for Identical Assets in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value Measurements
		(In thousands)									(In thousands)
Assets:	Assets:									Assets:
Cash equivalents:	Cash equivalents:									Cash equivalents:
Money market funds	Money market funds	$	291,810	$	0	$	0	$	291,810	Money market funds	$	374,014	$	—	$	—	$	374,014
Treasury discount notes										Treasury discount notes	—		324,995		—		324,995
Time deposits	Time deposits	0		23,040		0		23,040		Time deposits	—		2,721		—		2,721
Marketable debt securities:										Marketable debt securities:
Treasury discount notes										Treasury discount notes	—		49,995		—		49,995
Total	Total	$	291,810	$	23,040	$	0	$	314,850	Total	$	374,014	$	377,711	$	—	$	751,725

Assets measured at fair value on a nonrecurring basis

The Company’s non-financial assets, such as goodwill, intangible assets, ROU assets, capitalized software, leasehold improvements and equipment are adjusted to fair value only when an impairment is recognized. Such fair value measurements are based predominantly on Level 3 inputs.

During the nine months ended September 30, 2021, the Company recorded $9.6 million in impairment charges on ROU assets, leasehold improvements, and furniture and equipment as a result of the Company reducing its real estate footprint. Impairment expense was determined by comparing the carrying value of each asset group related to each office space vacated to the estimated fair market value of cash inflows directly associated with each office space. Based on this analysis, if the carrying amount of the asset group is greater than the estimated future undiscounted cash flows, an impairment charge is recognized, measured as the amount by which the carrying amount exceeds the fair value of the asset.

Table of Contents

ANGI INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Financial instruments measured at fair value only for disclosure purposes

The following table presents the carrying value and the fair value of financial instruments measured at fair value only for disclosure purposes:

September 30, 2020 December 31, 2019
Carrying value Fair value Carrying value Fair value
(In thousands)
Current portion of long-term debt $ (13,750) $ (13,750) $ (13,750) $ (13,681)
Long-term debt, net (a)
$ (715,408) $ (715,288) $ (231,946) $ (232,581)


	September 30, 2021				December 31, 2020
	Carrying Value		Fair Value		Carrying Value		Fair Value
	(In thousands)

Long-term debt, net (a)	$	(494,373)	$	(495,625)	$	(712,277)	$	(725,700)

~~_________________~~________________________

(a) At September 30, ~~2020~~2021 and December 31, ~~2019,~~2020, the carrying value of long-term debt, net includes unamortized debt issuance costs of ~~$8.0~~$5.6 million and ~~$1.8~~$7.7 million, respectively.

~~At September 30, 2020 and December 31, 2019, the~~

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.

NOTE 4—LONG-TERM DEBT

Long-term debt consists of:

September 30, 2020 December 31, 2019
(In thousands)
3.875% ANGI Group Senior Notes due August 15, 2028 ("Senior Notes"); interest payable each February 15 and August 15, commencing February 15, 2021 $ 500,000 $ 0
ANGI Group Term Loan due November 5, 2023 ("Term Loan") 237,188 247,500
Total long-term debt 737,188 247,500
Less: current portion of Term Loan 13,750 13,750
Less: unamortized debt issuance costs 8,030 1,804
Total long-term debt, net $ 715,408 $ 231,946

~~Table of Contents~~

~~ANGI HOMESERVICES INC. AND SUBSIDIARIES~~

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

~~(Unaudited)~~


	September 30, 2021		December 31, 2020
	(In thousands)
3.875% ANGI Group Senior Notes due August 15, 2028 (“ANGI Group Senior Notes”); interest payable each February 15 and August 15, commencing February 15, 2021	$	500,000	$	500,000
ANGI Group Term Loan due November 5, 2023 (“ANGI Group Term Loan”)	—		220,000
Total long-term debt	500,000		720,000

Less: unamortized debt issuance costs	5,627		7,723
Total long-term debt, net	$	494,373	$	712,277

ANGI Group Senior Notes

OnThe ANGI Group Senior Notes were issued on August 20, 2020, ~~ANGI Group, LLC ("ANGI Group"), a direct, wholly-owned subsidiary of the Company, issued $500 million in aggregate principal amount of the Senior Notes,~~ the proceeds of which ~~are intended~~have been used for general corporate purposes, including ~~potential future acquisitions~~the acquisition of Total Home Roofing, Inc. (“Angi Roofing”) on July 1, 2021, and ~~return of capital.~~ treasury share purchases.At any time prior to August 15, 2023, these notes may be redeemed at a redemption price equal to the sum of the principal amount thereof, plus accrued and unpaid interest and a make-whole premium.Thereafter, these notes may be redeemed at the redemption prices set forth ~~below,~~in the indenture governing the notes, plus accrued and unpaid interest thereon, if any, to the applicable redemption ~~date, if redeemed during the twelve-month period beginning on August 15 of the years indicated below:~~date.

Year Percentage
2023 101.938 %
2024 100.969 %
2025 and thereafter 100.000 %

The indenture governing the ANGI Group Senior Notes contains a covenant that would limit ANGI Group’s ability to incur liens for borrowed money in the event a default has occurred or ANGI Group’s secured leverage ratio (as defined in the indenture) exceeds 3.75 to 1.0. At September 30, ~~2020,~~2021, there were no limitations pursuant thereto.

~~Term Loan and~~

ANGI Group Revolving Facility

The $250.0 million ANGI ~~was a party to a credit agreement that terminates~~Group Revolving Facility, which otherwise would have expired on November 5, ~~2021. The credit agreement governs the Term Loan and revolving credit facility (the "Revolving Facility"). On~~2023, was terminated effective August ~~12, 2020,~~3, 2021.No amounts were ever drawn under the ANGI Group entered into a joinder agreement with the Company, the other subsidiaries of the Company that are party to the credit agreement, and each of the other loan parties to the credit agreement, pursuant to which ANGI Group became the successor borrower under the credit agreement and ANGI Homeservices Inc.'s obligations thereunder were terminated. In addition, on August 12, 2020, the definition of "Permitted Unsecured Ratio Debt" in the credit agreement was amended to remove the requirement that guarantees of certain indebtedness of the borrower be subordinated to the guarantees under the credit agreement.

The outstanding balance of the Term Loan was $237.2 million and $247.5 million at September 30, 2020 and December 31, 2019, respectively. 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. Additionally, interest payments are due at least quarterly through the term of the loan. At both September 30, 2020 and December 31, 2019, the Term Loan bore interest at LIBOR plus 1.50%, or 1.66% and 3.25%, respectively. The spread over LIBOR is subject to change in future periods based on ANGI Group's consolidated net leverage ratio.

The Term Loan requires ANGI Group 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 credit agreement also contains covenants that would limit ANGI Group's ability to pay dividends or make distributions in the event a default has occurred or ANGI Group's consolidated net leverage ratio exceeds 4.25 to 1.0. At September 30, 2020, there were no limitations pursuant thereto.

~~The $250 million~~ Revolving Facility expires on November 5, 2023. At September 30, 2020 and December 31, 2019, there were 0 outstanding borrowings under the Revolving Facility. The annual commitment fee on undrawn funds is based on ANGI Group's consolidated net leverage ratio most recently reported and was 25 basis points at both September 30, 2020 and December 31, 2019. Any future borrowings under the Revolving Facility would bear interest, at ANGI Group's option, at either a base rate or LIBOR, in each case plus an applicable margin, which is based on ANGI Group's consolidated net leverage ratio. The financial and other covenants are the same as those for the Term Loan.prior to its termination.

1615

Table of Contents

ANGI ~~HOMESERVICES~~ INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

ANGI Group Term Loan

~~The Senior Notes, Term Loan and Revolving Facility are guaranteed by certain~~As of May 6, 2021, the outstanding balance of the ANGI ~~Group's wholly-owned material domestic subsidiaries and ANGI Group's obligations under the~~Group Term Loan ~~and~~was repaid in its entirety. The outstanding balance of the ~~Revolving Facility are secured by substantially all assets of~~ ANGI Group ~~and the guarantors, subject to certain exceptions. The~~ Term Loan at December 31, 2020 was $220.0 million and outstanding borrowings, if any, under the Revolving Facility rank equally with each other, and have priority over the Senior Notes to the extent of the value of the assets securing the borrowings under the credit agreement.bore interest at 2.16%.

~~Long-term Debt Maturities~~

~~Long-term debt maturities as of September 30, 2020 are summarized in the table below:~~

(In thousands)
Remainder of 2020 $ 3,438
2021 13,750
2022 27,500
2023 192,500
2028 500,000
Total 737,188
Less: current portion of Term Loan 13,750
Less: unamortized debt issuance costs 8,030
Total long-term debt, net $ 715,408

NOTE 5—ACCUMULATED OTHER COMPREHENSIVE ~~LOSS~~INCOME (LOSS)

The following tables present the components of accumulated other comprehensive ~~loss:~~income (loss):


		Three Months Ended September 30,						Three Months Ended September 30,
		2020		2019				2021						2020
		Foreign Currency Translation Adjustment		Accumulated Other Comprehensive Loss		Foreign Currency Translation Adjustment			Accumulated Other Comprehensive Loss			Foreign Currency Translation Adjustment		Accumulated Other Comprehensive Income		Foreign Currency Translation Adjustment		Accumulated Other Comprehensive Loss
		(In thousands)						(In thousands)
Balance at July 1	Balance at July 1	$	(2,740)	$	(2,740)	$	(1,482)		$	(1,482)	Balance at July 1	$	5,973	$	5,973	$	(2,740)	$	(2,740)
Other comprehensive income (loss)		1,755		1,755		(2,681)			(2,681)
Other comprehensive (loss) income											Other comprehensive (loss) income	(1,040)		(1,040)		1,755		1,755
Balance at September 30	Balance at September 30	$	(985)	$	(985)	$	(4,163)		$	(4,163)	Balance at September 30	$	4,933	$	4,933	$	(985)	$	(985)


		Nine Months Ended September 30,											Nine Months Ended September 30,
		2020				2019							2021				2020
		Foreign Currency Translation Adjustment		Accumulated Other Comprehensive Loss		Foreign Currency Translation Adjustment		Unrealized Gains (Losses) On Available-For-Sale Debt Securities		Accumulated Other Comprehensive Loss			Foreign Currency Translation Adjustment		Accumulated Other Comprehensive Income		Foreign Currency Translation Adjustment		Accumulated Other Comprehensive Loss
		(In thousands)											(In thousands)
Balance at January 1	Balance at January 1	$	(1,379)	$	(1,379)	$	(1,864)	$	3	$	(1,861)	Balance at January 1	$	4,637	$	4,637	$	(1,379)	$	(1,379)
Other comprehensive income (loss )		394		394		(2,299)		(3)		(2,302)
Other comprehensive income												Other comprehensive income	296		296		394		394
Balance at September 30	Balance at September 30	$	(985)	$	(985)	$	(4,163)	$	0	$	(4,163)	Balance at September 30	$	4,933	$	4,933	$	(985)	$	(985)

At both September 30, ~~2020~~2021 and ~~2019,~~2020, there was 0no tax benefit or provision on the accumulated other comprehensive ~~loss.~~income (loss).

1716

Table of Contents

ANGI ~~HOMESERVICES~~ INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

NOTE 6—(LOSS) EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted (loss) earnings per share attributable to ~~ANGI Homeservices~~Angi Inc. Class A and Class B Common Stock shareholders:

Three Months Ended September 30,
2020 2019
Basic Diluted Basic Diluted
(In thousands, except per share data)
Numerator:
Net earnings $ 5,203 $ 5,203 $ 18,324 $ 18,324
Net earnings attributable to noncontrolling interests (731) (731) (325) (325)
Net earnings attributable to ANGI Homeservices Inc. shareholders $ 4,472 $ 4,472 $ 17,999 $ 17,999
Denominator:
Weighted average basic shares outstanding 497,501 497,501 505,836 505,836
Dilutive securities (a) (b)
— 17,218 — 6,241
Denominator for earnings per share—weighted average shares 497,501 514,719 505,836 512,077
Earnings per share attributable to ANGI Homeservices Inc. shareholders:
Earnings per share $ 0.01 $ 0.01 $ 0.04 $ 0.04


	Three Months Ended September 30,
	2021				2020
	Basic		Diluted		Basic		Diluted
	(In thousands, except per share data)
Numerator:
Net (loss) earnings	$	(16,693)	$	(16,693)	$	5,203	$	5,203
Net earnings attributable to noncontrolling interests	(302)		(302)		(731)		(731)
Net (loss) earnings attributable to Angi Inc. Class A and Class B Common Stock shareholders	$	(16,995)	$	(16,995)	$	4,472	$	4,472

Denominator:
Weighted average basic Class A and Class B common stock shares outstanding	503,416		503,416		497,501		497,501
Dilutive securities (a) (b) (c)	—		—		—		17,218
Denominator for (loss) earnings per share—weighted average shares	503,416		503,416		497,501		514,719

(Loss) earnings per share attributable to Angi Inc. Class A and Class B Common Stock shareholders:
(Loss) earnings per share	$	(0.03)	$	(0.03)	$	0.01	$	0.01

Nine Months Ended September 30,
2020 2019
Basic Diluted Basic Diluted
(In thousands, except per share data)
Numerator:
Net earnings $ 9,230 $ 9,230 $ 35,409 $ 35,409
Net earnings attributable to noncontrolling interests (1,049) (1,049) (473) (473)
Net earnings attributable to ANGI Homeservices Inc. shareholders $ 8,181 $ 8,181 $ 34,936 $ 34,936
Denominator:
Weighted average basic shares outstanding 497,574 497,574 505,661 505,661
Dilutive securities (a) (b)
— 13,901 — 12,955
Denominator for earnings per share—weighted average shares 497,574 511,475 505,661 518,616
Earnings per share attributable to ANGI Homeservices Inc. shareholders:
Earnings per share $ 0.02 $ 0.02 $ 0.07 $ 0.07


	Nine Months Ended September 30,
	2021				2020
	Basic		Diluted		Basic		Diluted
	(In thousands, except per share data)
Numerator:
Net (loss) earnings	$	(44,731)	$	(44,731)	$	9,230	$	9,230
Net earnings attributable to noncontrolling interests	(626)		(626)		(1,049)		(1,049)
Net (loss) earnings attributable to Angi Inc. Class A and Class B Common Stock shareholders	$	(45,357)	$	(45,357)	$	8,181	$	8,181

Denominator:
Weighted average basic Class A and Class B common stock shares outstanding	502,859		502,859		497,574		497,574
Dilutive securities (a) (b) (c)	—		—		—		13,901
Denominator for (loss) earnings per share—weighted average shares	502,859		502,859		497,574		511,475

(Loss) earnings per share attributable to Angi Inc. Class A and Class B Common Stock shareholders:
(Loss) Earnings per share	$	(0.09)	$	(0.09)	$	0.02	$	0.02

________________________

~~Table of Contents~~(a) For the three and nine months ended September 30, 2021, the Company had a loss from operations and as a result, approximately 21.2 million potentially dilutive securities were excluded from computing dilutive earnings per share because the impact would have been anti-dilutive. Accordingly, the weighted average basic shares outstanding were used to compute all earnings per share amounts.

~~ANGI HOMESERVICES INC. AND SUBSIDIARIES~~

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

~~(Unaudited)~~

~~(a)~~(b) 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 ~~("RSUs"~~(“RSUs”). For the three and nine months ended September

Table of Contents

ANGI INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

30, 2020, 1.4 million and 5.4 million, respectively, of potentially dilutive securities ~~respectively, are~~were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive. For the three and nine months ended September 30, 2019, 6.4 million and 6.0 million potentially dilutive securities, respectively, are excluded from the calculation of diluted securities per share because their inclusion would have been anti-dilutive.

~~(b)~~ (c)Market-based awards and performance-based stock units ~~("PSUs"~~(“PSUs”) are considered contingently issuable shares. Shares issuable upon exercise or vesting of market-based awards and PSUs are included in the denominator for earnings per share if (i) the applicable market or performance condition(s) has been met and (ii) the inclusion of the market-based awards and PSUs is dilutive for the respective reporting periods. For both the three and nine months ended September 30, 2020, 1.2 million shares underlying market-based awards and PSUs were excluded from the calculation of diluted earnings per share because the market or performance condition(s) had not been met. For both the three and nine months ended September 30, 2019, 4.8 million shares underlying market-based awards and PSUs were excluded from the calculation of diluted earnings per share because the market or performance condition(s) had not been met.

NOTE 7—SEGMENT INFORMATION

The overall concept that the Company employs in determining its operating segments is to present the financial information in a manner consistent ~~with:~~with how the chief operating decision maker views the ~~businesses;~~businesses. In addition, the Company considers how the businesses are organized as to segment ~~management;~~management and the 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 September 30,				Nine Months Ended September 30,
		2020		2019		2020		2019			2021		2020		2021		2020
		(In thousands)									(In thousands)
Revenue:	Revenue:									Revenue:
North America	North America	$	372,226	$	339,144	$	1,053,775	$	945,538	North America	$	443,531	$	372,226	$	1,204,517	$	1,053,775
Europe	Europe	17,687		18,214		54,849		59,159		Europe	18,034		17,687		65,065		54,849
Total	Total	$	389,913	$	357,358	$	1,108,624	$	1,004,697	Total	$	461,565	$	389,913	$	1,269,582	$	1,108,624

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


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2020		2019		2020		2019			2021		2020		2021		2020
		(In thousands)									(In thousands)
North America	North America									North America
Marketplace:
Angi Ads and Leads:										Angi Ads and Leads:
Consumer connection revenue(a)	Consumer connection revenue(a)	$	287,568	$	252,552	$	800,047	$	695,370	Consumer connection revenue(a)	$	238,421	$	244,184	$	699,867	$	694,804
Service professional membership subscription revenue		12,195		15,995		38,989		48,697
Advertising revenue(b)										Advertising revenue(b)	63,953		56,217		187,308		166,732
Membership subscription revenue(c)										Membership subscription revenue(c)	17,079		17,760		51,026		56,810
Other revenue	Other revenue	6,944		4,915		19,620		11,186		Other revenue	6,703		8,922		21,412		25,144
Total Marketplace revenue		306,707		273,462		858,656		755,253
Advertising and other revenue(b)		65,519		65,682		195,119		190,285
Total Angi Ads and Leads revenue										Total Angi Ads and Leads revenue	326,156		327,083		959,613		943,490
Angi Services revenue(d)										Angi Services revenue(d)	117,375		45,143		244,904		110,285
Total North America revenue	Total North America revenue	372,226		339,144		1,053,775		945,538		Total North America revenue	443,531		372,226		1,204,517		1,053,775
Europe	Europe									Europe
Consumer connection revenue(c)		14,006		14,125		43,640		46,480
Consumer connection revenue(e)										Consumer connection revenue(e)	14,530		14,006		54,226		43,640
Service professional membership subscription revenue	Service professional membership subscription revenue	3,278		3,465		9,792		10,820		Service professional membership subscription revenue	3,215		3,278		9,874		9,792
Advertising and other revenue	Advertising and other revenue	403		624		1,417		1,859		Advertising and other revenue	289		403		965		1,417
Total Europe revenue	Total Europe revenue	17,687		18,214		54,849		59,159		Total Europe revenue	18,034		17,687		65,065		54,849
Total revenue	Total revenue	$	389,913	$	357,358	$	1,108,624	$	1,004,697	Total revenue	$	461,565	$	389,913	$	1,269,582	$	1,108,624

________________________

(a) Includes fees paid by service professionals for consumer matches ~~and revenue from pre-priced jobs sourced~~ through the ~~HomeAdvisor~~Angi Ads and ~~Handy~~Leads platforms.

1918

Table of Contents

ANGI ~~HOMESERVICES~~ INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(b) Includes ~~Angie's List~~ revenue from service professionals under contract for ~~advertising and Angie's List~~advertising.

(c) Includes membership subscription ~~fees from consumers, as well as~~ revenue from ~~mHelpDesk~~service professionals and ~~HomeStars.~~consumers.

~~(c)~~(d) Includes revenue from pre-priced offerings and revenue from Angi Roofing

(e) Includes fees paid by service professionals for consumer matches.

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


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2020		2019		2020		2019			2021		2020		2021		2020
		(In thousands)									(In thousands)
Revenue:
Revenue										Revenue
United States	United States	$	368,082	$	335,230	$	1,041,903	$	934,409	United States	$	437,872	$	368,082	$	1,188,854	$	1,041,903
All other countries	All other countries	21,831		22,128		66,721		70,288		All other countries	23,693		21,831		80,728		66,721
Total	Total	$	389,913	$	357,358	$	1,108,624	$	1,004,697	Total	$	461,565	$	389,913	$	1,269,582	$	1,108,624


	September 30, 2021		December 31, 2020
	(In thousands)
Long-lived assets (excluding goodwill and intangible assets):
United States	$	108,496	$	97,841
All other countries	8,329		11,001
Total	$	116,825	$	108,842

September 30, 2020 December 31, 2019
(In thousands)
Long-lived assets (excluding goodwill, intangible assets and ROU assets):
United States $ 94,341 $ 95,822
All other countries 9,982 7,539
Total $ 104,323 $ 103,361

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


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2020		2019		2020		2019			2021		2020		2021		2020
		(In thousands)									(In thousands)
Operating income (loss):
Operating (loss) income:										Operating (loss) income:
North America	North America	$	295	$	27,194	$	8,377	$	40,409	North America	$	(14,719)	$	295	$	(37,269)	$	8,377
Europe	Europe	(3,314)		(2,468)		(10,048)		(7,921)		Europe	(254)		(3,314)		(10,326)		(10,048)
Total	Total	$	(3,019)	$	24,726	$	(1,671)	$	32,488	Total	$	(14,973)	$	(3,019)	$	(47,595)	$	(1,671)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2020		2019		2020		2019			2021		2020		2021		2020
		(In thousands)									(In thousands)
Adjusted EBITDA(d):
Adjusted EBITDA(f):										Adjusted EBITDA(f):
North America	North America	$	40,454	$	60,509	$	136,886	$	151,804	North America	$	11,213	$	40,454	$	37,076	$	136,886
Europe	Europe	$	(1,967)	$	(1,586)	$	(6,066)	$	(4,270)	Europe	$	1,182	$	(1,967)	$	(5,937)	$	(6,066)

________________________

~~(d)~~(f) The Company’s primary financial measure is Adjusted EBITDA, which is defined as operating (loss) income excluding: (1) stock-based compensation expense; (2) depreciation; and (3) acquisition-related items consisting of amortization of intangible assets and impairments of goodwill and intangible assets, if applicable. The Company believes this measure is useful for analysts and investors as this measure allows a more meaningful comparison between the ~~Company's~~Company’s performance and that of its competitors. ~~The above items are excluded from the Company's Adjusted EBITDA measure because these items are non-cash in nature.~~ Adjusted EBITDA has certain limitations because it excludes the impact of these expenses.

2019

Table of Contents

ANGI ~~HOMESERVICES~~ INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

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


		Three Months Ended September 30, 2020											Three Months Ended September 30, 2021
		Operating Income (Loss)		Stock-based Compensation Expense		Depreciation		Amortization of Intangibles		Adjusted EBITDA			Operating Loss		Stock-Based Compensation Expense		Depreciation		Amortization of Intangibles		Adjusted EBITDA
		(In thousands)											(In thousands)
North America	North America	$	295	$	14,599	$	12,767	$	12,793	$	40,454	North America	$	(14,719)	$	8,727	$	13,351	$	3,854	$	11,213
Europe	Europe	(3,314)		$	98	$	1,154	$	95	$	(1,967)	Europe	(254)		$	86	$	1,350	$	—	$	1,182
Operating loss	Operating loss	(3,019)										Operating loss	(14,973)
Interest expense	Interest expense	(3,699)										Interest expense	(6,032)
Other income, net		223
Other expense, net												Other expense, net	(479)
Loss before income taxes	Loss before income taxes	(6,495)										Loss before income taxes	(21,484)
Income tax benefit	Income tax benefit	11,698										Income tax benefit	4,791
Net earnings		5,203
Net loss												Net loss	(16,693)
Net earnings attributable to noncontrolling interests	Net earnings attributable to noncontrolling interests	(731)										Net earnings attributable to noncontrolling interests	(302)
Net earnings attributable to ANGI Homeservices Inc. shareholders		$	4,472
Net loss attributable to Angi Inc. shareholders												Net loss attributable to Angi Inc. shareholders	$	(16,995)


		Three Months Ended September 30, 2019											Three Months Ended September 30, 2020
		Operating Income (Loss)		Stock-based Compensation Expense		Depreciation		Amortization of Intangibles		Adjusted EBITDA			Operating Income (Loss)		Stock-Based Compensation Expense		Depreciation		Amortization of Intangibles		Adjusted EBITDA
		(In thousands)											(In thousands)
North America	North America	$	27,194	$	8,648	$	10,690	$	13,977	$	60,509	North America	$	295	$	14,599	$	12,767	$	12,793	$	40,454
Europe	Europe	(2,468)		$	136	$	554	$	192	$	(1,586)	Europe	(3,314)		$	98	$	1,154	$	95	$	(1,967)
Operating income		24,726
Operating loss												Operating loss	(3,019)
Interest expense	Interest expense	(3,007)										Interest expense	(3,699)
Other income, net	Other income, net	1,505										Other income, net	223
Earnings before income taxes		23,224
Income tax provision		(4,900)
Loss before income taxes												Loss before income taxes	(6,495)
Income tax benefit												Income tax benefit	11,698
Net earnings	Net earnings	18,324										Net earnings	5,203
Net earnings attributable to noncontrolling interests	Net earnings attributable to noncontrolling interests	(325)										Net earnings attributable to noncontrolling interests	(731)
Net earnings attributable to ANGI Homeservices Inc. shareholders		$	17,999
Net earnings attributable to Angi Inc. shareholders												Net earnings attributable to Angi Inc. shareholders	$	4,472

2120

Table of Contents

ANGI ~~HOMESERVICES~~ INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)


		Nine Months Ended September 30, 2020											Nine Months Ended September 30, 2021
		Operating Income (loss)		Stock-based Compensation Expense		Depreciation		Amortization of Intangibles		Adjusted EBITDA			Operating Loss		Stock-Based Compensation Expense		Depreciation		Amortization of Intangibles		Adjusted EBITDA
		(In thousands)											(In thousands)
North America	North America	$	8,377	$	54,406	$	35,531	$	38,572	$	136,886	North America	$	(37,269)	$	20,118	$	41,611	$	12,616	$	37,076
Europe	Europe	(10,048)		$	625	$	3,083	$	274	$	(6,066)	Europe	(10,326)		$	272	$	4,117	$	—	$	(5,937)
Operating loss	Operating loss	(1,671)										Operating loss	(47,595)
Interest expense	Interest expense	(7,593)										Interest expense	(18,463)
Other income, net		856
Other expense, net												Other expense, net	(1,882)
Loss before income taxes	Loss before income taxes	(8,408)										Loss before income taxes	(67,940)
Income tax benefit	Income tax benefit	17,638										Income tax benefit	23,209
Net earnings		9,230
Net loss												Net loss	(44,731)
Net earnings attributable to noncontrolling interests	Net earnings attributable to noncontrolling interests	(1,049)										Net earnings attributable to noncontrolling interests	(626)
Net earnings attributable to ANGI Homeservices Inc. shareholders		$	8,181
Net loss attributable to Angi Inc. shareholders												Net loss attributable to Angi Inc. shareholders	$	(45,357)


	Nine Months Ended September 30, 2020
	Operating Income (Loss)		Stock-Based Compensation Expense		Depreciation		Amortization of Intangibles		Adjusted EBITDA
	(In thousands)
North America	$	8,377	$	54,406	$	35,531	$	38,572	$	136,886
Europe	(10,048)		$	625	$	3,083	$	274	$	(6,066)
Operating loss	(1,671)
Interest expense	(7,593)
Other income, net	856
Loss before income taxes	(8,408)
Income tax benefit	17,638
Net earnings	9,230
Net earnings attributable to noncontrolling interests	(1,049)
Net earnings attributable to Angi Inc. shareholders	$	8,181

Nine Months Ended September 30, 2019
Operating
Income (Loss) Stock-based
Compensation Expense Depreciation Amortization
of Intangibles Adjusted
EBITDA
(In thousands)
North America $ 40,409 $ 45,107 $ 25,124 $ 41,164 $ 151,804
Europe (7,921) $ 479 $ 1,915 $ 1,257 $ (4,270)
Operating income 32,488
Interest expense (8,964)
Other income, net 4,823
Earnings before income taxes 28,347
Income tax benefit 7,062
Net earnings 35,409
Net earnings attributable to noncontrolling interests (473)
Net earnings attributable to ANGI Homeservices Inc. shareholders $ 34,936

~~Table of Contents~~

~~ANGI HOMESERVICES INC. AND SUBSIDIARIES~~

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

~~(Unaudited)~~

NOTE 8—CONSOLIDATED FINANCIAL STATEMENT DETAILS

Cash and Cash Equivalents and Restricted Cash

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

September 30, 2020 December 31, 2019 September 30, 2019 December 31, 2018
(In thousands)
Cash and cash equivalents $ 855,044 $ 390,565 $ 402,914 $ 336,984
Restricted cash included in other current assets 392 504 1,421 1,417
Restricted cash included in other non-current assets 429 409 403 420
Total cash and cash equivalents, and restricted cash as shown on the consolidated statement of cash flows $ 855,865 $ 391,478 $ 404,738 $ 338,821

Table of Contents

ANGI INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)


	September 30, 2021		December 31, 2020		September 30, 2020		December 31, 2019
	(In thousands)
Cash and cash equivalents	$	476,625	$	812,705	$	855,044	$	390,565
Restricted cash included in other current assets	272		407		392		504
Restricted cash included in other non-current assets	1,216		449		429		409
Total cash and cash equivalents, and restricted cash as shown on the consolidated statement of cash flows	$	478,113	$	813,561	$	855,865	$	391,478

Restricted cash included in other current assets at September 30, 2021 and December 31, 2020 consisted of funds collected from service providers for disputed payments which were not settled as of the period end, and cash reserved to fund insurance claims.

Restricted cash included in other current assets at September 30, 2020 and December 31, 2019 primarily ~~consists~~consisted of a deposit related to corporate credit cards. ~~Restricted cash included in other current assets at~~ ~~September 30, 2019 and December 31, 2018~~ p~~rimarily consists of a cash collateralized letter of credit and a deposit related to corporate credit cards.~~

Restricted cash included in other non-current assets for all periods presented ~~consists~~above primarily consisted of deposits related to leases. Restricted cash included in other non-current assets at September 30, 2021 also included cash held related to a check endorsement guarantee for Angi Roofing.

Credit Losses and Revenue Reserve

The following table presents the changes in the credit loss reserve for the nine months ended September 30, 2021 and 2020:


	2021		2020
	(In thousands)
Balance at January 1	$	26,046	$	19,066
Current period provision for credit losses	66,081		60,090
Write-offs charged against the credit loss reserve	(56,102)		(53,208)
Recoveries collected	1,896		1,883
Balance at September 30	$	37,921	$	27,831

The revenue reserve was $2.4 million and $2.0 million at September 30, 2021 and 2020, respectively. The total allowance for credit losses and revenue reserve was $40.3 million and $29.8 million as of September 30, 2021 and 2020, respectively.

Accumulated Amortization and Depreciation

The following table provides the accumulated amortization and depreciation within the consolidated balance sheet:


Asset Category	Asset Category	September 30, 2020		December 31, 2019		Asset Category	September 30, 2021		December 31, 2020
		(In thousands)					(In thousands)
Right-of-use assets included in other non-current assets		$	35,511	$	19,416
Capitalized software, leasehold improvements and equipment		$	93,842	$	68,227
Right-of-use assets (included in “other non-current assets”)						Right-of-use assets (included in “other non-current assets”)	$	55,284	$	40,800
Capitalized software, leasehold improvements, and equipment						Capitalized software, leasehold improvements, and equipment	$	96,956	$	95,438
Intangible assets	Intangible assets	$	157,999	$	141,208	Intangible assets	$	155,820	$	162,627

~~Other income, net~~

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
(In thousands)
Interest income $ 129 $ 2,103 $ 1,561 $ 6,378
Loss on the sale of a business 0 0 (273) (142)
Foreign exchange gains (losses) 88 278 (256) 606
Mark-to-market loss related for an indemnification claim related to the Handy acquisition 0 (945) (181) (1,999)
Other 6 69 5 (20)
Other income, net $ 223 $ 1,505 $ 856 $ 4,823

2322

Table of Contents

ANGI ~~HOMESERVICES~~ INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Other (expense) income, net


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
					(In thousands)
Interest income	$	31	$	129	$	178	$	1,561
Gain (loss) on the sale of a business(a)	18		—		31		(454)
Foreign exchange (losses) gains	(515)		88		(968)		(256)
Loss on extinguishment of debt(b)	—		—		(1,110)		—
Other	(13)		6		(13)		5
Other (expense) income, net	$	(479)	$	223	$	(1,882)	$	856

________________________

(a)Loss from acquisition/sale of a business for the nine months ended September 30, 2020 includes a $0.2 million mark-to-market charge for an indemnification charge related to the Handy acquisition that was settled in Angi Inc. shares during the first quarter of 2020 and a $0.3 million charge related to the final earn-out settlement related to the sale of Felix.

(b)Represents the write-off of deferred debt issuance costs related to the ANGI Group Term Loan, which was repaid in its entirety during the second quarter of 2021.

NOTE 9—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~~not identified ~~certain other~~any material legal matters where ~~the Company believes~~we believe an unfavorable outcome is ~~not~~ probable and estimable; therefore, 0no reserve is established. Although management currently believes that resolving claims against ~~the Company,~~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 1one 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—Income Taxes"” for additional information related to income tax contingencies.

NOTE 10—RELATED PARTY TRANSACTIONS WITH IAC

~~The Company~~Angi Inc. and IAC have entered into certain agreements to govern ~~our relationship with IAC following the combination of IAC's HomeAdvisor business and Angie's List, Inc. on September 29, 2017 (the "Combination").~~their relationship. These agreements include: a contribution agreement; an investor rights agreement; a services agreement; a tax sharing agreement; and an employee matters agreement.

For the three and nine months ended September 30, ~~2020~~2021 and ~~2019,~~2020, the Company was charged $0.9 million and $3.2 million, and $1.3 million and $3.6 ~~million; and $1.0 million and $3.7~~ million, respectively, by IAC for services rendered pursuant to the services agreement. There were 0no outstanding receivables or payables pursuant to the services agreement ~~as of~~at September 30, ~~2020~~2021 or December 31, ~~2019.~~2020.

Additionally, the Company subleases office space to IAC and charged IAC ~~$0.5~~$0.4 million and ~~$1.4 million;~~$1.2 million, and $0.5 million and ~~$1.0~~$1.4 million of rent for the three and nine months ended September 30, 2021 and 2020, respectively. IAC subleases office space to the Company and ~~2019, respectively. At both~~charged the Company $0.3 million of rent for the three and nine months ended September 30, ~~2020 and 2019,~~2021. At September 30, 2021, there were no outstanding receivables or payables pursuant to the sublease agreements. At December 31, 2020, there was an outstanding receivable of less than $0.1 million due from IAC pursuant to the sublease agreements, which ~~were~~was subsequently paid in full in ~~each respective fourth quarter.~~the first quarter of 2021.

At September 30, ~~2020~~2021 and December 31, ~~2019,~~2020, the Company had outstanding payables of ~~$0.6~~$1.7 million and ~~$0.2~~$0.9 million, respectively, due to IAC pursuant to the tax sharing agreement, which are included in ~~"Accrued~~“Accrued expenses and other current ~~liabilities"~~

Table of Contents

ANGI INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

liabilities,” in the accompanying consolidated balance sheet. There were no payments to or refunds from IAC pursuant to this agreement during the three and nine months ended September 30, 2021. There were $3.1 million of refunds received from IAC pursuant to this agreement during the nine months ended September 30, 2020. There were 0 payments to or refunds from IAC pursuant to this agreement during the three months ended September 30, 2020. During the first quarter of 2019, $11.4 million was paid to IAC pursuant to this agreement.

For the three and nine months ended September 30, ~~2020,~~2021, less than 0.1 million and ~~0.3~~0.2 million shares, respectively, of ~~ANGI Homeservices~~Angi Inc. Class B common stock were issued to IAC pursuant to the employee matters agreement as reimbursement for shares of IAC common stock issued in connection with the exercise and vesting of IAC equity awards held by ~~ANGI Homeservices~~Angi Inc. employees. For the three and nine months ended September 30, ~~2019, less than~~2020, 0.1 million and ~~0.5~~0.3 million shares ~~respectively,~~ of ~~ANGI Homeservices~~Angi Inc. Class B common stock were issued to IAC pursuant to the employee matters agreement. For the three and nine months ended September 30, 2021, less than 0.1 million and 2.6 million shares, respectively, of Angi Inc. Class A common stock were issued to IAC pursuant to the employee matters agreement as reimbursement for IAC common stock issued in connection with the exercise and settlement of certain Angi Inc. stock appreciation rights. There were no shares of Angi Inc. Class A common stock issued to IAC during the three and nine months ended September 30, 2020.

Table of Contents

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

GENERAL

Management Overview

Angi Inc., formerly ANGI Homeservices, Inc. ~~("ANGI Homeservices,"~~, (“Angi Inc.,” the ~~"Company," "ANGI," "we," "our,"~~“Company,” “we,” “our,” or ~~"us"~~“us”) connects quality home service professionals with consumers across ~~500~~400 different categories, from repairing and remodeling homes to cleaning and ~~landscaping, with consumers.~~landscaping. Over ~~230,000~~260,000 domestic service professionals actively ~~seek~~sought consumer matches, ~~complete~~completed jobs, or ~~advertise~~advertised work through ~~ANGI Homeservices'~~Angi Inc. platforms ~~and~~during the three months ended September 30, 2021. Additionally, consumers ~~turn~~turned to at least one of our brands to find a professional for ~~more than 25~~approximately 33 million projects ~~each year. We’ve established category-transforming products with brands such as HomeAdvisor, Angie’s List, Handy and Fixd Repair.~~during the twelve months ended September 30, 2021.

The Company has two operating segments: (i) North America (United States and Canada), which includes ~~HomeAdvisor, Angie's List, Handy, mHelpDesk, HomeStars~~Angi Ads and ~~Fixd Repair~~Leads and Angi Services; and (ii) ~~Europe, which includes Travaux, MyHammer, MyBuilder, Werkspot~~Europe. The brands operate as follows: Angi Ads operates under the Angi (formerly Angie’s List) brand, Angi Leads operates primarily under the HomeAdvisor, powered by Angi brand, and ~~Instapro.~~Angi Services operates primarily under the Handy brand.

For a more detailed description of the ~~Company's~~Company’s operating businesses, see the ~~Company's~~Company’s Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020.

Defined Terms and Operating Metrics:

Unless otherwise indicated or as the context otherwise requires, certain terms, ~~used in this quarterly report,~~ which include the principal operating metrics we use in managing our business, used in this quarterly report are defined below:

•~~Marketplace~~Angi Ads and Leads Revenue ~~includes~~primarily reflects domestic ads and leads revenue, ~~from the HomeAdvisor, Handy and Fixd Repair domestic marketplaces,~~ including consumer connection revenue for consumer matches, revenue from pre-priced jobs sourced through the HomeAdvisor, Handy and Fixd Repair platforms and service professional membership subscription revenue. It excludes revenue from Angie's List, mHelpDesk and HomeStars. Effective January 1, 2020, Fixd Repair has been moved to Marketplace from Advertising & Other and prior year amounts have been reclassified to conform to the current year presentation.

•~~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~~service professionals and ~~HomeStars.~~consumers.

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

•Angi Service Requests (“Service Requests”) are fully completed and submitted domestic customer service requests ~~to HomeAdvisor~~ and includes ~~pre-priced jobs sourced through~~Angi Services requests in the ~~HomeAdvisor, Handy and Fixd Repair platforms.~~period.

•~~Marketplace~~Angi Monetized Transactions- are fully completed and submitted domestic customer service requests ~~to HomeAdvisor~~ that were matched to and paid for by a service professional and includes ~~pre-priced~~completed and in-process Angi Services jobs ~~sourced through the HomeAdvisor, Handy and Fixd Repair platforms during~~in the period.

•~~Marketplace~~Angi Transacting Service Professionals ~~("Marketplace~~ (“Transacting ~~SPs"~~SPs”) are the number of ~~HomeAdvisor, Handy and Fixd Repair domestic~~ service professionals that paid for consumer matches through Angi Leads or performed aan Angi Services job ~~sourced through the HomeAdvisor, Handy and Fixd Repair platforms during~~in the quarter.

•Angi Advertising Service Professionals ("(“Advertising ~~SPs"~~SPs”) are the ~~total~~ number of ~~Angie’s List~~ service professionals under contract for advertising at the end of the period.

•Senior Notes - - On August 20, 2020, ANGI Group, LLC ("(“ANGI ~~Group"~~Group”), a direct wholly-owned subsidiary of the Company, issued ~~$500~~$500.0 million of its 3.875% Senior Notes due August 15, 2028, with interest payable February 15 and August 15 of each year, commencing February 15, 2021. ~~The proceeds from the offering will be used for general corporate purposes, including future potential acquisitions and return of capital.~~

~~Table of Contents~~

•~~Term Loan -~~ due November 5, 2023. The outstanding balance of the Term Loan as of September 30, 2020 is $237.2 million and quarterly principal payments are required. Pursuant to the joinder agreement entered into on August 12, 2020, ANGI Group became the successor borrower under the Term Loan and ANGI Homeservices Inc.'s obligations thereunder were terminated. At both September 30, 2020 and December 31, 2019, the Term Loan bore interest at LIBOR plus 1.50%. The interest rate was 1.66% and 3.25% at September 30, 2020 and December 31, 2019, respectively.

•~~Revolving Facility~~ - The ANGI Group $250 million revolving credit facility expires on November 5, 2023. Pursuant to the joinder agreement entered into on August 12, 2020, ANGI Group became the successor borrower under the Revolving Facility and ANGI Homeservices Inc.'s obligations thereunder were terminated. At September 30, 2020 and December 31, 2019, there were no outstanding borrowings under the Revolving Facility.

Components of Results of Operations

Sources of Revenue

~~Marketplace~~Angi Ads and Leads Revenue is primarily derived from (i) consumer connection revenue, which ~~comprises~~is comprised of fees paid by ~~HomeAdvisor~~ service professionals for consumer matches (regardless of whether the service professional ultimately provides the requested service), (ii) advertising revenue, which includes revenue from service professionals under contract for advertising, and ~~fees from jobs sourced through the HomeAdvisor, Handy and Fixd Repair platforms, and (ii) HomeAdvisor service professional~~(iii) membership subscription ~~fees.~~revenue from service professionals and consumers. Consumer connection revenue varies based upon

Table of Contents

several factors, including the service requested, product experience offered, and geographic location of service. ~~Advertising & Other Revenue~~Angi Services is ~~primarily derived~~comprised of revenue from jobs (i) ~~sales of time-based website, mobile and call center advertising to service professionals,~~sourced through the “Book Now” feature which lets consumers consummate the entire transaction digitally for work that’s completed physically, (ii) ~~membership subscription fees from consumers~~under managed projects (including Angi Roofing) which are home improvement projects, and (iii) ~~service warranty subscription~~through retail partnerships for delivery and installation of furniture or other ~~services.~~

Prior to January 1, 2020, Handy recorded revenue on a net basis. Effective January 1, 2020, we modified the Handy terms and conditions so that Handy, rather than the service professional, has the contractual relationship with the consumer to deliver the service and Handy, rather than the consumer, has the contractual relationship with the service professional. Consumers request services and pay for such services directly through the Handy platform and then Handy fulfills the request with independently established home services providers engaged in a trade, occupation and/or business that customarily provides such services. This change in contractual terms requires gross revenue accounting treatment effective January 1, 2020. Also, in the case of certain tasks, HomeAdvisor provides a pre-priced product offering, pursuant to which consumers can request services through a HomeAdvisor platform and pay HomeAdvisor for the services directly. HomeAdvisor then fulfills the request with independently established home services providers engaged in a trade, occupation and/or business that customarily provides such services. Revenue from HomeAdvisor’s pre-priced product offering is also recorded on a gross basis effective January 1, 2020. In addition to changing the presentation of revenue to gross from net, the timing of revenue recognition changed for HomeAdvisor pre-priced jobs and will be later than consumer connection revenue because we will not be able to record revenue, generally, until the service professional completes the job on our behalf. The change to gross revenue reporting for Handy and HomeAdvisor’s pre-priced product offering, effective January 1, 2020, resulted in an increase in revenue of $20.8 million and $51.3 million during the three and nine months ended September 30, 2020, respectively.items.

Operating Costs and Expenses:

•Cost of revenue- - consists primarily of payments made to independent service professionals who perform work contracted under ~~pre-priced~~Angi Services arrangements, ~~through the HomeAdvisor, Handy and Fixd Repair platforms,~~ credit card processing fees, ~~compensation expense~~hosting fees, and ~~other employee-related~~roofing materials costs ~~at Fixd Repair for service work performed, and hosting fees.~~associated with Angi Roofing.

•Selling and marketing expense - consists primarily of advertising expenditures, which include online marketing, including fees paid to search ~~engines,~~engines; offline marketing, which is primarily television ~~advertising,~~advertising; and partner-related payments to those who direct traffic to our ~~brands,~~brands; compensation expense (including stock-based compensation expense) and other employee-related costs for our sales force and marketing ~~personnel,~~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,~~provision for credit losses, software license and maintenance costs, and facilities costs. Our customer service function includes personnel who provide support to our service professionals and consumers.

~~Table of Contents~~

•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 “Principles of Financial Reporting” for the definition of Adjusted EBITDA and a reconciliation of net (loss) earnings attributable to ~~ANGI Homeservices~~Angi Inc. shareholders to operating ~~(loss) income~~loss to consolidated Adjusted EBITDA for the three and nine months ended September 30, ~~2020~~2021 and ~~2019.~~2020.

~~Overview—Consolidated Results~~Brand Integration Initiative

Three Months Ended September 30, Nine Months Ended September 30,
2020 $ Change % Change 2019 2020 $ Change % Change 2019
(Dollars in thousands)
Revenue:
North America $ 372,226 $ 33,082 10 % $ 339,144 $ 1,053,775 $ 108,237 11 % $ 945,538
Europe 17,687 (527) (3) % 18,214 54,849 (4,310) (7) % 59,159
Total $ 389,913 $ 32,555 9 % $ 357,358 $ 1,108,624 $ 103,927 10 % $ 1,004,697
Operating Income (Loss):
North America $ 295 $ (26,899) (99) % $ 27,194 $ 8,377 $ (32,032) (79) % $ 40,409
Europe (3,314) (846) (34) % (2,468) (10,048) (2,127) (27) % (7,921)
Total $ (3,019) $ (27,745) NM $ 24,726 $ (1,671) $ (34,159) NM $ 32,488
Adjusted EBITDA:
North America $ 40,454 $ (20,055) (33) % $ 60,509 $ 136,886 $ (14,918) (10) % $ 151,804
Europe (1,967) (381) (24) % (1,586) (6,066) (1,796) (42) % (4,270)
Total $ 38,487 $ (20,436) (35) % $ 58,923 $ 130,820 $ (16,714) (11) % $ 147,534
On March 17, 2021, the Company updated one of its leading websites and brands, Angie’s List, to Angi, and concentrated its marketing investment in the Angi brand in order to focus its marketing, sales, and branding efforts on a single brand.

~~________________________~~We rely heavily on free, or organic, search results from search engine optimization, and paid search engine marketing to drive traffic to our websites. Our brand integration initiative has adversely affected the placement and ranking of Angi Inc. websites, particularly Angi.com, in organic search results as Angi does not have the same domain history as Angie’s List. In addition, we shifted marketing to support Angi, away from HomeAdvisor, which has negatively affected the efficiency of our search engine marketing efforts.

~~NM = Not meaningful.~~

~~For~~Since the beginning of the integration process, these efforts had a pronounced negative impact on service requests from organic search results and via our mobile applications, which in turn has resulted in increased paid search engine marketing to generate service requests. The combined effect of this during the three months ended September 30, ~~2020:~~

•~~Revenue~~2021, has reduced revenue and increased ~~$32.6 million, or 9%, driven by growth~~marketing spend, materially more than expected at the launch of the brand initiative in ~~North America~~the first quarter of ~~$33.1 million, or 10%, partially offset by a decline in Europe~~2021 and more significantly than our forecasts at the beginning of $0.5 million, or 3%. North America revenue growth was driven by increases in Marketplace Revenue of $33.2 million, or 12%, partially offset by a decrease in Advertising & Other Revenue of $0.2 million.

•~~Operating income decreased $27.7 million~~May 2021. We expect the pronounced negative impact to a loss of $3.0 million due primarily to a decrease in Adjusted EBITDA of $20.4 million, described below, and increases of $5.9 million in stock-based compensation expense and $2.7 million in depreciation, partially offset by a decrease of $1.3 million in amortization of intangibles. The increase in stock-based compensation expense was due primarily toorganic search results, the ~~issuance of new equity awards since 2019~~increased paid search engine marketing costs and the ~~reversal in~~reduced monetization from our mobile applications to continue until such time as the third quarter of 2019 of $7.6 million of expense related to certain performance-based awards that did not vest, partially offset by a decrease of $2.2 million in the modification charge related to the combination of IAC's HomeAdvisor businessnew brand establishes search engine optimization ranking and Angie's List, Inc. on September 29, 2017 (the "Combination"). The increase in depreciation was due primarily to the investments in capitalized software to support our products and services and leasehold improvements related to additional office space. The decrease in amortization of intangibles was due primarily to lower expense as certain intangible assets became fully amortized in 2019.

•~~Adjusted EBITDA decreased 35% to $38.5 million, despite higher revenue due primarily to~~ an ~~increase in cost of revenue, increased investment in fixed price, an increase in compensation expense and an increase of $3.6 million in bad debt expense due to higher Marketplace Revenue.~~consumer awareness is established.

2726

Table of Contents

~~For~~Angi Services Investment

Angi Services was launched in August 2019 and we have invested significantly in Angi Services and expect to continue to do so going forward. In the fourth quarter of 2021, we expect significant revenue growth as we expand the business, refine the overall experience, and increase penetration in certain geographies. This increased investment in Angi Services has contributed to lower profitability for the Company for the three and nine months ended September 30, ~~2020:~~

•~~Revenue increased $103.9 million, or 10%, driven by growth in North America~~2021 and is expected to continue to negatively impact profits through the remainder of $108.2 million, or 11%, partially offset by a decline in Europe of $4.3 million, or 7%. North America revenue growth was driven by increases in Marketplace Revenue of $103.4 million, or 14%, and Advertising & Other Revenue of $4.8 million, or 3%.

•Operating income decreased $34.2 million to a loss of $1.7 million due primarily to a decrease in Adjusted EBITDA of $16.7 million, described below, and increases of $11.6 million in depreciation and $9.4 million in stock-based compensation expense, partially offset by a decrease of $3.6 million in amortization of intangibles. The increases in depreciation and stock-based compensation and the decrease in amortization of intangibles were due primarily to the factors described above in the three-month discussion.

In the first quarter of 2020, the Company recorded additional stock-based compensation expense of $5.9 million related to the previously issued HomeAdvisor unvested awards that were modified in connection with the Combination. The initial modification charge related to these awards was $139.9 million. The cumulative $5.9 million adjustment includes an increase of $3.4 million to adjust forfeitures for the remaining unvested awards and $2.5 million to correct the attribution of expense by period. The adjustment primarily impacted general and administrative expense. The effect on prior periods is immaterial.

•~~Adjusted EBITDA decreased 11% to $130.8 million, despite higher revenue due primarily to an increase in cost of revenue, an increase of $10.8 million in~~ ~~bad debt expense due to higher Marketplace Revenue, the impact from COVID-19 on expected credit losses and anticipated losses from Advertising SPs, and increased European losses.~~2021.

COVID-19 Update

The impact on the Company from the COVID-19 ~~outbreak, which~~pandemic and the measures designed to contain its spread has been ~~declared~~varied and volatile.

As previously disclosed, the initial impact of COVID-19 on the Company resulted in a ~~"pandemic"~~decline in demand for service requests, driven primarily by decreases in demand in certain categories of jobs (particularly discretionary indoor projects). While we experienced a rebound in service requests in the ~~World Health Organization, has~~second half of 2020 and through early 2021, service requests did start to decline in May 2021 compared to the comparable months of 2020 as a result of the surge in 2020 and due to impacts of the “Brand Integration Initiative” discussed above. Moreover, many service professionals’ businesses had been ~~varied.~~ adversely impacted by labor and material constraints and many service professionals had limited capacity to take on new business, which negatively impacted our ability to monetize the increased level of service requests through the first quarter of 2021. Although our ability to monetize service requests rebounded modestly in the second and third quarters of 2021, we still have not returned to levels we experienced pre-COVID-19. No assurances can be provided that we will continue to be able to improve monetization, or that service professionals’ businesses will not be adversely impacted in the future.

The extent to which developments related to the COVID-19 ~~outbreak~~pandemic and measures designed to curb its spread continue to impact the Company’s business, financial condition and results of operations will depend on future developments, all of which are highly uncertain and many of which are beyond the Company’s control, including the ~~speed~~continuing spread of ~~contagion,~~COVID-19, the ~~development~~severity of resurgences of COVID-19 caused by variant strains of the virus, the effectiveness of vaccines and ~~implementation of effective preventative measures~~attitudes toward receiving them, materials and ~~possible treatments,~~supply chain constraints, labor shortages, the scope of governmental and other restrictions on travel, discretionary services ~~(including those provided by certain of our service professionals)~~ and other activity, and public reactions to these developments. For example, these developments and measures have resulted in rapid and adverse changes to the operating environment in which we do business, as well as significant uncertainty concerning the near and long term economic ramifications of the COVID-19 outbreak, which have adversely impacted our ability to forecast our results and respond in a timely and effective manner to trends related to the COVID-19 outbreak. The longer the global outbreak and measures designed to curb the spread of the virus continue to adversely affect levels of consumer confidence, discretionary spending and the willingness of consumers to interact with other consumers, vendors and service providers face-to-face (and in turn, adversely affect demand for the Company’s various products and services), the greater the adverse impact is likely to be on the Company’s business, financial condition and results of operations and the more limited will be the Company’s ability to try and make up for delayed or lost revenues.

~~In addition the United States, which repres~~

~~ents 94% of the Co~~

mpany's revenue for both the three and nine months ended September 30, 2020, has experienced a significant resurgence of the COVID-19 virus with record levels of infection being reported in the weeks following September 30, 2020. Europe, which is the second largest market for the Company's products and services, has also seen a dramatic resurgence in COVID-19. This resurgence and the measures designed to curb its spread could result in continued variability in service requests and/or a reduction in our ability to monetize service requests due to service professional constraints, one or both of which could materially and adversely affect our business, financial condition and results of operations.

2827

Table of Contents

Results of Operations for the three and nine months ended September 30, ~~2020~~2021 compared to the three and nine months ended September 30, ~~2019~~2020

Revenue

Three Months Ended September 30, Nine Months Ended September 30,
2020 $ Change % Change 2019 2020 $ Change % Change 2019
(Dollars in thousands)
Revenue:
Marketplace:
Consumer connection revenue $ 287,568 $ 35,016 14 % $ 252,552 $ 800,047 $ 104,677 15 % $ 695,370
Service professional membership subscription revenue 12,195 (3,800) (24) % 15,995 38,989 (9,708) (20) % 48,697
Other revenue 6,944 2,029 41 % 4,915 19,620 8,434 75 % 11,186
Total Marketplace Revenue 306,707 33,245 12 % 273,462 858,656 103,403 14 % 755,253
Advertising & Other Revenue 65,519 (163) — % 65,682 195,119 4,834 3 % 190,285
North America 372,226 33,082 10 % 339,144 1,053,775 108,237 11 % 945,538
Europe 17,687 (527) (3) % 18,214 54,849 (4,310) (7) % 59,159
Total Revenue $ 389,913 $ 32,555 9 % $ 357,358 $ 1,108,624 $ 103,927 10 % $ 1,004,697
Percentage of Total Revenue:
North America 95 % 95 % 95 % 94 %
Europe 5 % 5 % 5 % 6 %
Total Revenue 100 % 100 % 100 % 100 %
Three Months Ended September 30, Nine Months Ended September 30,
2020 Change % Change 2019 2020 Change % Change 2019
(Amounts in thousands)
Operating metrics:
Marketplace Service Requests 9,837 2,196 29 % 7,641 25,186 3,754 18 % 21,432
Marketplace Monetized Transactions 4,716 349 8 % 4,367 12,821 458 4 % 12,363
Marketplace Transacting SPs 207 17 9 % 190
Advertising SPs 39 2 5 % 37


	Three Months Ended September 30,									Nine Months Ended September 30,
	2021			$ Change		% Change	2020			2021			$ Change		% Change	2020
	(Dollars in thousands)
North America
Angi Ads and Leads:
Consumer connection revenue	$	238,421		$	(5,763)	(2)%	$	244,184		$	699,867		$	5,063	1%	$	694,804
Advertising revenue	63,953			7,736		14%	56,217			187,308			20,576		12%	166,732
Membership revenue	17,079			(681)		(4)%	17,760			51,026			(5,784)		(10)%	56,810
Other revenue	6,703			(2,219)		(25)%	8,922			21,412			(3,732)		(15)%	25,144
Total Angi Ads and Leads revenue	326,156			(927)		—%	327,083			959,613			16,123		2%	943,490
Angi Services revenue	117,375			72,232		NM	45,143			244,904			134,619		NM	110,285
Total North America revenue	443,531			71,305		19%	372,226			1,204,517			150,742		14%	1,053,775
Europe	18,034			347		2%	17,687			65,065			10,216		19%	54,849
Total revenue	$	461,565		$	71,652	18%	$	389,913		$	1,269,582		$	160,958	15%	$	1,108,624

Percentage of Total Revenue:
North America	96		%				95		%	95		%				95		%
Europe	4		%				5		%	5		%				5		%
Total revenue	100		%				100		%	100		%				100		%

	Three Months Ended September 30,									Nine Months Ended September 30,
	2021			Change		% Change	2020			2021			Change		% Change	2020
	(In thousands, rounding differences may occur)
Operating metrics:
Service Requests	8,707			(1,130)		(11)%	9,837			25,835			649		3%	25,186
Monetized Transactions	4,783			67		1%	4,716			13,982			1,161		9%	12,821
Transacting SPs	222			15		7%	207
Advertising SPs	39			—		1%	39

________________________

NM = Not meaningful

For the three months ended September 30, ~~2020~~2021 compared to the three months ended September 30, ~~2019~~2020

North America revenue increased ~~$33.1~~$71.3 million, or ~~10%~~19%, driven by ~~an increase in Marketplace Revenue~~growth of ~~$33.2~~$72.2 million, or ~~12%~~160%, ~~partially offset by a decrease~~ in ~~Advertising & Other Revenue~~Angi Services revenue, while Angi Ads and Leads remained relatively flat. Approximately half of ~~$0.2 million. The increase in Marketplace Revenue~~the Angi Services revenue growth is due to ~~an increase~~organic growth and approximately half of the revenue growth is due to Angi Roofing, acquired July 1, 2021. Angi Ads and Leads revenue had relatively flat growth, despite the decline in Service Requests during the quarter of 11%, which impacted consumer connection revenue ~~of $35.0 million, or 14%, which~~and was ~~due~~ primarily ~~to an increase of 8% in Marketplace Monetized Transactions to~~ ~~4.7 million,~~ ~~driven by an increase~~ ~~of 29% in Marketplace Service Requests~~ ~~to 9.8 million, and~~ ~~an increase in revenue of~~ ~~$20.8 million due~~attributable to the ~~change to gross revenue reporting for Handy and HomeAdvisor’s pre-priced product offering, effective January 1, 2020.~~brand integration initiative described above under “Brand Integration Initiative.”

Europe revenue ~~decreased $0.5~~increased $0.3 million, or 3%2%, due ~~primarily~~ to lower monetization from transitioning the business in France to a common European technology platform with the businesses in the Netherlands and Italy, which began in early February 2020, partially offset by the favorable impact of the weakening of the ~~U.S.~~U.S dollar relative to the Euro and the British Pound.

For the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020

North America revenue increased $150.7 million, or 14%, driven by increases in Angi Services revenue of $134.6 million, or 122%, and Angi Ads and Leads revenue of $16.1 million, or 2%. The increase in Angi Services revenue is due primarily to organic growth and to a lesser extent from Angi Roofing, acquired July 1, 2021. The increase in Angi Ads and Leads revenue is due primarily to an increase in Advertising revenue of $20.6 million, or 12%.

Table of Contents

Europe revenue increased $10.2 million, or 19%, due to strong growth across its markets due to increased consumer demand and the favorable impact of the weakening of the U.S dollar relative to the Euro and the British Pound.

Cost of revenue


	Three Months Ended September 30,							Nine Months Ended September 30,
	2021		$ Change		% Change	2020		2021		$ Change		% Change	2020
	(Dollars in thousands)
Cost of revenue (exclusive of depreciation shown separately below)	$	99,467	$	51,214	NM	$	48,253	$	222,999	$	100,475	82%	$	122,524
As a percentage of revenue	22%					12%		18%					11%

For the three months ended September 30, 2021 compared to the three months ended September 30, 2020

North America cost of revenue increased $51.1 million, or 107%, and increased as a percentage of revenue, due primarily to the growth of Angi Services, including $25.8 million of costs attributable to Angi Roofing acquired July 1, 2021, primarily for third-party contractors and roofing materials. The remaining increase is for payments to third-party professional service providers for other Angi Services arrangements.

For the nine months ended September 30, ~~2020~~2021 compared to the nine months ended September 30, ~~2019~~2020

North America cost of revenue increased ~~$108.2~~$100.4 million, or ~~11%, driven by increases in Marketplace Revenue of $103.4 million or 14%~~83%, and ~~Advertising & Other Revenue~~increased as a percentage of ~~$4.8 million, or 3%. The increase in Marketplace Revenue is due to an increase in consumer connection~~ revenue, ~~of $104.7 million, or 15%, which was~~ due primarily to ~~an increase of 4% in Marketplace Monetized Transactions to 12.8 million, driven by an increase of 18% in Marketplace Service Requests to 25.2 million, and an increase in revenue of $51.3 million due~~ to the change to gross revenue reporting for Handy and HomeAdvisor’s pre-priced product offering, effective January 1, 2020. The increase in Advertising & Other Revenue is due primarily to an increase in Angie's List revenue driven by an increase in Advertising SPs.

Europe revenue decreased $4.3 million, or 7%, due primarily to the impact of COVID-19 and lower monetization from transitioning the business in France to a common European technology platform with the businessesfactors described above in the ~~Netherlands~~three-month discussion.

Selling and ~~Italy, which began in early February 2020.~~marketing expense

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


		Three Months Ended September 30,										Nine Months Ended September 30,											Three Months Ended September 30,							Nine Months Ended September 30,
		2020			$ Change		% Change		2019			2020			$ Change		% Change		2019				2021		$ Change		% Change	2020		2021		$ Change		% Change	2020
		(Dollars in thousands)																					(Dollars in thousands)
Cost of revenue (exclusive of depreciation shown separately below)		$	48,253		$	34,941	262	%	$	13,312		$	122,524		$	88,479	260	%	$	34,045
Selling and marketing expense																						Selling and marketing expense	$	237,755	$	27,584	13%	$	210,171	$	682,626	$	92,512	16%	$	590,114
As a percentage of revenue	As a percentage of revenue	12		%					4		%	11		%					3		%	As a percentage of revenue	52%					54%		54%					53%

For the three months ended September 30, ~~2020~~2021 compared to the three months ended September 30, ~~2019~~

North America cost of revenue increased $35.1 million, or 272%, due primarily to the change from net to gross revenue reporting for Handy and HomeAdvisor's pre-priced product offering, effective January 1, 2020.

~~For the nine months ended September 30,~~ 2020 ~~compared to the nine months ended September 30, 2019~~

North America cost of revenue increased $88.5 million, or 270%, due primarily to the change from net to gross revenue reporting for Handy and HomeAdvisor's pre-priced product offering, effective January 1, 2020.

~~Table of Contents~~

~~Selling and marketing expense~~

Three Months Ended September 30, Nine Months Ended September 30,
2020 $ Change % Change 2019 2020 $ Change % Change 2019
(Dollars in thousands)
Selling and marketing expense $ 210,171 $ 14,629 7 % $ 195,542 $ 590,114 $ 23,103 4 % $ 567,011
As a percentage of revenue 54 % 55 % 53 % 56 %

~~For the three months ended September 30, 2020 compared to the three months ended September 30, 2019~~

North America selling and marketing expense increased ~~$15.8~~$29.5 million, or 8%15%, driven by increases ~~of $9.1 million~~ in~~advertising expense, $5.3 million in compensation expense and $1.1 million in outsourced personnel costs, partially offset by a decrease of $1.2 million in~~ ~~travel related expenses resulting from the impact of COVID-19. While service requests from both Google paid traffic and free traffic increased,~~ advertising expense ~~increased~~of $11.6 million, compensation expense of $9.6 million, expense of $7.2 million from inclusion of Angi Roofing and an increase in consulting costs of $3.2 million. The increase in advertising expense was due primarily to an increase in ~~online marketing costs as the proportion~~television spend of ~~service requests from Google paid traffic increased.~~$11.6 million. The Company continues to benefit from the search engine marketing strategy that was implemented in the second half of 2019, which focuses on the lifetime profitability of rather than cost per service request. This increase ~~in online marketing was partially offset by a decrease~~ in television spend ~~resulting from~~in 2021 reflects the return to historical spending levels as compared to the cost cutting initiatives during the third quarter of 2020 due to the impact of ~~COVID-19.~~COVID-19 as well as continued efforts related to the brand integration initiative described above under “Brand Integration Initiative.” The increase in compensation expense was due primarily to increased commission expense, ~~to the sales force resulting~~ ~~from higher revenue. The increase~~ in ~~outsourced personnel costs was due primarily~~addition to ~~various sales initiatives at Handy.~~

~~Europe selling and marketing expense decreased $1.2 million, or 12%, driven by a decrease in advertising expense~~ ~~of $1.9 million, partially offset by~~ an increase in ~~compensation expense of $0.8 million. The decrease in advertising expense is due, in part, to mitigating the negative impact of COVID-19 on revenue.~~sales force headcount. The increase in ~~compensation expense was due primarily~~ ~~to severance costs~~ ~~recorded in the third quarter of 2020~~ ~~associated with headcount reductions in France.~~

~~For the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019~~

~~North America selling and marketing expense increased $26.1 million, or 5%, driven by increases in compensation expense of $17.2 million, advertising expense of $4.8 million, outsourced personnel and consulting costs of~~ ~~$4.4 million~~ ~~and facility costs of $1.5 million, partially offset by a decrease of~~ ~~$2.5 million~~ in ~~travel related expenses resulting from the impact of COVID-19. The increase in compensation expense was due primarily to growth in the sales force~~ ~~and increased commission expense.~~ ~~The increase in advertising expense was due primarily to the factors described above in the three-month discussion. The increase in outsourced personnel and~~ consulting costs was due primarily to various sales initiatives at ~~Handy.~~Angi Services.

Europe selling and marketing expense decreased ~~$3.0~~$1.9 million, or 9%23%, driven by ~~decreases in advertising expense of~~ ~~$1.9 million~~ ~~and compensation expense of $0.7 million. The~~a decrease in compensation expense isof $2.1 million primarily due ~~primarily~~ to ~~a reduction in sales force headcount associated with the platform migration in France, partially offset by~~ severance ~~cost~~costs recorded in the third quarter of 2020 associated with headcount reductions in France.

For the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020

North America selling and marketing expense increased $93.9 million, or 17%, driven by increases in advertising expense of $46.6 million, compensation expense of $32.9 million, outsourced personnel and consulting costs of $10.4 million, and $7.2 million in expense from the inclusion of Angi Roofing. The increase in advertising expense was due primarily to increases of $42.7 million in online marketing spend and $3.7 million in television spend. The increase in online marketing spend was attributable to the brand integration initiative described above under “Brand Integration Initiative.” The increases in television spend, compensation expense, and outsourced personnel and consulting costs were due primarily to the factors described above in the three-month discussion.

Table of Contents

Europe selling and marketing expense decreased $1.4 million, or 5%, driven by a decrease in compensation expense of $3.2 million, partially offset by an increase in advertising expense of $2.0 million. The decrease in compensation expense was primarily due to severance costs recorded in the third quarter of 2020 associated with headcount reductions in France and lower headcount in 2021. The increase in advertising expense was due, in part, to decreased advertising expense in 2020 to mitigate the negative impact of COVID-19 on revenue.

General and administrative expense


		Three Months Ended September 30,										Nine Months Ended September 30,											Three Months Ended September 30,							Nine Months Ended September 30,
		2020			$ Change		% Change		2019			2020			$ Change		% Change		2019				2021		$ Change		% Change	2020		2021		$ Change		% Change	2020
		(Dollars in thousands)																					(Dollars in thousands)
General and administrative expense	General and administrative expense	$	90,122		$	7,778	9	%	$	82,344		$	270,129		$	15,343	6	%	$	254,786		General and administrative expense	$	103,086	$	12,964	14%	$	90,122	$	298,734	$	28,605	11%	$	270,129
As a percentage of revenue	As a percentage of revenue	23		%					23		%	24		%					25		%	As a percentage of revenue	22%					23%		24%					24%

For the three months ended September 30, ~~2020~~2021 compared to the three months ended September 30, ~~2019~~2020

North America general and administrative expense increased ~~$6.7~~$15.4 million, or 9%19%, due primarily to ~~increases~~an increase of ~~$4.3~~ $7.5 million in ~~compensation~~professional fees, $6.0 million of expense ~~$3.7~~from the inclusion of Angi Roofing, increases of $2.2 million in ~~bad~~ ~~debt~~software license and maintenance expense ~~due to higher Marketplace Revenue,~~and ~~$1.2~~$1.7 million in ~~outsourced personal costs,~~the provision for credit losses, partially offset by a $4.0 million decrease ~~of $1.1 million~~ in ~~travel related expenses resulting from the impact of COVID-19.~~compensation expense. The increase in ~~compensation expense~~professional fees is due primarily to an ~~increa~~seincrease in ~~stock-based compensation expense due primarily~~outsourced personnel costs, and to ~~the issuance of new equity awards since 2019~~a lesser extent, legal fees, consulting costs, and ~~the reversal in the third quarter of 2019 of $7.3 million of expense related to certain performance-based awards that did not vest, partially offset by a decrease~~ ~~of $2.9 million in the modification charge related to the Combination.~~recruiting fees. The increase in outsourced personnel costs is due primarily to an increase in call volume related to our customer service function. The increase in software license and maintenance expense is due primarily to increased investment in software to support our customer service function. The increase in the provision for credit losses is primarily due to higher Angi Services revenue as the provision for credit losses as a percentage of revenue has remained relatively flat. The decrease in compensation expense was due primarily to a decrease in stock-based compensation expense.

~~Table of Contents~~

Europe general and administrative expense ~~increased $1.1~~decreased $2.5 million, or ~~14%~~29%, ~~due primarily to an increase~~ ~~of $1.7 million~~ driven by a decrease in compensation expense ~~resulting from~~ ~~severance costs~~ ~~recorded in the third quarter~~ of ~~2020~~ ~~associated with headcount reductions in France, partially offset by decreases of $0.5~~$2.6 million ~~in the digital services tax and other non-payroll taxes and $0.2 million in travel related expenses resulting from the impact of COVID-19.~~

~~For the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019~~

~~North America general and administrative expense increased $14.7 million, or 6%, due~~ primarily ~~to increases~~ ~~of $10.5 million in bad debt expense~~ due to ~~higher Marketplace Revenue, the impact from COVID-19 on expected credit losses and anticipated losses from Advertising SPs, $6.8 million in compensation expense~~ ~~and $3.1 million in professional fees, partially offset by decreases of $2.0 million in travel related expenses resulting from the impact of COVID-19 and $1.9 million in software license and maintenance costs. The increase in compensation expense is due primarily to an increase of $9.6 million~~ in stock-based compensation expense due primarily to the factors described above in the three-month discussion and a cumulative adjustment recorded in the first quarter of 2020 in connection with the modification charge related to the Combination described under the "Overview" section above. The increase in professional fees is due primarily to a~~n increase in legal fees.~~

~~Europe general and administrative expense increased $0.7 million, or 3%, due primarily to an increase~~ ~~of $1.1 million in compensation expense resulting from~~ severance costs recorded in the third quarter of 2020 associated with headcount reductions in ~~France~~France.

For the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020

North America general and administrative expense increased $22.3 million, or 9%, due primarily to an increase of ~~$0.3~~$18.9 million in ~~bad debt~~professional fees, $9.6 million in one-time costs related to the Company reducing its real estate footprint, $6.0 million of expense ~~due, in part,~~ from the ~~impact~~inclusion of ~~COVID-19 on expected~~Angi Roofing, increases of $4.9 million in the provision for credit losses, and $4.4 million in software license and maintenance costs, partially offset by ~~decreases~~a decrease of ~~$0.5~~$26.0 million in ~~digital services tax~~compensation expense. The increase in professional fees, provision for credit losses, and ~~other non-payroll taxes~~software license and ~~$0.4~~maintenance costs were due primarily to the factors described above in the three-month discussion above. The real estate related costs are the result of impairments of right-of-use lease assets, leasehold improvements and furniture and equipment associated with office space we are vacating. The decrease in compensation expense was due primarily to a decrease of stock-based compensation expense of $34.6 million, partially offset by an increase of $8.0 million in ~~travel~~wage related expenses resulting primarily from annual wage increases and certain department’s headcount now being aligned to general and administrative functions under the ~~impact~~brand integration initiative, attributing to $2.8 million of ~~COVID-19.~~the increase. The decrease in stock-based compensation expense was due primarily to $22.4 million in stock appreciation rights expense recognized during the nine months ended September 30, 2020, which was not incurred in 2021 as the awards became fully vested in 2020, and a net decrease of $7.7 million due to the reversal of previously recognized expense related to unvested awards that were forfeited due to management departures in the first quarter of 2021, partially offset by the issuance of new equity awards since 2020.

Europe general and administrative expense increased $6.3 million, or 29%, due primarily to a charge of $6.0 million related to the acquisition of an additional 21% interest in our MyBuilder business at a premium to fair value and a $1.9 million increase in professional fees related to corporate restructuring, partially offset by a $3.9 million decrease in compensation expense driven by severance costs recorded in the third quarter of 2020 associated with headcount reductions in France.

Table of Contents

Product development expense


		Three Months Ended September 30,										Nine Months Ended September 30,											Three Months Ended September 30,							Nine Months Ended September 30,
		2020			$ Change		% Change		2019			2020			$ Change		% Change		2019				2021		$ Change		% Change	2020		2021		$ Change		% Change	2020
		(Dollars in thousands)																					(Dollars in thousands)
Product development expense	Product development expense	$	17,577		$	1,556	10	%	$	16,021		$	50,068		$	3,161	7	%	$	46,907		Product development expense	$	17,675	$	98	1%	$	17,577	$	54,474	$	4,406	9%	$	50,068
As a percentage of revenue	As a percentage of revenue	5		%					4		%	5		%					5		%	As a percentage of revenue	4%					5%		4%					5%

For the three months ended September 30, ~~2020~~2021 compared to the three months ended September 30, ~~2019~~2020

North America product development expense ~~increased $1.5~~decreased $1.3 million, or ~~12%~~9%, due primarily to decreases in compensation expense of $1.3 million, partially offset by an increase in software license and maintenance expense of $0.3 million. The decrease in compensation expense is due to certain departments’ headcount that were previously included within product development now being aligned to general and administrative functions under the brand integration initiative. This change resulted in a $2.4 million decrease in compensation expense. Excluding this change, compensation expense would have increased by $1.1 million driven by higher salary expense.

Europe product and development expense increased $1.4 million, or 53%, due to an increase in compensation ~~expense.~~expense of $1.3 million as a result of fewer projects being capitalized.

For the nine months ended September 30, ~~2020~~2021 compared to the nine months ended September 30, ~~2019~~2020

North America product development expense ~~increased $3.2~~decreased $0.4 million, or 8%1%, due primarily to ~~increases~~decreases in compensation expense of ~~$2.5~~$1.3 million, partially offset by increases in outsourced personnel and consulting costs of $0.8 million and software license and maintenance ~~costs~~expense of $0.7 million. The decrease in compensation expense is due to the factor described above in the three-month discussion. The increase in outsourced personnel and consulting costs were in support of projects for the Angi brand change.

Europe product and development expense increased $4.8 million, or 59%, due to an increase in compensation expense of $4.4 million due primarily to factors described above in the three-month discussion.

Depreciation


		Three Months Ended September 30,										Nine Months Ended September 30,											Three Months Ended September 30,							Nine Months Ended September 30,
		2020			$ Change		% Change		2019			2020			$ Change		% Change		2019				2021		$ Change		% Change	2020		2021		$ Change		% Change	2020
		(Dollars in thousands)																					(Dollars in thousands)
Depreciation	Depreciation	$	13,921		$	2,677	24	%	$	11,244		$	38,614		$	11,575	43	%	$	27,039		Depreciation	$	14,701	$	780	6%	$	13,921	$	45,728	$	7,114	18%	$	38,614
As a percentage of revenue	As a percentage of revenue	4		%					3		%	3		%					3		%	As a percentage of revenue	3%					4%		4%					3%

For the three and nine months ended September 30, 2021 compared to the three and nine months ended September 30, 2020 ~~compared to the three months ended September 30, 2019~~

North America and Europe depreciation in 2021 increased ~~$2.1 million, or 19%,~~from 2020 due primarily to ~~the~~ investments in capitalized software to support our products and ~~services and leasehold improvements related to additional office space. Europe depreciation increased $0.6 million.~~services.

Operating (loss) income


	Three Months Ended September 30,							Nine Months Ended September 30,
	2021		$ Change		% Change	2020		2021		$ Change		% Change	2020
	(Dollars in thousands)
North America	$	(14,719)	$	(15,014)	NM	$	295	$	(37,269)	$	(45,646)	NM	$	8,377
Europe	(254)		3,060		92%	(3,314)		(10,326)		(278)		(3)%	(10,048)
Total	$	(14,973)	$	(11,954)	NM	$	(3,019)	$	(47,595)	$	(45,924)	NM	$	(1,671)

As a percentage of revenue	(3)%					(1)%		(4)%					—%

3231

Table of Contents

For the ~~nine months ended September 30, 2020 compared to the nine months ended September 30, 2019~~

~~North America depreciation increased $10.4 million, or 41%, due primarily to the factors described above in the three-month discussion. Europe depreciation increased $1.2 million.~~

~~Operating income (loss)~~

Three Months Ended September 30, Nine Months Ended September 30,
2020 $ Change % Change 2019 2020 $ Change % Change 2019
(Dollars in thousands)
North America $ 295 $ (26,899) (99) % $ 27,194 $ 8,377 $ (32,032) (79) % $ 40,409
Europe (3,314) (846) (34) % (2,468) (10,048) (2,127) (27) % (7,921)
Total $ (3,019) $ (27,745) NM $ 24,726 $ (1,671) $ (34,159) NM $ 32,488
As a percentage of revenue (1) % 7 % — % 3 %

~~________________________~~

~~NM = Not meaningful~~

~~For the~~ three months ended September 30, ~~2020~~2021 compared to the three months ended September 30, ~~2019~~2020

North America operating income decreased ~~$26.9~~$15.0 million ~~or 99%,~~to a loss of $14.7 million due to a decrease in Adjusted EBITDA of ~~$20.1~~$29.2 million, described below, and ~~increases~~an increase of ~~$6.0 million in stock-based compensation expense and $2.1~~$0.6 million in depreciation, partially offset by ~~a decrease~~decreases of ~~$1.2~~$8.9 million in amortization of ~~intangibles. The increase~~intangibles and $5.9 million in stock-based compensation expense was due primarily to the issuance of new equity awards since 2019 and the reversal in the third quarter of 2019 of $7.6 million of expense related to certain performance-based awards that did not vest, partially offset by a decreas~~e of $2.2 million in the~~ ~~modification charge related to the Combination.~~expense. The increase in depreciation was due primarily to the investments in capitalized software to support our products and ~~services and leasehold improvements related to additional office space.~~services. The decrease in the amortization of intangibles was due primarily to ~~lower expense as~~ certain intangible assets becoming fully amortized during 2020. The decrease in stock-based compensation expense was due primarily to $6.8 million for stock appreciation rights and options expense recognized in the third quarter of 2020 which were not incurred in 2021 as the awards became fully ~~amortized in 2019.~~vested.

Europe operating loss increased ~~$0.8~~$3.1 million ~~or 34%,~~to a loss of $0.3 million due primarily to an increase ~~of $0.6 million in depreciation and a decrease~~ in Adjusted EBITDA loss of ~~$0.4~~$3.1 million, described below, partially offset by a decrease of $0.1 million in amortization of intangibles.

At September 30, ~~2020,~~2021, there is ~~$79.3~~$135.5 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 ~~2.1~~3.2 years.

For the nine months ended September 30, ~~2020~~2021 compared to the nine months ended September 30, ~~2019~~2020

North America operating income decreased ~~$32.0~~$45.6 million ~~or 79%,~~to a loss of $37.3 million due ~~primarily~~ to a decrease in Adjusted EBITDA of ~~$14.9~~$99.8 million, described below, and ~~increases~~an increase of ~~$10.4~~$6.1 million in depreciation, ~~and $9.3~~partially offset by decreases of $34.3 million in stock-based compensation expense ~~partially offset by a decrease of $2.6~~and $26.0 million in amortization of intangibles. The ~~increases~~increase in depreciation and the decreases in stock-based compensation ~~expense~~ and ~~decrease in~~ amortization of intangibles were ~~due primarily to~~driven by the factors described above in the three-month discussion.

Europe operating loss increased ~~$2.1~~$0.3 million, or ~~27%~~3%, due primarily to ~~a decrease~~an increase in Adjusted EBITDA loss of ~~$1.8~~$0.1 million, described below, and ~~increases~~an increase of ~~$1.2~~$1.0 million in depreciation ~~and $0.1~~expense, partially offset by decreases of $0.4 million in stock-based compensation expense ~~partially offset by a decrease of $1.0~~and $0.3 million in amortization of intangibles.

Adjusted EBITDA


	Three Months Ended September 30,							Nine Months Ended September 30,
	2021		$ Change		% Change	2020		2021		$ Change		% Change	2020
	(Dollars in thousands)
North America	$	11,213	$	(29,241)	(72)%	$	40,454	$	37,076	$	(99,810)	(73)%	$	136,886
Europe	1,182		3,149		NM	(1,967)		(5,937)		129		2%	(6,066)
Total	$	12,395	$	(26,092)	(68)%	$	38,487	$	31,139	$	(99,681)	(76)%	$	130,820

As a percentage of revenue	3%					10%		2%					12%

For a reconciliation of net (loss) earnings attributable to Angi Inc. shareholders to operating loss to consolidated Adjusted EBITDA, see “Principles of Financial Reporting.” For a reconciliation of operating (loss) income to Adjusted EBITDA for the Company’s reportable segments, see “Note 7—Segment Information” to the consolidated financial statements included in “Item 1. Consolidated Financial Statements.”

For the three months ended September 30, 2021 compared to the three months ended September 30, 2020

North America Adjusted EBITDA decreased $29.2 million, or 72%, to $11.2 million, and decreased as a percentage of revenue, despite higher revenue of $71.3 million, due primarily to an increase in selling and marketing expense of $29.5 million as well as growth of Angi Services due to factors described above in the cost of revenue and selling and marketing three-month discussions.

Europe Adjusted EBITDA increased $3.1 million, as higher revenue of $0.3 million was more than offset by the increases in general and administrative expense of $2.4 million (excluding stock-based compensation expense), selling and marketing expense of $1.9 million, and product development expense of $1.4 million; each of which are described above.

For the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020

North America Adjusted EBITDA decreased $99.8 million, or 73%, to $37.1 million, and decreased as a percentage of revenue, despite higher revenue of $150.7 million, due primarily to an increase in selling and marketing expense of $93.9

Table of Contents

~~Adjusted EBITDA~~

Three Months Ended September 30, Nine Months Ended September 30,
2020 $ Change % Change 2019 2020 $ Change % Change 2019
(Dollars in thousands)
North America $ 40,454 $ (20,055) (33) % $ 60,509 $ 136,886 $ (14,918) (10) % $ 151,804
Europe (1,967) (381) (24) % (1,586) (6,066) (1,796) (42) % (4,270)
Total $ 38,487 $ (20,436) (35) % $ 58,923 $ 130,820 $ (16,714) (11) % $ 147,534
As a percentage of revenue 10 % 16 % 12 % 15 %

~~For a reconciliation~~million as well as growth of ~~net earnings attributable~~Angi Services due to ~~ANGI Homeservices Inc. shareholders to operating (loss) income to consolidated Adjusted EBITDA, see "Principles of Financial Reporting." For a reconciliation of operating income (loss) to Adjusted EBITDA for~~factors described above in the ~~Company's reportable segments, see "Note 7—Segment Information" to the consolidated financial statements included in "Item 1. Consolidated Financial Statements~~."

~~For the three months ended September 30, 2020 compared to the three months ended September 30, 2019~~

~~North America Adjusted EBITDA decreased $20.1 million, or 33%, to $40.5 million, despite higher revenue due primarily to an~~ ~~increase in~~ cost of revenue ~~increased investment in fixed price~~ and ~~an increase of $3.7 million in bad debt expense due to higher Marketplace Revenue.~~selling and marketing nine-month discussions.

Europe Adjusted EBITDA loss ~~increased $0.4~~decreased $0.1 million, or ~~24%~~2%, ~~to a loss of $2.0 million, due primarily to a decrease in revenue and an increase in compensation expense due to severance~~ ~~costs~~ ~~recorded in the third quarter of 2020~~ ~~associated with headcount reductions in France, partially offset by a decrease of $1.9 million in~~ ~~advertising expense due, in part, to mitigating the negative impact of COVID-19 on revenue.~~

~~For the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019~~

~~North America Adjusted EBITDA decreased $14.9 million, or 10%, to $136.9 million, despite higher revenue~~ due primarily to an increase ~~in cost~~ of ~~revenue and an increase~~ ~~of $10.5 million in bad debt expense due to higher Marketplace Revenue, the impact from COVID-19 on expected credit losses and anticipated losses from Advertising SPs.~~

~~Europe Adjusted EBITDA loss increased $1.8 million, or 42%, to a loss of $6.1 million, due primarily to the decrease of $4.3~~$10.2 million in revenue, ~~and an~~mostly offset by the increase in ~~bad debt expense~~general and administrative expense of ~~$0.3~~$6.7 million ~~due, in part, from~~(excluding stock-based compensation expense), which included a charge of $6.0 million related to the ~~impact~~acquisition of ~~COVID-19 on expected credit losses, partially offset by~~an additional 21% interest in MyBuilder at a ~~decrease~~premium to fair value, and the increase in product development expense of $4.8 million.

~~$1.9 million~~ ~~in advertising expense.~~

Interest expense

Interest expense relates to interest on the ANGI Group Senior Notes, ANGI Group Term Loan, and commitment fees on the ~~undrawn~~ANGI Group Revolving Facility. As of May 6, 2021, the outstanding balance of the ANGI Group Term Loan was repaid in its entirety. The ANGI Group Revolving Facility. was terminated effective August 3, 2021. No amounts were ever drawn under the ANGI Group Revolving Facility prior to its termination.

For a detailed description of long-term debt, net, see "“Note 4—Long-term Debt"” to the consolidated financial statements included in "“Item 1. Consolidated Financial Statements."”

Three Months Ended September 30, Nine Months Ended September 30,
2020 $ Change % Change 2019 2020 $ Change % Change 2019
(Dollars in thousands)
Interest expense $ 3,699 $ 692 23 % $ 3,007 $ 7,593 $ (1,371) (15) % $ 8,964


	Three Months Ended September 30,							Nine Months Ended September 30,
	2021		$ Change		% Change	2020		2021		$ Change		% Change	2020
	(In thousands)
Interest expense	$	6,032	$	2,333	63%	$	3,699	$	18,463	$	10,870	NM	$	7,593

For the three and nine months ended September 30, 2021 compared to the three and nine months ended September 30, 2020

Interest expense increased due primarily to the issuance of the ANGI Group Senior Notes in August 2020 and the write-off of deferred debt issuance costs associated with the termination of the ANGI Group Revolving Facility, partially offset by a decrease in interest expense due to the repayment of the ANGI Group Term Loan during the second quarter of 2021.

Other (expense) income, net


	Three Months Ended September 30,							Nine Months Ended September 30,
	2021		$ Change		% Change	2020		2021		$ Change		% Change	2020
	(In thousands)
Other (expense) income, net	$	(479)	$	(702)	NM	$	223	$	(1,882)	$	(2,738)	NM	$	856

For the three months ended September 30, ~~2020 compared to the three months ended September 30, 2019~~

Interest expense in 2020 increased from 2019 due primarily to the issuance of the Senior Notes in August 2020, partially offset by a decrease in interest expense on the Term Loan due primarily to lower interest rates2021 and ~~the decrease in the average outstanding balance of the Term Loan compared to the prior year period.~~

~~Table of Contents~~

~~For the nine months ended September 30,~~ 2020 ~~compared to the nine months ended September 30, 2019~~

Interest expense in 2020 decreased from 2019 due primarily to lower interest rates and the decrease in the average outstanding balance of the Term Loan compared to the prior year period, partially offset by the issuance of the Senior Notes in August 2020.

Other ~~income,~~expense, net in 2021 principally includes a net foreign currency exchange loss of $0.5 million.

Three Months Ended September 30, Nine Months Ended September 30,
2020 $ Change % Change 2019 2020 $ Change % Change 2019
(Dollars in thousands)
Other income, net $ 223 $ (1,282) (85) % $ 1,505 $ 856 $ (3,967) (82) % $ 4,823

~~For the three months ended September 30, 2020 and 2019~~

Other income, net in 2020 principally includes interest income ofof $0.1 million and foreign currency exchange gains of $0.1 million.

Other income, net in 2019 principally includes interest income of $2.1 million, and net foreign currency exchange gains of $0.3 million, partially offset by a $0.9 million mark-to-market charge for an indemnification claim related to the Handy acquisition that was settled in ANGI shares during the first quarter of 2020.

For the nine months ended September 30, ~~2020~~2021 and ~~2019~~2020

Other expense, net in 2021 primarily includes the write-off of $1.1 million of deferred debt issuance costs related to the ANGI Group Term Loan which was repaid in its entirety during the second quarter of 2021 and net foreign currency exchange losses of $1.0 million, partially offset by interest income of $0.2 million.

Other income, net in 2020 ~~principally~~primarily includes interest income of $1.6 million, partially offset by net foreign currency exchange losses of $0.3 million, and a $0.2 million mark-to-market charge for an indemnification claim related to the Handy acquisition that was settled in ~~ANGI~~Angi Inc. shares during the first quarter of 2020.

~~Other income, net in 2019 principally includes interest income~~

Table of $6.4 million and net foreign currency exchange gains of $0.6 million, partially offset by a $2.0 million mark-to-market charge for an indemnification claim related to the Handy acquisition that was settled in ANGI shares during the first quarter of 2020.Contents

Income tax benefit ~~(provision)~~


		Three Months Ended September 30,								Nine Months Ended September 30,									Three Months Ended September 30,							Nine Months Ended September 30,
		2020		$ Change		% Change	2019			2020		$ Change		% Change		2019			2021		$ Change		% Change	2020		2021		$ Change		% Change	2020
		(Dollars in thousands)																	(Dollars in thousands)
Income tax benefit (provision)		$	11,698	$	16,598	NM	$	(4,900)		$	17,638	$	10,576	150	%	$	7,062
Income tax benefit																		Income tax benefit	$	4,791	$	(6,907)	(59)%	$	11,698	$	23,209	$	5,571	32%	$	17,638
Effective income tax rate	Effective income tax rate	NM					21		%	NM						NM		Effective income tax rate	22%					NM		34%					NM

For further details of income tax matters, see "“Note 2—Income Taxes"” to the consolidated financial statements included in "“Item 1. Consolidated Financial Statements."”

For the three months ended September 30, ~~2020~~2021 compared to the three months ended September 30, ~~2019~~2020

In 2021, the effective income tax rate was higher than the statutory rate of 21%, due primarily to the benefit from the change in the annual expected effective income tax rate driven by the reduced impact of forecasted nondeductible stock-based compensation expense had on the increase in forecasted ordinary pre-tax losses, partially offset by foreign income taxed at different tax rates.

In 2020, the income tax benefit was due primarily to excess tax benefits generated by the exercise and vesting of stock-based awards.

For the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020

In ~~2019,~~2021, the effective income tax rate ~~approximates~~was higher than the statutory rate of 21% due primarily to ~~unbenefited foreign losses and state taxes, offset by research credits and~~ excess tax benefits generated by the exercise and vesting of stock-based ~~awards.~~awards, partially offset by foreign income taxed at different tax rates.

~~For the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019~~

In 2020, the Company recorded an income tax benefit of $17.6 million. The income tax benefit was due primarily to excess tax benefits generated by the exercise and vesting of stock-based awards and a reduction to deferred taxes due to the true-up of the state tax rate of an indefinite-lived intangible asset.

In 2019, the Company recorded an income tax benefit of $7.1 million, despite pre-tax income. The income tax benefit was due primarily to excess tax benefits generated by the exercise and vesting of stock-based awards.

3534

Table of Contents

PRINCIPLES OF FINANCIAL REPORTING

We report Adjusted EBITDA as a supplemental measure to U.S. generally accepted accounting principles ~~("GAAP"~~(“GAAP”). This measure is one of the primary metrics by which we evaluate the performance of our businesses, on which our internal budgets are based and by which management is compensated. We believe that investors should have access to, and we are obligated to provide, the same set of tools that we use in analyzing our results. This non-GAAP measure should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP results. We endeavor to compensate for the limitations of the non-GAAP measure presented by providing the comparable GAAP measure with equal or greater prominence and descriptions of the reconciling items, including quantifying such items, to derive the non-GAAP measure. We encourage investors to examine the reconciling adjustments between the GAAP and non-GAAP measure, which we discuss below.

Definition of Non-GAAP Measure

Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("(“Adjusted ~~EBITDA"~~EBITDA”) is defined as operating income (loss) excluding: (1) stock-based compensation expense; (2) depreciation; and (3) acquisition-related items consisting of amortization of intangible assets and impairments of goodwill and intangible assets, if applicable. We believe this measure is useful for analysts and investors as this measure allows a more meaningful comparison between our performance and that of our competitors. ~~The above items are excluded from our Adjusted EBITDA measure because these items are non-cash in nature.~~ Adjusted EBITDA has certain limitations because it excludes the impact of these expenses.

The following table reconciles net (loss) earnings attributable to ~~ANGI Homeservices~~Angi Inc. shareholders to operating ~~(loss) income~~loss to consolidated Adjusted EBITDA:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2020		2019		2020		2019			2021		2020		2021		2020
		(In thousands)									(In thousands)
Net earnings attributable to ANGI Homeservices Inc. shareholders		$	4,472	$	17,999	$	8,181	$	34,936
Net (loss) earnings attributable to Angi Inc. shareholders										Net (loss) earnings attributable to Angi Inc. shareholders	$	(16,995)	$	4,472	$	(45,357)	$	8,181
Add back:	Add back:									Add back:
Net earnings attributable to noncontrolling interests	Net earnings attributable to noncontrolling interests	731		325		1,049		473		Net earnings attributable to noncontrolling interests	302		731		626		1,049
Income tax (benefit) provision		(11,698)		4,900		(17,638)		(7,062)
Other income, net		(223)		(1,505)		(856)		(4,823)
Income tax benefit										Income tax benefit	(4,791)		(11,698)		(23,209)		(17,638)
Other expense (income), net										Other expense (income), net	479		(223)		1,882		(856)
Interest expense	Interest expense	3,699		3,007		7,593		8,964		Interest expense	6,032		3,699		18,463		7,593
Operating (loss) income		(3,019)		24,726		(1,671)		32,488
Operating loss										Operating loss	(14,973)		(3,019)		(47,595)		(1,671)
Add back:										Add back:
Stock-based compensation expense	Stock-based compensation expense	14,697		8,784		55,031		45,586		Stock-based compensation expense	8,813		14,697		20,390		55,031
Depreciation	Depreciation	13,921		11,244		38,614		27,039		Depreciation	14,701		13,921		45,728		38,614
Amortization of intangibles	Amortization of intangibles	12,888		14,169		38,846		42,421		Amortization of intangibles	3,854		12,888		12,616		38,846
Adjusted EBITDA	Adjusted EBITDA	$	38,487	$	58,923	$	130,820	$	147,534	Adjusted EBITDA	$	12,395	$	38,487	$	31,139	$	130,820

For a reconciliation of operating ~~(loss) income~~loss to Adjusted EBITDA for the ~~Company's~~Company’s reportable segments, see "“Note 7—Segment Information"” to the consolidated financial statements included in "“Item 1. Consolidated Financial Statements."”

Non-Cash Expenses That Are Excluded from Our Non-GAAP Measure

Stock-based compensation expense consists ~~principally~~ of expense associated with the grants, including unvested grants assumed in acquisitions, of stock appreciation rights, restricted stock units ~~("RSUs"~~(“RSUs”), stock options, performance-based RSUs (“PSUs”) and market-based awards. These expenses are not paid in cash and we view the economic ~~cost~~costs of stock-based awards to be the dilution to our share base; we also include the related shares in our fully diluted shares outstanding for GAAP earnings per share using the treasury stock method. ~~Performance-based RSUs~~PSUs and market-based awards are included only to the extent the applicable performance or market condition(s) have been met (assuming the end of the reporting period is the end of the contingency period). The Company is currently settling all stock-based awards on a net basis and remits the required tax-withholding ~~amount~~amounts from its current funds.

~~Table of Contents~~

Depreciation is a non-cash expense relating to our capitalized software, leasehold improvements and equipment ~~that~~and is computed using the straight-line method to allocate the cost of depreciable assets to operations over their estimated useful lives, or, in the case of leasehold improvements, the lease term, if shorter.

Table of Contents

Amortization of intangible assets and impairments of goodwill and intangible assets are non-cash expenses related primarily to acquisitions. At the time of an acquisition, the identifiable definite-lived intangible assets of the acquired company, such as service professional relationships, technology, memberships, customer lists and user base, and trade names, are valued and amortized over their estimated lives. Value is also assigned to acquired indefinite-lived intangible assets, which comprise trade names and trademarks, and goodwill that are not subject to amortization. An impairment is recorded when the carrying value of an intangible asset or goodwill exceeds its fair value. We believe that intangible assets represent costs incurred by the acquired company to build value prior to acquisition and the related amortization and impairments of intangible assets or goodwill, if applicable, are not ongoing costs of doing business.

3736

Table of Contents

FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES

Financial Position


		September 30, 2020		December 31, 2019			September 30, 2021		December 31, 2020
		(In thousands)					(In thousands)
Cash and cash equivalents and marketable debt securities
Cash and cash equivalents and marketable debt securities:						Cash and cash equivalents and marketable debt securities:
United States	United States	$	837,611	$	377,648	United States	$	449,687	$	793,679
All other countries ~~(a)~~	All other countries ~~(a)~~	17,433		12,917		All other countries ~~(a)~~	26,938		19,026
Total cash and cash equivalents	Total cash and cash equivalents	855,044		390,565		Total cash and cash equivalents	476,625		812,705
Marketable debt securities (United States)	Marketable debt securities (United States)	49,992		—		Marketable debt securities (United States)	—		49,995
Total cash and cash equivalents and marketable debt securities	Total cash and cash equivalents and marketable debt securities	$	905,036	$	390,565	Total cash and cash equivalents and marketable debt securities	$	476,625	$	862,700

Long-term debt
Long-term debt:						Long-term debt:
Senior Notes	Senior Notes	$	500,000	$	—	Senior Notes	$	500,000	$	500,000
Term Loan	Term Loan	237,188		247,500		Term Loan	—		220,000
Total long-term debt	Total long-term debt	737,188		247,500		Total long-term debt	500,000		720,000
Less: current portion of Term Loan		13,750		13,750

Less: unamortized debt issuance costs	Less: unamortized debt issuance costs	8,030		1,804		Less: unamortized debt issuance costs	5,627		7,723
Total long-term debt, net	Total long-term debt, net	$	715,408	$	231,946	Total long-term debt, net	$	494,373	$	712,277

~~________________________~~

~~(a)~~ ~~If needed for U.S. operations, the~~The Company’s international cash ~~and cash equivalents held by the Company's foreign subsidiaries could~~can be repatriated without significant tax consequences.

For a detailed description of long-term debt, see “Note 4—Long-term Debt

The outstanding balance of the Term Loan as of September 30, 2020 is $237.2 million. 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. Additionally, interest payments are due at least quarterly through the term of the loan. At September 30, 2020, the Term Loan bore interest at LIBOR plus 1.50%, or 1.66%. The spread over LIBOR is subject to change in future periods based on ANGI Group's consolidated net leverage ratio.

On August 20, 2020, ANGI Group issued $500 million of its Senior Notes due August 15, 2028, with interest payable February 15 and August 15 of each year, commencing February 15, 2021. The proceeds from the offering will be used for general corporate purposes, including potential future acquisitions and return of capital.

~~On August 12, 2020, ANGI Group entered into a joinder agreement with the Company, the other subsidiaries of the Company that are party~~” to the credit agreement, and each of the other loan parties to the credit agreement, pursuant to which ANGI Group became the successor borrower under the credit agreement and ANGI Homeservices Inc.'s obligations thereunder were terminated. The credit agreement governs the Term Loan and Revolving Facility. In addition, on August 12, 2020, the definition of "Permitted Unsecured Ratio Debt"consolidated financial statements included in ~~the credit agreement was amended to remove the requirement that guarantees of certain indebtedness of the borrower be subordinated to the guarantees under the credit agreement.~~

The $250 million Revolving Facility expires on November 5, 2023. At September 30, 2020 and December 31, 2019, there were no outstanding borrowings under the Revolving Facility. The annual commitment fee on undrawn funds is currently 25 basis points and is based on ANGI Group's consolidated net leverage ratio most recently reported. Borrowings under the Revolving Facility bear interest, at ANGI Group's option, at either a base rate or LIBOR, in each case plus an applicable margin, which is determined based on ANGI Group's consolidated net leverage ratio.

“~~Table of Contents~~Item 1. Consolidated Financial Statements

~~The Senior Notes, Ter~~m Loan and Revolving Facility are guaranteed by certain of ANGI Group's wholly-owned material domestic subsidiaries and ANGI Group’s obligations under the Term Loan and the Revolving Facility are secured by substantially all assets of ANGI Group and the guarantors, subject to certain exceptions. The Term Loan and outstanding borrowings, if any, under the Revolving Facility rank equally with each other, and have priority over the Senior Notes to the extent of the value of the assets securing the borrowings under the credit agreement. The terms of the Revolving Facility and the Term Loan require ANGI Group 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). In addition, the credit agreement contains covenants that would limit ANGI Group's ability to pay dividends or make distributions in the event a default has occurred or if ANGI Group's consolidated net leverage ratio exceeds 4.25 to 1.0.”

Cash Flow Information

In summary, the ~~Company's~~Company’s cash flows are as follows:


		Nine Months Ended September 30,					Nine Months Ended September 30,
		2020		2019			2021		2020
		(In thousands)					(In thousands)
Net cash provided by (used in):
Net cash provided (used in) by:						Net cash provided (used in) by:
Operating activities	Operating activities	$	173,185	$	182,084	Operating activities	$	25,888	$	173,185
Investing activities	Investing activities	$	(86,894)	$	(26,630)	Investing activities	$	(26,663)	$	(86,894)
Financing activities	Financing activities	$	378,450	$	(89,924)	Financing activities	$	(335,046)	$	378,450

Net cash provided by operating activities consists of earnings adjusted for non-cash items and the effect of changes in working capital. Non-cash adjustments include stock-based compensation expense, provision for credit losses, ~~stock-based compensation expense,~~ amortization of intangibles, depreciation, impairment of long-lived and right-of-use assets, non-cash lease expense, and deferred income taxes.

2021

Adjustments to earnings consist primarily of $66.1 million of provision for credit losses, $45.7 million of depreciation, $20.4 million of stock-based compensation expense, $12.6 million of amortization of intangibles, $12.3 million of impairment charges on long-lived and right-of-use assets, $9.6 million of non-cash lease expense, and $6.4 million of revenue reserves, partially offset by $25.4 million of deferred income taxes. The decrease from changes in working capital consists primarily of an increase of $106.2 million in accounts receivable partially offset by increases of $23.3 million in accounts payable and other liabilities and $4.6 million of deferred revenue. The increase in accounts receivable is due primarily to revenue growth, primarily attributable to Angi Services. The increase in accounts payable and other liabilities is due primarily to increases in accrued advertising and related payables and accrued roofing material costs related to Angi Roofing, partially offset by the reduction in lease liabilities. The increase in deferred revenue is primarily driven by increases in annual membership payments and an increase in customer deposits for Angi Services jobs.

Table of Contents

Net cash used in investing activities includes $52.1 million of capital expenditures, primarily related to investments in capitalized software to support the Company’s products and services, $25.4 million of cash principally related to the acquisition of Angi Roofing, partially offset by proceeds of $50.0 million from the maturities of marketable debt securities.

Net cash used in financing activities includes $220.0 million for the prepayment of the ANGI Group Term Loan, which otherwise would have matured on November 5, 2023, $56.1 million for the payment of withholding taxes on behalf of employees for stock-based awards that were net settled, $35.4 million for the repurchase of 3.2 million shares of Angi Inc. Class A common stock, on a settlement date basis, at an average price of $11.06 per share, and $23.5 million for the purchase of redeemable noncontrolling interests.

2020

Adjustments to earnings consist primarily of $60.1 million of provision for credit losses, $55.0 million of stock-based compensation expense, $38.8 million of amortization of intangibles, and $38.6 million of depreciation, and $10.2 million of non-cash lease expense, partially offset by $18.1 million of deferred income taxes. The decrease from changes in working capital consists primarily of an increase in accounts receivable of $70.7 million, partially offset by an increase in accounts payable and other liabilities of $46.9 million. The increase in accounts receivable is due primarily to revenue ~~growth in North America.~~growth. The increase in accounts payable and other liabilities is due primarily to an increase in accrued advertising and related payables, and accrued compensation costs due, in part, to the deferral of payroll tax payments under the Coronavirus Aid, Relief, and Economic Security ~~Act.~~Act, partially offset by the reduction in lease liabilities..

Net cash used in investing activities includes purchases of marketable debt securities of $50.0 million and capital expenditures of $37.6 million, primarily related to investments in capitalized software to support the Company's products and services, and leasehold improvements.

Net cash provided by financing activities includes $500.0 million of proceeds from the issuance of the Senior Notes and a $3.1 million payment from ~~IAC~~IAC/InterActiveCorp (“IAC”) pursuant to the tax sharing agreement, partially offset by $54.4 million for the repurchase of 7.7 million shares of Class A common stock, on a settlement date basis, at an average price of $7.02 per share, $50.0 million for the payment of withholding taxes on behalf of employees for stock-based awards that were net settled, $10.3 million in principal payments on the Term Loan, $5.6 million for debt issuance costs, and $4.3 million for the purchase of redeemable noncontrolling interests.

~~2019~~

Adjustments to earnings consist primarily of $49.3 million of provision for credit losses, $45.6 million of stock-based compensation expense, $42.4 million of amortization of intangibles, and $27.0 million of depreciation, partially offset by $8.3 million of deferred income taxes. The deferred income tax benefit primarily relates to the net operating loss created by the exercise and vesting of stock-based awards. The decrease from changes in working capital consists primarily of an increase in accounts receivable of $66.6 million, partially offset by an increase in accounts payable and other liabilities of $30.6 million and a decrease in other assets of $15.7 million. The increase in accounts receivable was due primarily to revenue growth in North America. The increase in accounts payable and other liabilities is due primarily to an increase in accrued advertising and related payables. The decrease in other assets is due, in part, to a receipt of tenant improvement allowances.

~~Table of Contents~~

Net cash used in investing activities includes capital expenditures of $54.8 million, primarily related to investments in capitalized software to support the Company's products and services, and leasehold improvements, $20.3 million of cash principally related to the acquisition of Fixd Repair, partially offset by $25.0 million of proceeds from maturities of marketable debt securities, $23.6 million of net proceeds from the December 31, 2018 sale of Felix.

Net cash used in financing activities includes $34.0 million for the repurchase of 4.1 million shares of Class A common stock, on a settlement date basis, at an average price of $8.23 per share, $30.0 million for the payment of withholding taxes on behalf of employees for stock-based awards that were net settled, a $11.4 million payment to IAC pursuant to the tax sharing agreement and $10.3 million for the principal payments on the Term Loan.

Liquidity and Capital Resources

~~During~~Financing Arrangements

The ANGI Group Senior Notes were issued on August 20, 2020, the proceeds of which have been used for general corporate purposes, including the acquisition of Angi Roofing, and treasury share purchases.

As of May 6, 2021, the outstanding balance of the ANGI Group Term Loan was repaid in its entirety.The outstanding balance of the ANGI Group Term Loan at December 31, 2020 was $220.0 million and bore interest at 2.16%.

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

Share Repurchase Authorizations and Activity

During the nine months ended September 30, ~~2020,~~2021, the Company repurchased ~~7.6~~3.2 million shares, ~~of its Class A common stock,~~ on a trade date basis, of its common stock at an average price of ~~$7.00~~$11.06 per share, or ~~$53.4~~$35.4 million in aggregate. ~~At September 30, 2020, the Company~~Angi Inc. has ~~20.1~~16.1 million shares remaining in its share repurchase ~~authorization.~~authorization as of September 30, 2021. The Company may purchase ~~its~~ shares over an indefinite period of time on the open market and in privately negotiated transactions, depending on those factors Angi Inc. management deems relevant at any particular time, including, without limitation, market conditions, share price and future outlook.

Outstanding Stock-based Awards

The Company may settle equity awards on a gross or a net basis upon factors deemed relevant at the time, and if settledon a net basis, with Angi remits withholding taxes on behalf of the employee. At IAC’s option, certain Angi stock appreciation

Table of Contents

rights can be settled in either Class A shares of Angi or shares of IAC common stock. If settled in IAC common stock, the Company reimburses IAC in either cash or through the issuance of Class A shares to IAC. The Company currently settles all equity awards on a net basis. ~~Assuming~~

Pursuant to the employee matters agreement, in the event of a distribution of Angi capital stock to IAC stockholders in a transaction intended to qualify as tax-free for U.S. federal income tax purposes, the Compensation Committee of the IAC Board of Directors has the exclusive authority to determine the treatment of outstanding IAC equity awards. Such authority includes (but is not limited to) the ability to convert all or part of IAC equity awards outstanding onimmediately prior to the distribution into equity awards denominated in shares of Angi Class A Common Stock for no compensation, which Angi would be obligated to assume and which would be dilutive to Angi’s stockholders.

The following table summarizes the aggregate intrinsic value of all awards outstanding as of October ~~30, 2020~~29, 2021;assuming these awards were net settled on that date, ~~including~~the withholding taxes that would be paid by the Company on behalf of employees upon exercise or vesting that would be payable (assuming these equity awards are net settled with a 50% tax rate), and the shares that would have been issued are as follows:


	Aggregate intrinsic value of awards outstanding		Estimated withholding taxes payable		Estimated shares to be issued
	(In thousands)
Stock appreciation rights	$	9,375	$	4,687	374
Other equity awards(a)(b)	190,775		94,491		7,684
Total outstanding employee stock-based awards	$	200,150	$	99,178	8,058

_______________

(a)Includes stock options, RSUs, and ~~subsidiary-denominated~~subsidiary denominated equity.

(b)The number of shares ultimately needed to settle subsidiary denominated equity ~~ANGI would have issued 10.0 million~~awards and the cash withholding tax obligation may vary significantly as a result of the determination of the fair value of the relevant award at the time of exercise. In addition, the number of shares ~~of its Class A common~~required to settle these awards will be impacted by movement in the Company’s stock ~~and would have remitted $106.3 million in cash for withholding taxes (assuming a~~ price.

~~50%~~
~~withholding rate).~~

Capital Expenditures

The ~~Company's 2020~~Company’s 2021 capital expenditures are expected to be ~~lower~~higher than ~~2019~~2020 capital expenditures of ~~$68.8~~$52.5 million by approximately ~~15%~~25% to ~~20%~~30%, due primarily to ~~lower leasehold improvements.~~ increased investment in capitalized software to support the development of our products and services.

Liquidity Assessment

The ~~Company's~~Company’s liquidity could be negatively affected by a decrease in demand for ~~our~~its products and services due to COVID-19 or other factors. As described in the ~~"COVID-19 Update"~~“COVID-19 Update” section above, to date, the COVID-19 outbreak and measures designed to curb its spread have ~~had an impact~~adversely impacted the Company’s business.

At September 30, 2021, IAC held all Class B shares of Angi Inc., which represent 84.6% of the economic interest and 98.2% of the voting interest of the Company. As a result, IAC has the ability to control Angi Inc.’s financing activities, including the issuance of additional debt and equity securities by Angi Inc. or any of its subsidiaries, or the incurrence of other indebtedness generally. While Angi Inc. is expected to have the ability to access debt and equity markets if needed, such transactions may require the approval of IAC due to its control of the majority of the outstanding voting power of Angi Inc.’s capital stock and its representation on the ~~Company's business. The longer~~Angi Inc. board of directors. Additional financing may not be available on terms favorable to the ~~global outbreak and measures designed to curb~~Company or at all. In addition, the spread of the virus have adverse impacts on economic conditions generally, the greater the adverse impact is likely to be on the Company's business, financial condition and results of operations. The Company believes it has ample access to capital to navigate current and coming economic pressures.

~~The~~ Company’s existing indebtedness could limit its ability to: (i) obtain additional financing to fund working capital needs, acquisitions, capital expenditures or debt service or other requirements; and (ii) use operating cash flow to make certain acquisitions or investments, in the event a default has occurred or, in certain circumstances, if ANGI Group's leverage ratio exceeds the ratios set forth in the Term Loan. There were no such limitations at September 30, 2020. The Company's ability to obtain additional ~~financing may also be impacted by any disruptions in the financial markets caused by COVID-19 or otherwise.~~financing.

The Company believes its existing cash, cash equivalents, ~~marketable debt securities, available borrowings under the Revolving Facility~~ and expected positive cash flows generated from operations will be sufficient to fund its normal operating requirements, including capital expenditures, debt service, the payment of withholding taxes paid on behalf of employees for net-settled stock-based awards, and investing and other commitments, for the foreseeable future.

At September 30, 2020, IAC held all Class B shares of ANGI, which represent 84.5% of the economic interest and 98.2% of the voting interest of ANGI. As a result, IAC has the ability to control ANGI’s financing activities, including the issuance of additional debt and equity securities by ANGI or any of its subsidiaries, or the incurrence of other indebtedness generally. While ANGI is expected to have the ability to access debt and equity markets if needed, such transactions may require the approval of IAC due to its control of the majority of the outstanding voting power of ANGI’s capital stock and its representation on the ANGI board of directors. Additional financing may not be available on terms favorable to the Company or at all.

4039

Table of Contents

CONTRACTUAL OBLIGATIONS

AtDuring the nine months ended September 30, ~~2020,~~2021, other than the repayment of the outstanding balance of the ANGI Group Term Loan of $220.0 million, there have been no material changes to the ~~Company's~~Company’s contractual obligations since the disclosure in our Annual Report on Form 10-K for the year ended December 31, 2019 except for the issuance, by ANGI Group, on August 20, 2020 of $500 million aggregate principal amount of its Senior Notes due August 15, 2028. The proceeds from the offering will be used for general corporate purposes, including potential future acquisitions and return of capital.2020.

4140

Table of Contents

Item 3. Quantitative and Qualitative Disclosures About Market Risk

AtDuring the nine months ended September 30, ~~2020,~~2021, there have ~~bee~~nbeen no material changes to the ~~Company's~~Company’s instruments or positions that are sensitive to market risk since the disclosure in our Annual Report on Form 10-K for the year ended December 31, ~~2019,~~2020, other than the ~~issuance~~repayment of the outstanding balance of the ANGI Group ~~Senior Notes on August 20, 2020,~~term loan of $220.0 million, which ~~increased the Company's exposure to interest rate risk.~~

If market interest rates decline, the Company runs the risk that the related required payments of the ANGI Group Senior Notes will exceed those based on market rates. A 100-basis point increase or decrease in the level of interest rates would, respectively, decrease or increase the fair value of the fixed-rate debt by $33.4 million. Such potential increase or decrease in fair value is based on certain simplifying assumptions, including an immediate increase or decrease in the level of interest rates with no other subsequent changes for the remainder of the period. The outstanding balances of $237.2 million on the ANGI Group Term Loan bearsbore interest at ~~LIBOR plus 1.50%. As of September 30, 2020,~~a variable rate, reducing the ~~rate in effect was 1.66%. If LIBOR were~~Company’s exposure risk related to ~~increase or decrease by 100 basis points, then the annual interest expense on the ANGI Group Term Loan would increase or decrease by $2.4 million.~~ ~~The decline~~changes in interest ~~rates in 2020 relative to 2019 has reduced the Company's interest expense by approximately~~ rates.

~~$1.3 million and $3.1 million for the three and nine months ended September 30, 2020.~~

4241

Table of Contents

Item 4. Controls and Procedures

The Company monitors and evaluates on an ongoing basis its disclosure controls and procedures and internal control over financial reporting in order to improve their overall effectiveness. In the course of these evaluations, the Company modifies and refines its internal processes as conditions warrant.

As required by Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended (the ~~"Exchange Act"~~“Exchange Act”), the Company’s management, including our principal executive and principal financial officers, or persons performing similar functions, evaluated the effectiveness of the ~~Company's~~Company’s disclosure controls and procedures as defined by Rule 13a-15(e) under the Exchange Act. Based on this evaluation, management has concluded that the ~~Company's~~Company’s disclosure controls and procedures were effective as of the end of the period covered by this report in providing reasonable assurance that information we are required to disclose in our filings with the Securities and Exchange Commission under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the ~~Commission's~~Commission’s rules and forms, and include controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

There were no changes to the ~~Company's~~Company’s internal control over financial reporting during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

4342

Table of Contents

PART II

OTHER INFORMATION

Item 1. Legal Proceedings

Overview

In the ordinary course of business, the Company and its subsidiaries are (or may become) parties to litigation involving property, personal injury, contract, intellectual property and other claims, as well as stockholder derivative actions, class action lawsuits and other matters. The amounts that may be recovered in such matters may be subject to insurance coverage. Although the results of legal proceedings and claims cannot be predicted with certainty, neither the Company nor any of its subsidiaries is currently a party to any legal proceedings, the outcome of which, we believe, if determined adversely to us, would individually or in the aggregate have a material adverse effect on our business, financial condition or results of operations.

Rules of the Securities and Exchange Commission require the description of material pending legal proceedings (other than ordinary, routine litigation incident to the registrant’s business) and advise that proceedings ordinarily need not be described if they primarily involve damages claims for amounts (exclusive of interest and costs) not exceeding 10% of the current assets of the registrant and its subsidiaries on a consolidated basis. In the judgment of Company management, none of the pending litigation matters which we are defending, including the one described below, involves or is likely to involve amounts of that magnitude. The litigation matter and the investigation described below involves issues or claims that may be of particular interest to our stockholders, regardless of whether this matter may be material to our financial position or operations based upon the standard set forth in the rules of the Securities and Exchange Commission.

FTC Investigation of Certain HomeAdvisor Business Practices

On April 19, 2021, the staff of the Federal Trade Commission (“FTC”) informed HomeAdvisor that upon investigation it believes that certain of HomeAdvisor’s business practices relating to leads provided to service professionals and its mHelpDesk product are unfair or deceptive in violation of the FTC Act. The staff proposed to resolve its potential claims via a consent judgment mandating certain business practice changes (and an unspecified payment amount) and invited the company to engage in settlement discussions to resolve the matter. While HomeAdvisor believes that any such claims would be without merit and is prepared to defend vigorously against any enforcement proceeding, it is continuing a dialogue with the FTC to discuss the matter and cannot currently predict the outcome of this investigation and related discussions.

Service Professional Class Action Litigation against HomeAdvisor

This purported class action pending in Colorado is described in detail on page 2427 of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019.~~2020. See Airquip, Inc. et al. v. HomeAdvisor, Inc. et al., No. l:16-cv-1849 and Costello et al. v. HomeAdvisor, Inc. et al., No. 1:18-cv-1802, both filed in U.S. District Court in Colorado and consolidated under the caption In re HomeAdvisor, Inc. Litigation. This lawsuit alleges that our HomeAdvisor business engages in certain deceptive practices affecting the service professionals who join its network, including charging them for substandard customer leads or failing to disclose certain charges. ~~On September 29, 2020, the court issued an order granting in part and denying in part the defendants’ motions to dismiss and with the exception of this development, there~~There have been no material or otherwise noteworthy developments in this case since the filing of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019.~~2020. The Company believes that the allegations in this lawsuit are without merit and will continue to defend vigorously against them.

~~Table of Contents~~

Item 1A. Risk Factors

~~Cautionary Statement Regarding Forward-Looking Information~~

This quarterly report on Form 10-Q contains ~~"forward-looking statements"~~“forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. The use of words such as ~~"anticipates," "estimates," "expects," "plans"~~“anticipates,” “estimates,” “expects,” “plans” and ~~"believes,"~~“believes,” among others, generally identify forward-looking statements. These forward-looking statements include, among others, statements relating to the ~~Company's~~Company’s future financial performance, business prospects and strategy, anticipated trends and prospects in home services industry and other similar matters. These forward-looking statements are based on Company management's current expectations and assumptions about future events, which are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict.

Actual results could differ materially from those contained in these forward-looking statements for a variety of reasons, including, among others: (i) the impact of the COVID-19 outbreak on our businesses, (ii) our ability to compete, (iii) the failure or delay of the home services market to migrate online, (iv) adverse economic events or trends (particularly those that adversely

Table of Contents

impact consumer confidence and spending behavior), (v) our ability to establish and maintain relationships with quality service professionals, (vi) our ability to build, maintain and/or enhance our various brands, (vii) our ability to market our various products and services in a successful and cost-effective manner, (viii) the continued display of links to websites offering our products and services in a prominent manner in search results, (ix) our continued ability to communicate with consumers and service professionals via e-mail (or other sufficient means), (x) our ability to access, share and use personal data about consumers, (xi) our ability to develop and monetize versions of our products and services for mobile and other digital devices, (xii) any challenge to the contractor classification or employment status of our Handy service professionals, (xiii) our ability to protect our systems, technology and infrastructure from cyberattacks and to protect personal and confidential user information, (xiv) the occurrence of data security breaches, fraud and/or additional regulation involving or impacting credit card payments, (xv) the integrity, efficiency and scalability of our technology systems and infrastructures (and those of third parties with whom we do business), (xvi) operational and financial risks relating to acquisitions and the integration of suitable targets, (xvii) our ability to operate (and expand into) international markets successfully, (xviii) our ability to adequately protect our intellectual property rights and not infringe the intellectual property rights of third parties, (xix) changes in key personnel, (xx) various risks related to our relationship with IAC and (xxi) various risks related to our outstanding indebtedness.

Certain of these and other risks and uncertainties are discussed in our filings with the SEC, including in Part I-Item 1A-Risk Factors of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019 and Part II-Item 1A-Risk Factors of our Quarterly Reports on 10-Q for the fiscal quarters ended March 31, 2020 and June 30,~~ 2020. Other unknown or unpredictable factors that could also adversely affect our business, financial condition and operating results may arise from time to time. In light of these risks and uncertainties, the forward-looking statements discussed in this quarterly report may not prove to be accurate. Accordingly, you should not place undue reliance on these forward-looking statements, which only reflect the views of Company management as of the date of this quarterly report. We do not undertake to update these forward-looking statements.

Risk Factors

~~In addition~~Recent changes in our executive management may not result in growth of our business or enhance stockholder value, and our management transition may not be successful.

During 2021, we announced the appointment of a new Chief Executive Officer, a new Chief Financial Officer, and a new Chief Marketing Officer. Our executive management team is critical to the ~~risk factor relating to the impact~~overall management of the ~~COVID-19 outbreak on~~Company and also plays a key role in maintaining our ~~businesses~~culture and ~~other information set forth~~setting our strategic direction. In connection with these executive management changes, we have experienced, and may continue to experience, employee and management turnover in ~~this quarterly report, you should carefully consider the risk factors set forth~~certain areas. These recent changes in ~~Part I-Item 1A-Risk Factors~~our executive management may also cause or result in: disruption of our ~~Annual Report on Form 10-K for the fiscal year ended December 31, 2019~~business and ~~Part II-Item 1A-Risk Factors~~operations; difficulty recruiting, hiring, motivating and retaining talented and skilled personnel; further departures of other members of management; increased stock price volatility; and difficulty in establishing, maintaining or negotiating business or strategic relationships or transactions. Furthermore, these transitions could be a distraction to our ~~Quarterly Reports on 10-Q for the fiscal quarters ended March 31, 2020~~executive management, business operations, service professionals and ~~June 30, 2020, which could materially~~customers. If we do not succeed in attracting well-qualified employees, retaining and ~~adversely affect~~motivating existing employees or integrating new executives and employees, our business, financial condition and results of operations. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and results of operations.

~~The global outbreak ofCOVID-19 and other similar outbreaks could adversely affect our business, financial condition and results of operations.~~

~~Our~~ business could be materially and adversely ~~affected by the outbreak~~affected.

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

On March 17, 2021, the Company updated one of its leading websites and brands, Angie’s List, to Angi, and concentrated its marketing investment in the Angi brand in order to focus its marketing, sales, and branding efforts on a single brand.

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

During the second and third quarters of 2021, these efforts had a pronounced negative impact on Service Requests from organic search results and via our mobile applications, which in turn has resulted in increased paid search engine marketing to generate Service Requests. The combined effect of this during the three months ended September 30, 2021, has reduced revenue and increased marketing spend, materially more than expected at the launch of the ~~coronavirus ("COVID-19"), which has been declared a "pandemic" by~~brand initiative in the ~~World Health Organization. To date,~~first quarter of 2021 and more significantly than our forecasts at the ~~outbreak~~beginning of ~~COVID-19 has caused a widespread global health crisis,~~May 2021. We expect the pronounced negative impact to organic search results, increased paid search engine marketing and ~~governments in affected regions have implemented measures designed to curb~~reduced monetization from our mobile applicationswill continue until such time as the ~~spread~~new brand establishes search engine optimization ranking and consumer awareness is more established. Any or all of the virus, such as social distancing, government imposed quarantines and lockdowns, travel bans and other public health safety measures. These measures have resulted in significant social disruption and have had (and are likely tothese impacts could continue to ~~have) an adverse effect on economic conditions generally, as well as on consumer confidence and spending, all of which could have an adverse effect on~~increase our ~~businesses, financial condition and~~marketing costs (particularly to the extent free traffic is

4544

Table of Contents

results of operations. For example, in March 2020, we experienced a decline in demand for service requests, driven primarily by decreases in demand in certain categories of jobs (particularly discretionary indoor projects). In the second quarter of 2020, we experienced a rebound in service requests, exceeding pre-COVID 19 growth levels, driven by increased demand from homeowners who spent more time at home due to measures taken to reduce the spread of COVID-19. We continued to experience strong demand for home services in the third quarter of 2020. However, many service professionals' businesses have been adversely impacted by labor and material constraints and many service professionals have limited capacity to take on new business, which has negatively impacted our ability to monetize this increased level of service requests. Also, the United States, which represen~~ts 94% of our revenue for both the three and nine months ended September 30, 2020, has experienced a significant resurgence of COVID-19~~replaced with record levels of infection being reported in the weeks following the end of the third quarter or 2020. Lastly, Europe, which is the second largest market for the Company's product and services, has also seen a dramatic resurgence of COVID-19. These resurgences and the measures designed to curb their spread could result in continued variability in service requests and/or a reduction in our ability to monetize service requests due to service professional constraints, one or both of which could materiallypaid traffic) and adversely affect the effectiveness of our ~~business, financial condition and results of operations.~~

In addition, in response to the COVID-19 outbreak and government-imposed measures to control its spread, our ability to conduct ordinary course business activities has been (and may continue to be) impaired for an indefinite period of time. For example, we have taken several precautions that could adversely impact employee productivity, such as requiring employees to work remotely for the first time in the Company's history, as well as imposing travel restrictions and temporarily closing office locations. While we have found that our employees (including call center and sales employees) have transitioned to working remotely with limited disruption to date, no assurances can be provided that their productivity and efficiency will remain at pre-pandemic levels, particularly if they are required to continue working remotely for an extended period of time. Also, working remotely may involve increased operational risks, such as increased risks of "phishing," other cybersecurity attacks or the unauthorized dissemination of personally identifiable information or proprietary and confidential information. Lastly, moving employees back to the office may introduce distraction that could have a temporary negative impact on the Company’s productivity, and in turn, revenue. We may also experience increased operating costsmarketing efforts overall. Finally, as we ~~gradually resume normal operations~~align and ~~enhance preventative measures, including with respect to real estate, compliance~~focus the organization around a single brand, we could experience financial and ~~insurance-related expenses. Moreover, we may also experience business disruption if the ordinary course operations of~~operational challenges and reduced service professional participation across our ~~contractors, vendors or business partners are adversely affected. Any of these measures or impairments~~various product lines. Depending on market acceptance, our brand integration initiative could adversely affect our ~~business, financial condition~~ability to attract and ~~results of operations.~~

~~The extent~~retain customers and service professionals, which could cause us not to ~~which developments related to COVID-19 and measures designed to curb its spread continue to impact our business, financial condition and results of operations will depend on future developments,~~realize some or all of ~~which are highly uncertain and many of which are beyond our control, including~~ the ~~speed of contagion,~~anticipated benefits contemplated by the development and implementation of effective preventative measures and possible treatments, the scope of governmental and other restrictions on travel, discretionary services (including those provided by certain of our service professionals) and other activity, and public reactions to these developments. For example, these developments and measures have resulted in rapid and adverse changes to the operating environment in which we do business, as well as significant uncertainty concerning the near and long term economic ramifications of the COVID-19 outbreak, which have adversely impacted our ability to forecast our results and respond in a timely and effective manner to trends related to COVID-19. The longer the global outbreak and measures designed to curb the spread of COVID-19 continue to adversely affect levels of consumer confidence, discretionary spending and the willingness of consumers to interact with other consumers, vendors and service providers face-to-face (and in turn, adversely affect demand for home services provided by our service professionals and our products and services generally), the greater the adverse impact is likely to be on our business, financial condition and results of operations and the more limited our ability will be to try and make up for delayed or lost revenues.brand integration initiative.

The COVID-19 outbreak may also have the effect of heightening many of the other risks described in Part I-Item 1A-Risk Factors of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 and Part II-Item 1A-Risk Factors of our Quarterly Reports on 10-Q for the fiscal quarters ended March 31, 2020 and June 30, 2020. We will continue to evaluate the nature and extent of the impact of the COVID-19 outbreak on our business, financial condition and results of operations.

Furthermore, because COVID-19 did not begin to impact our results until late in the first quarter of 2020, any current or future impacts may not be directly comparable to any historical periods and are not necessarily indicative of any future impacts that COVID-19 may have on our results for the remainder of 2020 or any subsequent periods. The impact of COVID-19 on our revenues and expenses may also fluctuate differently over the duration of the pandemic.

~~Table of Contents~~

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Unregistered Sales of Equity Securities

The ~~Employee Matters Agreement~~employee matters agreement dated as of September 29, 2017, by and between us and IAC, ~~(the "Employee Matters Agreement"),~~ provides, among other things, that we will reimburse IAC for the cost of certain equity awards held by our current and former employees and that IAC may elect to receive payment either in cash or shares of our ~~Class B common~~capital stock.

Pursuant to the ~~Employee Matters Agreement, 102,838~~employee matters agreement, 2,985 shares of Class A common stock and 42,243 shares of Class B common stock were issued to IAC on September 30, ~~2020~~2021 as reimbursement for shares of IAC common stock issued in connection with the settlement of certain equity awards held by our employees during the ~~quarter~~three months ended September 30, ~~2020.~~2021. This issuance did not involve any underwriters or public offerings and we believe that such issuance was exempt from the registration requirements of the Securities Act of 1933, as amended (the ~~"Securities Act"~~“Securities Act”), pursuant to Section 4(a)(2) thereof.

Issuer Purchases of Equity Securities

The following table sets forth purchases by the Company ~~did not purchase any shares~~ of its Class A common stock during the ~~quarter~~three months ended September 30, ~~2020. As~~2021:


Period	(a) Total Number of Shares Purchased	(b) Average Price Paid Per Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1)	(d) Maximum Number of Shares that May Yet Be Purchased Under Publicly Announced Plans or Programs(2)
July 2021	537,140	$	11.77	537,140	18,259,646
August 2021	1,514,127	$	10.64	1,514,127	16,745,519
September 2021	675,683	$	10.85	675,683	16,069,836
Total	2,726,950	$	11.77	2,726,950	16,069,836

(1)Reflects repurchases made pursuant to the share repurchase authorizations previously announced in March 2020 and February 2019.

(2)Represents the total number of ~~that date, 20,053,530~~ shares of ~~ANGI~~ Class A common stock that remained available for repurchase ~~under~~as of September 30, 2021 pursuant to the ~~Company's previously announced~~March 2020 and February 2019 ~~and March 2020~~share repurchase authorizations. The Company may repurchase shares pursuant to ~~these~~this share repurchase ~~authorizations~~authorization over an indefinite period of time in the open market and in privately negotiated transactions, depending on those factors ~~ANGI~~Company management deems relevant at any particular time, including, without limitation, market conditions, share price and future outlook.

4745

Table of Contents

Item 6. Exhibits

The documents set forth below, numbered in accordance with Item 601 of Regulation S-K, are filed herewith, incorporated by reference to the location indicated or furnished herewith.

Exhibit Number

Description

Location

3.1

Certificate of Amendment to the Amended and Restated Certificate of Incorporation of ~~ANGI Homeservices~~Angi Inc.

Exhibit 3.1 to the ~~Registrant's~~Registrant’s Current Report on Form 8-K, filed on ~~October 2, 2017~~March 17, 2021.

3.2

Amended and Restated Certificate of Incorporation

Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, filed on October 2, 2017.

3.3

Amended and Restated Bylaws of ~~ANGI Homeservices~~Angi Inc.

Exhibit 3.2 to the ~~Registrant's~~Registrant’s Current Report on Form 8-K, filed on ~~October 2, 2017~~March 17, 2021.

4.1

~~Indenture, dated as~~Form of ~~August 20, 2020, among ANGI Group, LLC, the guarantors party thereto and Computershare Trust Company, N.A., as trustee.~~Angi Inc. Common Stock Certificate.

Exhibit 4.1 to the ~~Registrant's Current~~Registrant’s Quarterly Report on Form ~~8-K,~~10-Q, filed on ~~August 20, 2020~~May 10, 2021.

10.1

~~Amendment No. 1,~~Employment Agreement between Dhanusha Sivajee and Angi Inc., dated as of ~~August 12, 2020, among ANGI Homeservices Inc., the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent and collateral agent.~~July 30, 2021. (1)(2)

~~Exhibit 10.1 to the Registrant's Current Report on Form 8-K,~~ ~~filed on August 12, 2020~~.

~~10.2~~

Joinder and Reaffirmation Agreement, dated as of August 12, 2020, among ANGI Homeservices Inc., ANGI Group, LLC, each of the parties listed on Schedule 1 thereto and JPMorgan Chase Bank, N.A., as administrative agent and collateral agent.

~~Exhibit 10.2 to the Registrant's Current Report on Form 8-K, filed on August 12, 2020.~~

~~10.3~~

~~Advisory Agreement, dated September 8, 2020, between ANGI Homeservices Inc. and Craig Smith.~~

~~Exhibit 10.1 to the~~ ~~Registrant's Current Report on Form 8-K, filed on September 11, 2020~~.

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. (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. (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. ~~(2)~~(3)

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. ~~(2)~~(3)

101.INS

Inline XBRL Instance (1)

The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document.

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)Filed herewith.

(2)Reflects management contracts and management and director compensatory plans.

(3)Furnished herewith.

Table of Contents

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated:

November ~~6, 2020~~5, 2021

~~ANGI Homeservices~~Angi Inc.

By:

/s/ ~~JAMIE COHEN~~JEFFREY W. PEDERSEN

~~Jamie Cohen~~Jeffrey W. Pedersen

Chief Financial Officer



Signature	Title	Date

/s/ ~~JAMIE COHEN~~JEFFREY W. PEDERSEN	Chief Financial Officer	November ~~6, 2020~~5, 2021
~~Jamie Cohen~~Jeffrey W. Pedersen

4947


Balance as of December 31, 2018	$	18,163	$	81	80,515	$	421	421,118	$	0	0	$	1,333,097	$	(18,797)	$	(1,861)	$	0	$	1,312,941	$	9,046	$	1,321,987
Net earnings	284		—		—	—		—	—		—	—		34,936		—		—		34,936		189		35,125
Other comprehensive loss	(514)		—		—	—		—	—		—	—		—		(2,302)		—		(2,302)		(67)		(2,369)
Stock-based compensation expense	113		—		—	—		—	—		—	45,473		—		—		—		45,473		—		45,473
Issuance of common stock pursuant to stock-based awards, net of withholding taxes	—		5		5,560	—		—	—		—	(27,805)		—		—		—		(27,800)		—		(27,800)
Issuance of common stock to IAC pursuant to the employee matters agreement	—		—		—	1		452	—		—	(1,766)		—		—		—		(1,765)		—		(1,765)
Purchase of treasury stock	—		—		—	—		—	—		—	—		—		—		(34,157)		(34,157)		—		(34,157)
Purchase of redeemable noncontrolling interests	(71)		—		—	—		—	—		—	—		—		—		—		—		—		—
Adjustment of redeemable noncontrolling interests to fair value	4,024		—		—	—		—	—		—	(4,024)		—		—		—		(4,024)		—		(4,024)
Other	—		—		—	—		—	—		—	(19)		—		—		—		(19)		—		(19)
Balance as of September 30, 2019	$	21,999	$	86	86,075	$	422	421,570	$	0	0	$	1,344,956	$	16,139	$	(4,163)	$	(34,157)	$	1,323,283	$	9,168	$	1,332,451


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(In thousands)
Treasury discount notes	$	49,991	$	1	$	0	$	49,992
Total available-for-sale marketable debt securities	$	49,991	$	1	$	0	$	49,992


Year	Percentage
2023	101.938	%
2024	100.969	%
2025 and thereafter	100.000	%


	(In thousands)
Remainder of 2020	$	3,438
2021	13,750
2022	27,500
2023	192,500
2028	500,000
Total	737,188
Less: current portion of Term Loan	13,750
Less: unamortized debt issuance costs	8,030
Total long-term debt, net	$	715,408


	Nine Months Ended September 30, 2019
	Operating Income (Loss)		Stock-based Compensation Expense		Depreciation		Amortization of Intangibles		Adjusted EBITDA
	(In thousands)
North America	$	40,409	$	45,107	$	25,124	$	41,164	$	151,804
Europe	(7,921)		$	479	$	1,915	$	1,257	$	(4,270)
Operating income	32,488
Interest expense	(8,964)
Other income, net	4,823
Earnings before income taxes	28,347
Income tax benefit	7,062
Net earnings	35,409
Net earnings attributable to noncontrolling interests	(473)
Net earnings attributable to ANGI Homeservices Inc. shareholders	$	34,936


	September 30, 2020		December 31, 2019		September 30, 2019		December 31, 2018
	(In thousands)
Cash and cash equivalents	$	855,044	$	390,565	$	402,914	$	336,984
Restricted cash included in other current assets	392		504		1,421		1,417
Restricted cash included in other non-current assets	429		409		403		420
Total cash and cash equivalents, and restricted cash as shown on the consolidated statement of cash flows	$	855,865	$	391,478	$	404,738	$	338,821