Angi (NASDAQ:ANGI) Misses Q3 Sales Targets
Home services online marketplace ANGI (NASDAQ: ANGI) fell short of analysts' expectations in Q3 FY2023, with revenue down 25.3% year on year to $371.8 million. Turning to EPS, Angi made a GAAP loss of $0.01 per share, improving from its loss of $0.03 per share in the same quarter last year.
Is now the time to buy Angi? Find out by accessing our full research report, it's free.
Angi (ANGI) Q3 FY2023 Highlights:
Revenue: $371.8 million vs analyst estimates of $378.4 million (1.7% miss)
EPS: -$0.01 vs analyst estimates of -$0.03 ($0.02 beat)
Free Cash Flow was -$2.8 million, down from $48.3 million in the previous quarter
Gross Margin (GAAP): 92.3%, up from 78.1% in the same quarter last year
Domestic Customer Service Requests : 6.1 million, down 1.7 million year on year (miss vs. 7.6 million)
Created by IAC’s mergers of Angie’s List and HomeAdvisor, ANGI (NASDAQ: ANGI) operates the largest online marketplace for home services in the US.
Gig Economy
The iPhone changed the world, ushering in the era of the “always-on” internet and “on-demand” services - anything someone could want is just a few taps away. Likewise, the gig economy sprang up in a similar fashion, with a proliferation of tech-enabled freelance labor marketplaces, which work hand and hand with many on demand services. Individuals can now work on demand too. What began with tech enabled platforms that aggregated riders and drivers has expanded over the past decade to include food delivery, groceries, and now even a plumber or graphic designer are all just a few taps away.
Sales Growth
Angi's revenue growth over the last three years has been unimpressive, averaging 4.8% annually. This quarter, Angi reported a year on year revenue decline of 25.3%, missing analysts' expectations.
Before the earnings results were announced, Wall Street analysts covering the company were projecting revenue to decline -1.7% over the next 12 months.
The pandemic fundamentally changed several consumer habits. There is a founder-led company that is massively benefiting from this shift. The business has grown astonishingly fast, with 40%+ free cash flow margins. Its fundamentals are undoubtedly best-in-class. Still, the total addressable market is so big that the company has room to grow many times in size. You can find it on our platform for free.
Usage Growth
As a gig economy marketplace, Angi generates revenue growth by expanding the number of services on its platform (e.g. rides, deliveries, freelance jobs) and raising the commission fee from each service provided.
Angi has been struggling to grow its service requests, a key performance metric for the company. Over the last two years, its requests have declined 12.8% annually to 6.1 million. This is one of the lowest rates of growth in the consumer internet sector.
In Q3, Angi's service requests decreased by 1.7 million, a 22.1% drop since last year.
Key Takeaways from Angi's Q3 Results
With a market capitalization of $860.7 million, Angi is among smaller companies, but its $366.8 million cash balance and positive free cash flow over the last 12 months give us confidence that it has the resources needed to pursue a high-growth business strategy.
Revenue missed, but Adjusted EBITDA and EPS beat. On the other hand, Service Requests, a key volume measure for the business, missed and its user base fell. The company usually gives full year adjusted EBITDA guidance, and this quarter, Angi lowered this outlook from the previous. Overall, this was a mediocre quarter for Angi. The stock is up 3% after reporting and currently trades at $1.7 per share, potentially reflecting expectations that worsened into earnings.
Angi may have had a tough quarter, but does that actually create an opportunity to invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.
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The author has no position in any of the stocks mentioned in this report.
