Angi (NASDAQ:ANGI) Misses Q4 Revenue Estimates, But Stock Soars 7%
Home services online marketplace ANGI (NASDAQ: ANGI) missed analysts' expectations in Q4 FY2023, with revenue down 32% year on year to $300.4 million. It made a GAAP loss of $0.01 per share, improving from its loss of $0.02 per share in the same quarter last year.
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Angi (ANGI) Q4 FY2023 Highlights:
Revenue: $300.4 million vs analyst estimates of $309.1 million (2.8% miss)
EPS: -$0.01 vs analyst estimates of -$0.02 (48.3% beat)
Free Cash Flow was -$6.3 million compared to -$2.77 million in the previous quarter
Gross Margin (GAAP): 94.3%, up from 76.9% in the same quarter last year
Domestic Customer Service Requests : 4.32 million, down 1.7 million year on year
Market Capitalization: $1.26 billion
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 has been declining over the last three years, dropping on average by 0.5% annually. This quarter, Angi reported a year on year revenue decline of 32%, missing analysts' expectations.
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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 15.8% annually to 4.32 million. This is one of the lowest rates of growth in the consumer internet sector.
In Q4, Angi's service requests decreased by 1.7 million, a 28.2% drop since last year.
Revenue Per Request
Average revenue per request (ARPR) is a critical metric to track for consumer internet businesses like Angi because it measures how much the company earns in transaction fees from each request. This number also informs us about Angi's take rate, which represents its pricing leverage over the ecosystem, or "cut" from each transaction.
Angi's ARPR growth has been impressive over the last two years, averaging 15.3%. Although its service requests have shrunk during this time, the company's ability to successfully increase prices demonstrates its platform's enduring value for existing requests. This quarter, ARPR declined 5.2% year on year to $69.48 per request.
Key Takeaways from Angi's Q4 Results
Although Angi's revenue missed analysts' estimates thanks to lower-than-expected service requests and transacting service professionals, its adjusted EBITDA significantly beat ($41.4 million vs estimates of $28.6 million). Furthermore, its full-year 2024 EBITDA guidance topped Wall Street's projections. Overall, this was a mediocre quarter for Angi from a top-line perspective, but its improved profitability is helping the stock. Angi is up 7% after reporting and currently trades at $2.59 per share.
So should you invest in Angi 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.
