IAC Spin-Off Completed - Angi is Back with its First Figures as an Independent Company
Read here to find out why Angi shares suddenly rose by 40% and what's behind the new strategy of the Home Services platform.
On May 6th, 2025, Angi Inc. (ANGI 0.00%↑), the leading online marketplace for home services in the U.S., published its first quarter results as an independent company. These figures are interesting not only from a financial perspective but also because they mark an important milestone in the history of the home services marketplace. Angi officially spun off from its former parent company, IAC (IAC 0.00%↑) , on March 31st, 2025, and has been operating as an independent, publicly traded company since then.
You can read more on the history of Angi and the spin-off here:
So the results for Q1 2025 are Angi's first "independent figures," and I look forward to taking a closer look at them. Angi's stock, which came under heavy pressure in the wake of the spinoff, reacted to these financial results with a veritable liberation strike, recovering by 40%. However, it is still trading one-third below the price on November 11, 2024, when the spin-off from IAC was announced.
To correctly understand Angi's quarterly figures, particularly the decline in revenue, the restructuring measures must first be considered.
Angi's Turnaround Strategy
Angi is pursuing a clear turnaround plan to overcome past structural problems and achieve sustainable, profitable growth. The goal is to transition from a focus on lead volume to a focus on high-quality orders ("jobs done well") and to develop closer relationships with homeowners and professional tradespeople. Clearly, such a restructuring of the business model cannot be achieved without short-term revenue losses. The plan primarily comprises the following key points:
Quality over quantity when it comes to leads:
Rather than focusing on generating as many leads as possible, which are often automatically generated and of poor quality, Angi will work more with pre-qualified users who are ready to buy. This strategy, called "Homeowner Choice," means customers select from a list of service providers instead of using the standard matching algorithm. This reduces the rejection rate on the provider side and increases customer satisfaction.
Focus on own channels:
Angi wants to become less dependent on Google and is strengthening its "proprietary channels" for lead generation. The decline in leads has almost stopped in Q1 2025. After five quarters of double-digit declines, this turnaround shows that the marketing and sales measures are taking effect. These channels now account for over 80% of the volume — this is where the leverage for the future lies!
Focus on high-margin categories:
Areas such as plumbing, heating/air conditioning, and electrical services will be expanded at the expense of less predictable services. These segments are easier to plan and allow for higher average prices per order.
Platform efficiency and cost structure:
Reduce sales costs through automation and more targeted marketing. At the same time, Angi is improving the mobile user experience to increase conversion rates via smartphones.
Angi Financial Results for Q1 2025 at a Glance
Angi generated $246 million in revenue in Q1 2025, a decline of over 19% compared to Q1 2024 ($305 million). This decline is primarily due to strategic changes in the lead matching process and a reduction in marketing expenses.
The number of service requests declined again in Q1 by 19% year-on-year, and the number of leads declined by 20%. However, a closer look at the figures reveals a much more encouraging picture. The decline in leads came almost exclusively from "network channels," which fell by 57%, while proprietary channels remained stable at -1%. This indicates that the quality of Angi's leads has improved significantly. Unlike in previous years, the company is no longer dependent on purchasing leads from Google and similar platforms and hoping for favorable treatment from their algorithms.
Despite the decline in revenue, Angi increased its operating profit from $2.7 million in Q1 2024 to $20.0 million in Q1 2025. Net income turned from a loss of $1.6 million the previous year to a profit of $15.1 million.
However, adjusted EBITDA declined from $36.0 million to $27.7 million (-22.6%), primarily due to a decline in revenue. Free cash flow declined to -15 million USD, compared to 10 million in the previous year, due to the transition to the new business model. Declining bookings (-18.5%) also reduced direct pre-financing by customers. This negatively impacts cash flow in the short term. Cash flow should gradually improve in the coming quarters. I will closely monitor this critical point.
Since the beginning of the year, the company has repurchased 2.3 million of its own shares for 32 million as of the start of May. At the start of May, the board approved a new share buyback program allowing the repurchase of an additional five million shares. This would represent more than 10% of all outstanding shares!
Angi can certainly afford these share buybacks, as it had cash reserves of $387 million at the end of the first quarter.
Angi's Outlook for 2025 and 2026
Angi management has confirmed its guidance for 2025. They continue to expect a gradual improvement in revenue development, ultimately expecting the full-year revenue decline to be between -12% and -16%. Operating income is expected to be between $55 million and $100 million in 2025. Adjusted EBITDA is expected to be between $135 million and $150 million. Unfortunately, no guidance was provided for cash flow.
It is equally important to note that the reset of the Angi business is expected to be completed in 2025. A return to profitable revenue growth is expected in 2026. Profitability, as measured by EBITDA, is also expected to increase further next year. I assume this applies to cash flow development as well, though I would have liked a clearer statement from management on this point.
Angi Stock Valuation
Angi's Enterprise Value (EV) is approximately USD 900 million, based on a share price of around USD 17. This results in an EV/sales ratio of around 0.8, based on sales over the past four quarters. The price-earnings ratio (P/E) is about 16, and the enterprise value-to-free cash flow ratio is 11 (both TTM).
I find Angi's turnaround situation particularly exciting due to its most recent high gross margin of 94%, combined with significantly lower sales and marketing costs. If the company succeeds in increasing tradespeople's and customers' loyalty to the platform, reduced marketing costs will lead to substantial profits and cash flow growth starting in 2026.
The low valuation to date reflects the poor revenue quality in recent years. If CEO Jeff Kip and Chairman Joey Levin's business plan works, improved revenue quality should lead to a significant increase in valuation based on the revenue multiple. In such a positive scenario, Angi shares could multiply in value over the next few years.
Competitive Environment
Angi's main competitors are not other online services but rather word-of-mouth recommendations, which are still prevalent in the analog-dominated skilled trades market and deter many potential customers from using referral platforms.
However, Angi remains the leader in a highly competitive and fragmented online market. Platforms such as Yelp, Thumbtack, and TaskRabbit are also vying for consumers and tradespeople.
Thumbtack is often mentioned as a dangerous challenger to Angi. The younger platform currently seems more intuitive and efficient for consumers than Angi. The unlisted company recently gained market share from Angi, generating revenue of $400 million in fiscal year 2024 — a 27% increase from the previous year.
Although Angi's revenue declined, it remains three times larger than Thumbtack. Thumbtack is growing rapidly, is reportedly cash flow positive, and was valued at $3.2 billion in its last financing round in 2021, before the tech crash of 2022.
Angi's advantages include its brand awareness, large database, and the many tradespeople integrated into its platform. Its listing as an independent company also facilitates future acquisitions or mergers with competitors such as Thumbtack.
Focusing on "high-quality leads" rather than volume is a strategic shift that should secure competitive advantages and market share for Angi in the medium term.
Take Away on Angi Stock
Angi Inc. delivered a mixed picture in the first quarter of 2025. Operating margin and net income increased significantly thanks to strategic realignment and cost discipline. However, the negative cash flow is a cause for concern.
However, the significant decline in revenue and leads is not necessarily negative, as the company is succeeding in its focus on higher-quality services and more sustainable customer relationships. If management succeeds in implementing its turnaround plan, the current valuation of Angi shares offers significant upside potential in the medium term.
Investing now certainly requires faith in Angi's management. I have confidence in the management team, and recent developments have confirmed my positive view of Angi shares. I see here an excellent risk/reward ratio, even during economically difficult times. Therefore, I have expanded the Angi position in my sample portfolio.
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*Disclaimer:
The author and/or related persons or companies own shares in Angi Inc. This article is an expression of opinion and does not constitute investment advice.