Angi Inc

We report Adjusted EBITDA as a supplemental measure to U.S. generally accepted accounting principles (“GAAP”). This measure is considered our primary segment measure of profitability and one of the metrics by which we evaluate the performance of our businesses, and on which our internal budgets are based and may also impact management compensation. 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”) is defined as operating income excluding: (1) stock-based compensation expense; (2) depreciation; and (3) acquisition-related items consisting of amortization of intangible assets and impairments of goodwill and intangible assets, if applicable. 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. Adjusted EBITDA has certain limitations because it excludes the impact of these expenses.

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

For a reconciliation of operating income (loss) to Adjusted EBITDA for the Company’s reportable segments, see “Note 5—Segment Information” to the 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 of expense associated with the grants, including unvested grants assumed in acquisitions, of stock appreciation rights, restricted stock units (“RSUs”), stock options, performance-based RSUs (“PSUs”) and market-based awards. These expenses are not paid in cash and we view the economic 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. 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 amounts from its current funds.

Depreciation is a non-cash expense relating to our capitalized software, leasehold improvements and equipment 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.

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 professional relationships, technology, 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.

FINANCIAL POSITION, LIQUIDITY, AND CAPITAL RESOURCES

Financial Position

At September 30, 2024, all of the Company’s international cash can be repatriated without significant consequences.

For a detailed description of long-term debt, see “Note 3—Long-term Debt” to the financial statements included in “Item 1—Consolidated Financial Statements.”

Cash Flow Information

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

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

Adjustments to net earnings attributable to continuing operations consist primarily of $65.7 million of depreciation, $43.7 million of provision for credit losses, $28.1 million of stock-based compensation expense, $13.8 million of non-cash lease expense (including impairment of right-of-use assets), and $24.6 million of deferred income taxes. The decrease from changes in working capital consists primarily of an increase of $44.7 million in accounts receivable, a decrease of $13.9 million in operating lease liabilities and a decrease of $3.9 million in accounts payable and other liabilities, partially offset by a decrease of $21.1 million in other assets. The increase in accounts receivable is due primarily to timing of cash receipts. The decrease in operating lease liabilities is due to cash payments on leases net of interest accretion. The decrease in accounts payable and other liabilities is due primarily to the timing of payments, partially offset by an increase in accrued advertising. The decrease in other assets is due primarily to payment received related to insurance coverage for previously incurred legal fees and a decrease in prepaid hosting services.

Net cash used in investing activities attributable to continuing operations includes capital expenditures of $37.5 million primarily related to investments in capitalized software to support the Company’s products and services.

Net cash used in financing activities attributable to continuing operations includes $25.7 million for the repurchase of 11.4 million shares of the Company’s Class A common stock, on a settlement date basis, at an average price of $2.25 per share,

$16.0 million for the purchase of the remaining noncontrolling interests of a foreign subsidiary, and $5.7 million for the payment of withholding taxes on behalf of employees for stock-based awards that were net settled.

Adjustments to net loss attributable to continuing operations consist primarily of $69.7 million of depreciation, $64.8 million of provision for credit losses, $33.6 million of stock-based compensation expense, $9.1 million of non-cash lease expense, and $8.0 million of amortization of intangibles. The decrease from changes in working capital consists primarily of an increase of $58.5 million in accounts receivable, a decrease of $16.5 million in operating lease liabilities, and an increase of $18.8 million in accounts payable and other liabilities. The increase in accounts receivable is due primarily to timing of cash receipts. The decrease in operating lease liabilities is due to cash payments on leases net of interest accretion. The increase in accounts payable and other liabilities is due, in part, to timing of payments.

Net cash used in investing activities attributable to continuing operations includes capital expenditures of $36.1 million primarily related to investments in capitalized software to support the Company’s products and services and purchases of marketable debt securities of $12.4 million, partially offset by proceeds from maturities of marketable debt securities of $12.5 million.

Net cash used in financing activities attributable to continuing operations includes $4.8 million for the payment of withholding taxes on behalf of employees for stock-based awards that were net settled and $3.4 million for the repurchase of 1.1 million shares of the Company’s Class A common stock, on a settlement date basis, at an average price of $3.22 per share.

Discontinued Operations

Net cash provided by discontinued operations of $3.9 million for the nine months ended September 30, 2023 relates to the operations of THR. The Company does not expect cash flows from discontinued operations following the sale of THR.

Liquidity and Capital Resources

Share Repurchase Authorizations and Activity

During the nine months ended September 30, 2024, the Company repurchased 11.4 million shares of its Class A common stock, on a trade date basis, at an average price of $2.25 per share, or $25.6 million in aggregate. During the fourth quarter of 2023, the Company announced its intent to repurchase the 14.0 million shares remaining in its stock repurchase authorization from March 2020 (the “2020 Share Authorization”). On August 2, 2024, the board of directors of the Company approved a new stock repurchase authorization of 25 million shares (the “2024 Share Authorization”). As of August 19, 2024, the Company had no shares remaining under the 2020 Authorization. From October 1, 2024 through November 8, 2024 the Company repurchased an additional 1.1 million shares at an average price of $2.49 per share, or $2.8 million in aggregate. As of November 8, 2024, the Company had 23.1 million shares remaining in the 2024 Share Authorization.

The Company may repurchase shares pursuant to the 2024 Repurchase Authorization over an indefinite period of time in the open market and in privately negotiated transactions, depending on those factors the Company’s management deems relevant at any particular time, including, without limitation, market conditions, share price and future outlook.

Contractual Obligations

At September 30, 2024, there were no material changes outside the ordinary course of business to the Company's contractual obligations disclosures as of December 31, 2023, included in the Company's Annual Report on Form 10-K for the year ended December 31, 2023.

Capital Expenditures

The Company’s 2024 capital expenditures are expected to be higher than 2023 capital expenditures of $47.8 million by approximately 10% to 15%, due to an increase related to capitalized software.

Liquidity Assessment

The Company’s liquidity could be negatively affected by a decrease in demand for its products and services due to economic or other factors.

At September 30, 2024, IAC held 2.6 million of the Company’s outstanding Class A shares and all of the Company’s outstanding Class B shares, which represented 85.3% of the Company’s economic interest and 98.3% of the Company’s voting interest as of that date. As a result, IAC has the ability to control the Company’s financing activities, including the issuance of additional debt and equity securities by the Company or any of its subsidiaries, or the incurrence of other indebtedness generally. While the Company 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 the Company’s capital stock and its representation on the Company’s board of directors.

The Company believes its existing cash, cash equivalents, 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 next twelve months. We may elect to raise additional capital through the sale of additional equity or debt financing to fund business activities such as strategic acquisitions, share repurchases, or other purposes beyond the next twelve months.

Additional financing may not be available on terms favorable to the Company or at all, and may also be impacted by any disruptions in the financial markets. In addition, the Company’s existing indebtedness could limit its ability to obtain additional financing.