Angi Inc. Q1 FY2025 earnings call

• Implemented homeowner choice in January, leading to near positive homeowner Net Promoter Score for the first time since tracking and a 10% increase in pro win rate. - Released new metrics disclosing the breakout of Service Requests and Leads into Proprietary and Network Channels. - Active pro network: Fewer newly acquired pros but higher lifetime value per pro; moved to average monthly active basis for pros and split into cohorts to show retention. - Proprietary service request declines decelerated and proprietary lead declines nearly flattened in Q1, with expectations of revenue per lead growth in Q2 2025.

The company's revenue in the first quarter was impacted by the move to homeowner choice. Network service requests and leads saw 33% and 57% step-downs respectively due to homeowners now having to choose pros in the network channel. Proprietary service request declines have decelerated and proprietary lead declines have nearly flattened. In terms of active pro network, the volume of newly acquired pros has decreased, but the value creation per pro is nearly 150% greater despite acquiring 41% fewer pros. Leads per active pro was 11 in Q1 2025 compared to 15 in Q3 2024, indicating significant capacity in the existing network. Revenue contribution: Network channel saw a large drop, while proprietary channel's performance is improving with decelerating declines.

• Network channel is expected to remain flattish year-over-year in 2026 compared to the first quarter 2025 drop. - Proprietary lead volume is expected to grow. - Revenue per lead is expected to start growing in Q2 2025, leading to revenue growth in 2026 with sequential quarterly improvements in revenue declines in 2025. - Anticipate growing the number of pros in 2026 by stabilizing sales headcount and rolling out online pro acquisition in the second half of 2025.

• Macro environment impact on consumer wallet spend and pros' order books. - Regulatory matters in Europe such as ID checks for pros (5%-8% impact) and GDPR-related issues affecting cookies and other aspects. - Potential challenges with pro acquisition and retention, including the need to manage the transition to online pro acquisition and ensure proper integration.

Q: How does the macro environment impact the business?

A: The macro environment can cause consumers to pull back on large discretionary purchases but pros may rely more on the platform to fill order book voids. Roughly two-thirds of the business is nondiscretionary, providing some protection. Operationally, the business is in a fortunate position with no direct supply chain disruptions.

Q: What are the capital allocation priorities?

A: Includes buying back shares as appropriate, and considering acquisitions that are accretive to shareholders and strategically critical. Focus on core operations and digesting previous acquisitions first.

Q: What are the next product initiatives?

A: Continue iterating on questions to get job details right, use LLM-based AI helper in homeowner path, move to single pro product, drive post-match experience, and use AI in various customer interaction areas like care and sales operations.

Q: What about international revenue decline?

A: Canadian business moved to international platform with lower consideration but higher ROI; regulatory matters in Europe like ID checks and GDPR impact revenue. Core business is healthy with high NPS and margin potential.

Q: How is the company thinking about paid channels?

A: Have had success in SCM acquisition, display networks, and META's ecosystem. Strong paid marketing team delivering good performance. Expect to continue improving paid channel strategies.