Angi Inc. Q2 FY2025 earnings call

• Business adjustments: In the past few years, shedding lower-quality revenue and unprofitable marketing and sales expenses, improving profitability, with adjusted EBITDA and free cash flow significantly up from 2022. Achieved proprietary volume growth in Q2 2025 and stabilized network channel traffic.
• Customer experience: Moved homeowner Net Promoter Score by 30 points over the last 2 years, increased total retention of Pros by nearly 20% in the last quarter, and invested in core product functionality while pruning lower-quality traffic.
• Technology platform: Had 4 technical platforms in the US and 3 internationally 1.5 years ago, and by the end of the year, will have 2 in the US and 1 internationally, with plans to move to a single modern international platform in the future.
• Pro acquisition: Achieved higher value with a lower sales force in Pro acquisition.

No detailed absolute financial data and revenue contribution percentages of each product segment were mentioned

• Revenue growth: Expect service requests and leads to keep growing at approximately the same rate as in the second quarter in the second half of the year, with revenue growth coming from revenue per lead growth. As moving to a single platform, revenue per lead will be lifted. Network traffic is expected to be roughly stable in the second half of the year.
• Profit margin: Expect contribution margin as a percent of revenue to be roughly flat in 2026. Marketing expense may increase slightly due to paid channel expansion, while Pro acquisition expense as a percent of revenue may decrease slightly. Fixed costs are expected to remain relatively flat, resulting in adjusted EBITDA growth with modestly higher EBITDA margins on a higher revenue base in 2026.

• Macroeconomic impact: Consumer confidence affected by the economy may lead to fewer homeowners hiring pros, affecting business performance.
• Market competition: The consolidation trend in the industry may bring competitive pressure.

Q: Could you delve more into the leads and service request trends you're expecting for both the proprietary network channels just for the second half of the year that kind of underpin the guidance that you guys gave?

A: We expect that server request and leads to keep growing at approximately the same rate they were growing in the second quarter. But then improvement in year-over-year revenue comparisons will come from more growth in revenue per lead and just to remind everybody that change in revenue per lead is somewhat driven by price optimization, but the biggest driver there is our move to a single platform where we're moving our legacy ad pros who really bought a basket at a significant discount, a basket of leads at a significant discount. We're averaging that portion of the network out by, a, in March, we stopped selling them and b, at the end of this quarter we will start migrating them to the main platform. That will give us lift over time in the revenue per lead. I guess the one other note I would say is, we expect that our network volume will kind of stabilize our exit kind of run rates for the second quarter and be roughly stable the rest of the year.

Q: Interested if you could talk more about your probable acquisition opportunities and then how we should think about that consumer marketing expense line going forward. That was up year-over-year. So just wondering if Q2 is a good run rate as a percent of revenue? Or do you continue to see a nice runway to invest behind those opportunities and we should expect that number increasing going forward?

A: So just to talk about margins broadly, where we are now after homeowner choice is, we've had a little bit of a step-up in our consumer marketing expense as a percent of revenue compared to where we were in the first quarter and last year as we're driving more on our paid proprietary acquisition channels. And then in this quarter, we simply had strong execution there. And what happens is then on the margins, where both -- as we drive on the paid acquisition channels, on the margin, some of those acquisition ends up being a little bit lower margin than in the core of our pay channels. And then at the same time, we have a little bit lighter on our organic traffic. So as you think about our margins this quarter, a little bit higher consumer marketing expense as a percent of revenue, we're making some of that back is in terms of our paid acquisition expense as we've moved all of our sales on to the single Pro platform and optimize our sales force. So at the contribution margin line, it all kind of evens out. We're going forward, we expect in Q3 and Q4 to be fairly stable on our contribution margins. Going from Q3 into Q4, we expect to have operating margin leverage that is similar to the path that we had in the same quarter in the prior years. However, without the fixed expense increase that we saw in the fourth quarter of last year, where we had some expenses that won't reoccur this year in the fourth quarter. So that will give us the ability to avoid some of the fixed expense margin deleverage that we saw in the fourth quarter and have more of our profitability flow through down to the bottom line.