ANGI INC. GENERAL
Management OverviewANGI Homeservices Inc. ("ANGI Homeservices ," the "Company," "ANGI," "we," "our," or "us") connects quality home service professionals across 500 different categories, from repairing and remodeling to cleaning and landscaping, with consumers. Over 230,000 domestic service professionals actively seek consumer matches, complete jobs or advertise throughANGI Homeservices' platforms and consumers turn to at least one of our brands to find a professional for more than 25 million projects each year. We've established category-transforming products with brands such as HomeAdvisor,Angie's List , Handy and Fixd Repair. The Company has two operating segments: (i)North America (United States andCanada ), which includes HomeAdvisor,Angie's List , Handy, mHelpDesk, HomeStars and Fixd Repair and (ii)Europe , which includes Travaux, MyHammer, MyBuilder, Werkspot and Instapro. For a more detailed description of the Company's operating businesses, see the Company's Annual Report on Form 10-K for the year endedDecember 31, 2019 . Defined Terms and Operating Metrics: Unless otherwise indicated or as the context otherwise requires certain terms used in this quarterly report, which include the principal operating metrics we use in managing our business, are defined below: •Marketplace Revenue includes revenue from the HomeAdvisor, Handy and Fixd Repair domestic marketplaces, including consumer connection revenue for consumer matches, revenue from pre-priced jobs sourced through the HomeAdvisor, Handy and Fixd Repair platforms and service professional membership subscription revenue. It excludes revenue fromAngie's List , mHelpDesk and HomeStars. EffectiveJanuary 1, 2020 , Fixd Repair has been moved to Marketplace from Advertising & Other and prior year amounts have been reclassified to conform to the current year presentation. •Advertising & Other Revenue includesAngie's List revenue (revenue from service professionals under contract for advertising and membership subscription fees from consumers) as well as revenue from mHelpDesk and HomeStars. •Marketplace Service Requests are fully completed and submitted domestic customer service requests to HomeAdvisor and includes pre-priced jobs sourced through the HomeAdvisor, Handy and Fixd Repair platforms. •Marketplace Monetized Transactions - are fully completed and submitted domestic customer service requests to HomeAdvisor that were matched to and paid for by a service professional and includes pre-priced jobs sourced through the HomeAdvisor, Handy and Fixd Repair platforms during the period. •Marketplace Transacting Service Professionals ("Marketplace Transacting SPs") are the number of HomeAdvisor, Handy and Fixd Repair domestic service professionals that paid for consumer matches or performed a job sourced through the HomeAdvisor, Handy and Fixd Repair platforms during the quarter. •Advertising Service Professionals ("Advertising SPs") are the total number ofAngie's List service professionals under contract for advertising at the end of the period. •Senior Notes - OnAugust 20, 2020 ,ANGI Group, LLC ("ANGI Group "), a direct wholly-owned subsidiary of the Company, issued$500 million of its 3.875% Senior Notes dueAugust 15, 2028 , with interest payableFebruary 15 andAugust 15 of each year, commencingFebruary 15, 2021 . The proceeds from the offering will be used for general corporate purposes, including future potential acquisitions and return of capital. 25 -------------------------------------------------------------------------------- Table of Contents •Term Loan - dueNovember 5, 2023 . The outstanding balance of the Term Loan as ofSeptember 30, 2020 is$237.2 million and quarterly principal payments are required. Pursuant to the joinder agreement entered into onAugust 12, 2020 ,ANGI Group became the successor borrower under theTerm Loan andANGI Homeservices Inc.'s obligations thereunder were terminated. At bothSeptember 30, 2020 andDecember 31, 2019 , the Term Loan bore interest at LIBOR plus 1.50%. The interest rate was 1.66% and 3.25% atSeptember 30, 2020 andDecember 31, 2019 , respectively. •Revolving Facility -The ANGI Group $250 million revolving credit facility expires onNovember 5, 2023 . Pursuant to the joinder agreement entered into onAugust 12, 2020 ,ANGI Group became the successor borrower under theRevolving Facility andANGI Homeservices Inc.'s obligations thereunder were terminated. AtSeptember 30, 2020 andDecember 31, 2019 , there were no outstanding borrowings under the Revolving Facility. Components of Results of Operations Revenue Marketplace Revenue is primarily derived from (i) consumer connection revenue, which comprises fees paid by HomeAdvisor service professionals for consumer matches (regardless of whether the service professional ultimately provides the requested service) and fees from jobs sourced through the HomeAdvisor, Handy and Fixd Repair platforms, and (ii) HomeAdvisor service professional membership subscription fees. Consumer connection revenue varies based upon several factors, including the service requested, product experience offered and geographic location of service. Advertising & Other Revenue is primarily derived from (i) sales of time-based website, mobile and call center advertising to service professionals, (ii) membership subscription fees from consumers and (iii) service warranty subscription and other services. Prior toJanuary 1, 2020 , Handy recorded revenue on a net basis. EffectiveJanuary 1, 2020 , we modified the Handy terms and conditions so that Handy, rather than the service professional, has the contractual relationship with the consumer to deliver the service and Handy, rather than the consumer, has the contractual relationship with the service professional. Consumers request services and pay for such services directly through the Handy platform and then Handy fulfills the request with independently established home services providers engaged in a trade, occupation and/or business that customarily provides such services. This change in contractual terms requires gross revenue accounting treatment effectiveJanuary 1, 2020 . Also, in the case of certain tasks, HomeAdvisor provides a pre-priced product offering, pursuant to which consumers can request services through a HomeAdvisor platform and pay HomeAdvisor for the services directly. HomeAdvisor then fulfills the request with independently established home services providers engaged in a trade, occupation and/or business that customarily provides such services. Revenue from HomeAdvisor's pre-priced product offering is also recorded on a gross basis effectiveJanuary 1, 2020 . In addition to changing the presentation of revenue to gross from net, the timing of revenue recognition changed for HomeAdvisor pre-priced jobs and will be later than consumer connection revenue because we will not be able to record revenue, generally, until the service professional completes the job on our behalf. The change to gross revenue reporting for Handy and HomeAdvisor's pre-priced product offering, effectiveJanuary 1, 2020 , resulted in an increase in revenue of$20.8 million and$51.3 million during the three and nine months endedSeptember 30, 2020 , respectively. Operating Costs and Expenses: •Cost of revenue - consists primarily of payments made to independent service professionalswho perform work contracted under pre-priced arrangements through the HomeAdvisor, Handy and Fixd Repair platforms, credit card processing fees, compensation expense and other employee-related costs at Fixd Repair for service work performed, and hosting fees. •Selling and marketing expense - consists primarily of advertising expenditures, which include online marketing, including fees paid to search engines, offline marketing, which is primarily television advertising, and partner-related payments to thosewho direct traffic to our brands, compensation expense (including stock-based compensation expense) and other employee-related costs for our sales force and marketing personnel, and facilities costs. •General and administrative expense - consists primarily of compensation expense (including stock-based compensation expense) and other employee-related costs for personnel engaged in executive management, finance, legal, tax, human resources and customer service functions, fees for professional services (including transaction-related costs related to acquisitions), bad debt expense, software license and maintenance costs and facilities costs. Our customer service function includes personnelwho provide support to our service professionals and consumers. 26 -------------------------------------------------------------------------------- Table of Contents •Product development expense - consists primarily of compensation expense (including stock-based compensation expense) and other employee-related costs that are not capitalized for personnel engaged in the design, development, testing and enhancement of product offerings and related technology, software license and maintenance costs and facilities costs. Non-GAAP financial measure Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") is a non-GAAP financial measure. See " Principles of Financial Reporting " for the definition of Adjusted EBITDA and a reconciliation of net earnings attributable toANGI Homeservices Inc. shareholders to operating (loss) income to consolidated Adjusted EBITDA for the three and nine months endedSeptember 30, 2020 and 2019. Overview-Consolidated Results Three Months Ended September 30, Nine Months Ended September 30, 2020 $ Change % Change 2019 2020 $ Change % Change 2019 (Dollars in thousands)
Revenue:
North America$ 372,226 $ 33,082 10 %$ 339,144 $ 1,053,775 $ 108,237 11 %$ 945,538 Europe 17,687 (527) (3) % 18,214 54,849 (4,310) (7) % 59,159 Total$ 389,913 $ 32,555 9 %$ 357,358 $ 1,108,624 $ 103,927 10 %$ 1,004,697 Operating Income (Loss): North America$ 295 $ (26,899) (99) %$ 27,194 $ 8,377 $ (32,032) (79) %$ 40,409 Europe (3,314) (846) (34) % (2,468) (10,048) (2,127) (27) % (7,921) Total$ (3,019) $ (27,745) NM$ 24,726 $ (1,671) $ (34,159) NM$ 32,488 Adjusted EBITDA: North America$ 40,454 $ (20,055) (33) %$ 60,509 $ 136,886 $ (14,918) (10) %$ 151,804 Europe (1,967) (381) (24) % (1,586) (6,066) (1,796) (42) % (4,270) Total$ 38,487 $ (20,436) (35) %$ 58,923 $ 130,820 $ (16,714) (11) %$ 147,534
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NM = Not meaningful. For the three months endedSeptember 30, 2020 : •Revenue increased$32.6 million , or 9%, driven by growth inNorth America of$33.1 million , or 10%, partially offset by a decline inEurope of$0.5 million , or 3%.North America revenue growth was driven by increases in Marketplace Revenue of$33.2 million , or 12%, partially offset by a decrease in Advertising & Other Revenue of$0.2 million . •Operating income decreased$27.7 million to a loss of$3.0 million due primarily to a decrease in Adjusted EBITDA of$20.4 million , described below, and increases of$5.9 million in stock-based compensation expense and$2.7 million in depreciation, partially offset by a decrease of$1.3 million in amortization of intangibles. The increase in stock-based compensation expense was due primarily to the issuance of new equity awards since 2019 and the reversal in the third quarter of 2019 of$7.6 million of expense related to certain performance-based awards that did not vest, partially offset by a decrease of$2.2 million in the modification charge related to the combination of IAC's HomeAdvisor business andAngie's List, Inc. onSeptember 29, 2017 (the "Combination"). The increase in depreciation was due primarily to the investments in capitalized software to support our products and services and leasehold improvements related to additional office space. The decrease in amortization of intangibles was due primarily to lower expense as certain intangible assets became fully amortized in 2019. •Adjusted EBITDA decreased 35% to$38.5 million , despite higher revenue due primarily to an increase in cost of revenue, increased investment in fixed price, an increase in compensation expense and an increase of$3.6 million in bad debt expense due to higher Marketplace Revenue. 27 -------------------------------------------------------------------------------- Table of Contents For the nine months endedSeptember 30, 2020 : •Revenue increased$103.9 million , or 10%, driven by growth inNorth America of$108.2 million , or 11%, partially offset by a decline inEurope of$4.3 million , or 7%.North America revenue growth was driven by increases in Marketplace Revenue of$103.4 million , or 14%, and Advertising & Other Revenue of$4.8 million , or 3%. •Operating income decreased$34.2 million to a loss of$1.7 million due primarily to a decrease in Adjusted EBITDA of$16.7 million , described below, and increases of$11.6 million in depreciation and$9.4 million in stock-based compensation expense, partially offset by a decrease of$3.6 million in amortization of intangibles. The increases in depreciation and stock-based compensation and the decrease in amortization of intangibles were due primarily to the factors described above in the three-month discussion. In the first quarter of 2020, the Company recorded additional stock-based compensation expense of$5.9 million related to the previously issued HomeAdvisor unvested awards that were modified in connection with the Combination. The initial modification charge related to these awards was$139.9 million . The cumulative$5.9 million adjustment includes an increase of$3.4 million to adjust forfeitures for the remaining unvested awards and$2.5 million to correct the attribution of expense by period. The adjustment primarily impacted general and administrative expense. The effect on prior periods is immaterial. •Adjusted EBITDA decreased 11% to$130.8 million , despite higher revenue due primarily to an increase in cost of revenue, an increase of$10.8 million in bad debt expense due to higher Marketplace Revenue, the impact from COVID-19 on expected credit losses and anticipated losses from Advertising SPs, and increased European losses. COVID-19 Update The impact on the Company from the COVID-19 outbreak, which has been declared a "pandemic" by theWorld Health Organization , has been varied. The extent to which developments related to the COVID-19 outbreak and measures designed to curb its spread continue to impact the Company's business, financial condition and results of operations will depend on future developments, all of which are highly uncertain and many of which are beyond the Company's control, including the speed of contagion, the development and implementation of effective preventative measures and possible treatments, the scope of governmental and other restrictions on travel, discretionary services (including those provided by certain of our service professionals) and other activity, and public reactions to these developments. For example, these developments and measures have resulted in rapid and adverse changes to the operating environment in which we do business, as well as significant uncertainty concerning the near and long term economic ramifications of the COVID-19 outbreak, which have adversely impacted our ability to forecast our results and respond in a timely and effective manner to trends related to the COVID-19 outbreak. The longer the global outbreak and measures designed to curb the spread of the virus continue to adversely affect levels of consumer confidence, discretionary spending and the willingness of consumers to interact with other consumers, vendors and service providers face-to-face (and in turn, adversely affect demand for the Company's various products and services), the greater the adverse impact is likely to be on the Company's business, financial condition and results of operations and the more limited will be the Company's ability to try and make up for delayed or lost revenues. InMarch 2020 , the Company experienced a decline in demand for service requests, driven primarily by decreases in demand in certain categories of jobs (particularly discretionary indoor projects). In the second quarter of 2020, the Company experienced a rebound in service requests, exceeding pre-COVID-19 growth levels, driven by increased demand from homeownerswho spent more time at home due to measures taken to reduce the spread of COVID-19. The Company continued to experience strong demand for home services in the third quarter of 2020. However, many service professionals' businesses have been adversely impacted by labor and material constraints and many service professionals have limited capacity to take on new business, which has negatively impacted the Company's ability to monetize this increased level of service requests. In additionthe United States , which represents 94% of the Company's revenue for both the three and nine months endedSeptember 30, 2020 , has experienced a significant resurgence of the COVID-19 virus with record levels of infection being reported in the weeks followingSeptember 30, 2020 .Europe , which is the second largest market for the Company's products and services, has also seen a dramatic resurgence in COVID-19. This resurgence and the measures designed to curb its spread could result in continued variability in service requests and/or a reduction in our ability to monetize service requests due to service professional constraints, one or both of which could materially and adversely affect our business, financial condition and results of operations. 28 -------------------------------------------------------------------------------- Table of Contents Results of Operations for the three and nine months endedSeptember 30, 2020 compared to the three and nine months endedSeptember 30, 2019 Revenue Three Months Ended September 30, Nine Months Ended September 30, 2020 $ Change % Change 2019 2020 $ Change % Change 2019 (Dollars in thousands) Revenue: Marketplace: Consumer connection revenue$ 287,568 $ 35,016 14 %$ 252,552 $ 800,047 $ 104,677 15 %$ 695,370 Service professional membership subscription revenue 12,195 (3,800) (24) % 15,995 38,989 (9,708) (20) % 48,697 Other revenue 6,944 2,029 41 % 4,915 19,620 8,434 75 % 11,186 Total Marketplace Revenue 306,707 33,245 12 % 273,462 858,656 103,403 14 % 755,253 Advertising & Other Revenue 65,519 (163) - % 65,682 195,119 4,834 3 % 190,285 North America 372,226 33,082 10 % 339,144 1,053,775 108,237 11 % 945,538 Europe 17,687 (527) (3) % 18,214 54,849 (4,310) (7) % 59,159 Total Revenue$ 389,913 $ 32,555 9 %$ 357,358 $ 1,108,624 $ 103,927
10 %
Percentage of Total Revenue:
North America 95 % 95 % 95 % 94 %
Europe 5 % 5 % 5 % 6 %
Total Revenue 100 % 100 % 100 % 100 %
Three Months Ended September 30, Nine Months Ended September 30,
2020 Change % Change 2019 2020 Change % Change 2019
(Amounts in thousands)
Operating metrics:
Marketplace Service Requests 9,837 2,196 29 % 7,641 25,186 3,754 18 % 21,432
Marketplace Monetized
Transactions 4,716 349 8 % 4,367 12,821 458 4 % 12,363
Marketplace Transacting SPs 207 17 9 % 190
Advertising SPs 39 2 5 % 37
For the three months ended September 30, 2020 compared to the three months ended
September 30, 2019
North America revenue increased $33.1 million , or 10%, driven by an increase in
Marketplace Revenue of $33.2 million or 12%, partially offset by a decrease in
Advertising & Other Revenue of $0.2 million . The increase in Marketplace Revenue
is due to an increase in consumer connection revenue of $35.0 million , or 14%,
which was due primarily to an increase of 8% in Marketplace Monetized
Transactions to 4.7 million, driven by an increase of 29% in Marketplace Service
Requests to 9.8 million, and an increase in revenue of $20.8 million due to the
change to gross revenue reporting for Handy and HomeAdvisor's pre-priced product
offering, effective January 1, 2020 .
Europe revenue decreased $0.5 million , or 3%, due primarily to lower
monetization from transitioning the business in France to a common European
technology platform with the businesses in the Netherlands and Italy , which
began in early February 2020 , partially offset by the favorable impact of the
weakening of the U.S. dollar relative to the Euro and British Pound.
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For the nine months ended September 30, 2020 compared to the nine months ended
September 30, 2019
North America revenue increased $108.2 million , or 11%, driven by increases in
Marketplace Revenue of $103.4 million or 14%, and Advertising & Other Revenue of
$4.8 million , or 3%. The increase in Marketplace Revenue is due to an increase
in consumer connection revenue of $104.7 million , or 15%, which was due
primarily to an increase of 4% in Marketplace Monetized Transactions to 12.8
million, driven by an increase of 18% in Marketplace Service Requests to 25.2
million, and an increase in revenue of $51.3 million due to the change to gross
revenue reporting for Handy and HomeAdvisor's pre-priced product offering,
effective January 1, 2020 . The increase in Advertising & Other Revenue is due
primarily to an increase in Angie's List revenue driven by an increase in
Advertising SPs.
Europe revenue decreased $4.3 million , or 7%, due primarily to the impact of
COVID-19 and lower monetization from transitioning the business in France to a
common European technology platform with the businesses in the Netherlands and
Italy , which began in early February 2020 .
Cost of revenue (exclusive of depreciation shown separately below)
Three Months Ended September 30, Nine Months Ended September 30,
2020 $ Change % Change 2019 2020 $ Change % Change 2019
(Dollars in thousands)
Cost of revenue
(exclusive of
depreciation shown
separately below) $ 48,253 $ 34,941 262 % $ 13,312 $ 122,524 $ 88,479 260 % $ 34,045
As a percentage of
revenue 12 % 4 % 11 % 3 %
For the three months ended September 30, 2020 compared to the three months ended
September 30, 2019
North America cost of revenue increased $35.1 million , or 272%, due primarily to
the change from net to gross revenue reporting for Handy and HomeAdvisor's
pre-priced product offering, effective January 1, 2020 .
For the nine months ended September 30, 2020 compared to the nine months ended
September 30, 2019
North America cost of revenue increased $88.5 million , or 270%, due primarily to
the change from net to gross revenue reporting for Handy and HomeAdvisor's
pre-priced product offering, effective January 1, 2020 .
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Selling and marketing expense
Three Months Ended September 30, Nine Months Ended September 30,
2020 $ Change % Change 2019 2020 $ Change % Change 2019
(Dollars in thousands)
Selling and marketing
expense $ 210,171 $ 14,629 7 % $ 195,542 $ 590,114 $ 23,103 4 % $ 567,011
As a percentage of
revenue 54 % 55 % 53 % 56 %
For the three months ended September 30, 2020 compared to the three months ended
September 30, 2019
North America selling and marketing expense increased $15.8 million , or 8%,
driven by increases of $9.1 million in advertising expense, $5.3 million in
compensation expense and $1.1 million in outsourced personnel costs, partially
offset by a decrease of $1.2 million in travel related expenses resulting from
the impact of COVID-19. While service requests from both Google paid traffic and
free traffic increased, advertising expense increased due primarily to an
increase in online marketing costs as the proportion of service requests from
Google paid traffic increased. The Company continues to benefit from the search
engine marketing strategy that was implemented in the second half of 2019, which
focuses on the lifetime profitability of rather than cost per service request.
This increase in online marketing was partially offset by a decrease in
television spend resulting from cost cutting initiatives due to the impact of
COVID-19. The increase in compensation expense was due primarily to increased
commission expense to the sales force resulting from higher revenue. The
increase in outsourced personnel costs was due primarily to various sales
initiatives at Handy.
Europe selling and marketing expense decreased $1.2 million , or 12%, driven by a
decrease in advertising expense of $1.9 million , partially offset by an increase
in compensation expense of $0.8 million . The decrease in advertising expense is
due, in part, to mitigating the negative impact of COVID-19 on revenue. The
increase in compensation expense was due primarily to severance costs recorded
in the third quarter of 2020 associated with headcount reductions in France .
For the nine months ended September 30, 2020 compared to the nine months ended
September 30, 2019
North America selling and marketing expense increased $26.1 million , or 5%,
driven by increases in compensation expense of $17.2 million , advertising
expense of $4.8 million , outsourced personnel and consulting costs of $4.4
million and facility costs of $1.5 million , partially offset by a decrease of
$2.5 million in travel related expenses resulting from the impact of COVID-19.
The increase in compensation expense was due primarily to growth in the sales
force and increased commission expense. The increase in advertising expense was
due primarily to the factors described above in the three-month discussion. The
increase in outsourced personnel and consulting costs was due primarily to
various sales initiatives at Handy.
Europe selling and marketing expense decreased $3.0 million , or 9%, driven by
decreases in advertising expense of $1.9 million and compensation expense of
$0.7 million . The decrease in compensation expense is due primarily to a
reduction in sales force headcount associated with the platform migration in
France , partially offset by severance cost recorded in the third quarter of 2020
associated with headcount reductions in France .
General and administrative expense
Three Months Ended September 30, Nine Months Ended September 30,
2020 $ Change % Change 2019 2020 $ Change % Change 2019
(Dollars in thousands)
General and
administrative expense $ 90,122 $ 7,778 9 % $ 82,344 $ 270,129 $ 15,343 6 % $ 254,786
As a percentage of
revenue 23 % 23 % 24 % 25 %
For the three months ended September 30, 2020 compared to the three months ended
September 30, 2019
North America general and administrative expense increased $6.7 million , or 9%,
due primarily to increases of $4.3 million in compensation expense, $3.7 million
in bad debt expense due to higher Marketplace Revenue, and $1.2 million in
outsourced personal costs, partially offset by a decrease of $1.1 million in
travel related expenses resulting from the impact of COVID-19. The increase in
compensation expense is due primarily to an increase in stock-based compensation
expense due primarily to the issuance of new equity awards since 2019 and the
reversal in the third quarter of 2019 of $7.3 million of expense related to
certain performance-based awards that did not vest, partially offset by a
decrease of $2.9 million in the modification charge related to the Combination.
The increase in outsourced personnel costs is due primarily to an increase in
call volume related to our customer service function.
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Europe general and administrative expense increased $1.1 million , or 14%, due
primarily to an increase of $1.7 million in compensation expense resulting from
severance costs recorded in the third quarter of 2020 associated with headcount
reductions in France , partially offset by decreases of $0.5 million in the
digital services tax and other non-payroll taxes and $0.2 million in travel
related expenses resulting from the impact of COVID-19.
For the nine months ended September 30, 2020 compared to the nine months ended
September 30, 2019
North America general and administrative expense increased $14.7 million , or 6%,
due primarily to increases of $10.5 million in bad debt expense due to higher
Marketplace Revenue, the impact from COVID-19 on expected credit losses and
anticipated losses from Advertising SPs, $6.8 million in compensation expense
and $3.1 million in professional fees, partially offset by decreases of $2.0
million in travel related expenses resulting from the impact of COVID-19 and
$1.9 million in software license and maintenance costs. The increase in
compensation expense is due primarily to an increase of $9.6 million in
stock-based compensation expense due primarily to the factors described above in
the three-month discussion and a cumulative adjustment recorded in the first
quarter of 2020 in connection with the modification charge related to the
Combination described under the "Overview" section above. The increase in
professional fees is due primarily to an increase in legal fees.
Europe general and administrative expense increased $0.7 million , or 3%, due
primarily to an increase of $1.1 million in compensation expense resulting from
severance costs recorded in the third quarter of 2020 associated with headcount
reductions in France and an increase of $0.3 million in bad debt expense due, in
part, from the impact of COVID-19 on expected credit losses, partially offset by
decreases of $0.5 million in digital services tax and other non-payroll taxes
and $0.4 million in travel related expenses resulting from the impact of
COVID-19.
Product development expense
Three Months Ended September 30, Nine Months Ended September 30,
2020 $ Change % Change 2019 2020 $ Change % Change 2019
(Dollars in thousands)
Product development expense $ 17,577 $ 1,556 10 % $ 16,021 $ 50,068 $ 3,161 7 % $ 46,907
As a percentage of revenue 5 % 4 % 5 % 5 %
For the three months ended September 30, 2020 compared to the three months ended
September 30, 2019
North America product development expense increased $1.5 million , or 12%, due
primarily to an increase in compensation expense.
For the nine months ended September 30, 2020 compared to the nine months ended
September 30, 2019
North America product development expense increased $3.2 million , or 8%, due
primarily to increases in compensation expense of $2.5 million and software
license and maintenance costs of $0.7 million .
Depreciation
Three Months Ended September 30, Nine Months Ended September 30,
2020 $ Change % Change 2019 2020 $ Change % Change 2019
(Dollars in thousands)
Depreciation $ 13,921 $ 2,677 24 % $ 11,244 $ 38,614 $ 11,575 43 % $ 27,039
As a percentage of revenue 4 % 3 % 3 % 3 %
For the three months ended September 30, 2020 compared to the three months ended
September 30, 2019
North America depreciation increased $2.1 million , or 19%, due primarily to the
investments in capitalized software to support our products and services and
leasehold improvements related to additional office space. Europe depreciation
increased $0.6 million .
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For the nine months ended September 30, 2020 compared to the nine months ended
September 30, 2019
North America depreciation increased $10.4 million , or 41%, due primarily to the
factors described above in the three-month discussion. Europe depreciation
increased $1.2 million .
Operating income (loss)
Three Months Ended September 30, Nine Months Ended September 30,
2020 $ Change % Change 2019 2020 $ Change % Change 2019
(Dollars in thousands)
North America $ 295 $ (26,899) (99) % $ 27,194 $ 8,377 $ (32,032) (79) % $ 40,409
Europe (3,314) (846) (34) % (2,468) (10,048) (2,127)
(27) % (7,921)
Total $ (3,019) $ (27,745) NM $ 24,726 $ (1,671) $ (34,159) NM $ 32,488
As a percentage of revenue (1) % 7 % - % 3 %
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NM = Not meaningful For the three months endedSeptember 30, 2020 compared to the three months endedSeptember 30, 2019 North America operating income decreased$26.9 million , or 99%, due to a decrease in Adjusted EBITDA of$20.1 million , described below, and increases of$6.0 million in stock-based compensation expense and$2.1 million in depreciation, partially offset by a decrease of$1.2 million in amortization of intangibles. The increase in stock-based compensation expense was due primarily to the issuance of new equity awards since 2019 and the reversal in the third quarter of 2019 of$7.6 million of expense related to certain performance-based awards that did not vest, partially offset by a decrease of$2.2 million in the modification charge related to the Combination. The increase in depreciation was due primarily to the investments in capitalized software to support our products and services and leasehold improvements related to additional office space. The decrease in amortization of intangibles was due primarily to lower expense as certain intangible assets became fully amortized in 2019.Europe operating loss increased$0.8 million , or 34%, due primarily to an increase of$0.6 million in depreciation and a decrease in Adjusted EBITDA of$0.4 million , described below, partially offset by a decrease of$0.1 million in amortization of intangibles. AtSeptember 30, 2020 , there is$79.3 million of unrecognized compensation cost, net of estimated forfeitures, related to all equity-based awards, which is expected to be recognized over a weighted average period of approximately 2.1 years. For the nine months endedSeptember 30, 2020 compared to the nine months endedSeptember 30, 2019 North America operating income decreased$32.0 million , or 79%, due primarily to a decrease in Adjusted EBITDA of$14.9 million , described below, and increases of$10.4 million in depreciation and$9.3 million in stock-based compensation expense, partially offset by a decrease of$2.6 million in amortization of intangibles. The increases in depreciation and stock-based compensation expense and decrease in amortization of intangibles were due primarily to the factors described above in the three-month discussion.Europe operating loss increased$2.1 million , or 27%, due primarily to a decrease in Adjusted EBITDA loss of$1.8 million , described below, and increases of$1.2 million in depreciation and$0.1 million in stock-based compensation expense, partially offset by a decrease of$1.0 million in amortization of intangibles. 33 -------------------------------------------------------------------------------- Table of Contents Adjusted EBITDA Three Months Ended September 30, Nine Months Ended September 30, 2020 $ Change % Change 2019 2020 $ Change % Change 2019 (Dollars in thousands) North America$ 40,454 $ (20,055) (33) %$ 60,509 $ 136,886 $ (14,918) (10) %$ 151,804 Europe (1,967) (381) (24) % (1,586) (6,066) (1,796) (42) % (4,270) Total$ 38,487 $ (20,436) (35) %$ 58,923 $ 130,820 $ (16,714) (11) %$ 147,534 As a percentage of revenue 10 % 16 % 12 % 15 % For a reconciliation of net earnings attributable toANGI Homeservices Inc. shareholders to operating (loss) income to consolidated Adjusted EBITDA, see " Principles of Financial Reporting ." For a reconciliation of operating income (loss) to Adjusted EBITDA for the Company's reportable segments, see " Note 7-Segment Information " to the consolidated financial statements included in " Item 1. Consolidated Financial Statements ." For the three months endedSeptember 30, 2020 compared to the three months endedSeptember 30, 2019 North America Adjusted EBITDA decreased$20.1 million , or 33%, to$40.5 million , despite higher revenue due primarily to an increase in cost of revenue, increased investment in fixed price and an increase of$3.7 million in bad debt expense due to higher Marketplace Revenue. Europe Adjusted EBITDA loss increased$0.4 million , or 24%, to a loss of$2.0 million , due primarily to a decrease in revenue and an increase in compensation expense due to severance costs recorded in the third quarter of 2020 associated with headcount reductions inFrance , partially offset by a decrease of$1.9 million in advertising expense due, in part, to mitigating the negative impact of COVID-19 on revenue. For the nine months endedSeptember 30, 2020 compared to the nine months endedSeptember 30, 2019 North America Adjusted EBITDA decreased$14.9 million , or 10%, to$136.9 million , despite higher revenue due primarily to an increase in cost of revenue and an increase of$10.5 million in bad debt expense due to higher Marketplace Revenue, the impact from COVID-19 on expected credit losses and anticipated losses from Advertising SPs. Europe Adjusted EBITDA loss increased$1.8 million , or 42%, to a loss of$6.1 million , due primarily to the decrease of$4.3 million in revenue and an increase in bad debt expense of$0.3 million , due, in part, from the impact of COVID-19 on expected credit losses, partially offset by a decrease of$1.9 million in advertising expense. Interest expense Interest expense relates to interest on the Senior Notes, Term Loan and commitment fees on the undrawn Revolving Facility. For a detailed description of long-term debt, net, see " Note 4-Long-term Debt " to the consolidated financial statements included in " Item 1. Consolidated Financial Statements ." Three Months Ended September 30, Nine Months Ended September 30, 2020 $ Change % Change 2019 2020 $ Change % Change 2019 (Dollars in thousands) Interest expense$ 3,699 $ 692 23 %$ 3,007 $ 7,593 $ (1,371) (15) %$ 8,964 For the three months endedSeptember 30, 2020 compared to the three months endedSeptember 30, 2019 Interest expense in 2020 increased from 2019 due primarily to the issuance of the Senior Notes inAugust 2020 , partially offset by a decrease in interest expense on the Term Loan due primarily to lower interest rates and the decrease in the average outstanding balance of the Term Loan compared to the prior year period. 34 -------------------------------------------------------------------------------- Table of Contents For the nine months endedSeptember 30, 2020 compared to the nine months endedSeptember 30, 2019 Interest expense in 2020 decreased from 2019 due primarily to lower interest rates and the decrease in the average outstanding balance of the Term Loan compared to the prior year period, partially offset by the issuance of the Senior Notes inAugust 2020 . Other income, net Three Months Ended September 30, Nine Months Ended September 30, 2020 $ Change % Change 2019 2020 $ Change % Change 2019 (Dollars in thousands) Other income, net$ 223 $ (1,282) (85) %$ 1,505 $ 856 $ (3,967) (82) %$ 4,823 For the three months endedSeptember 30, 2020 and 2019 Other income, net in 2020 principally includes interest income of$0.1 million and foreign currency exchange gains of$0.1 million . Other income, net in 2019 principally includes interest income of$2.1 million , and net foreign currency exchange gains of$0.3 million , partially offset by a$0.9 million mark-to-market charge for an indemnification claim related to the Handy acquisition that was settled in ANGI shares during the first quarter of 2020. For the nine months endedSeptember 30, 2020 and 2019 Other income, net in 2020 principally includes interest income of$1.6 million , partially offset by net foreign currency exchange losses of$0.3 million , and a$0.2 million mark-to-market charge for an indemnification claim related to the Handy acquisition that was settled in ANGI shares during the first quarter of 2020. Other income, net in 2019 principally includes interest income of$6.4 million and net foreign currency exchange gains of$0.6 million , partially offset by a$2.0 million mark-to-market charge for an indemnification claim related to the Handy acquisition that was settled in ANGI shares during the first quarter of 2020. Income tax benefit (provision) Three Months Ended September 30, Nine Months Ended September 30, 2020 $ Change % Change 2019 2020 $ Change % Change 2019 (Dollars in thousands)
Income tax benefit (provision)$ 11,698 $ 16,598 NM$ (4,900) $ 17,638 $ 10,576 150 %$ 7,062 Effective income tax rate NM 21 % NM NM For further details of income tax matters, see " Note 2-Income Taxes " to the consolidated financial statements included in " Item 1. Consolidated Financial Statements ." For the three months endedSeptember 30, 2020 compared to the three months endedSeptember 30, 2019 In 2020, the income tax benefit was due primarily to excess tax benefits generated by the exercise and vesting of stock-based awards. In 2019, the effective income tax rate approximates the statutory rate of 21% due primarily to unbenefited foreign losses and state taxes, offset by research credits and excess tax benefits generated by the exercise and vesting of stock-based awards. For the nine months endedSeptember 30, 2020 compared to the nine months endedSeptember 30, 2019 In 2020, the Company recorded an income tax benefit of$17.6 million . The income tax benefit was due primarily to excess tax benefits generated by the exercise and vesting of stock-based awards and a reduction to deferred taxes due to the true-up of the state tax rate of an indefinite-lived intangible asset. In 2019, the Company recorded an income tax benefit of$7.1 million , despite pre-tax income. The income tax benefit was due primarily to excess tax benefits generated by the exercise and vesting of stock-based awards. 35
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PRINCIPLES OF FINANCIAL REPORTING
We report Adjusted EBITDA as a supplemental measure to U.S. generally accepted
accounting principles ("GAAP"). This measure is one of the primary metrics by
which we evaluate the performance of our businesses, on which our internal
budgets are based and by which management is compensated. 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. The above items are excluded from our
Adjusted EBITDA measure because these items are non-cash in nature. Adjusted
EBITDA has certain limitations because it excludes the impact of these expenses.
The following table reconciles net earnings attributable to ANGI Homeservices
Inc. shareholders to operating (loss) income to consolidated Adjusted EBITDA:
Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
(In thousands)
Net earnings attributable to ANGI Homeservices
Inc. shareholders $ 4,472 $ 17,999 $ 8,181 $ 34,936
Add back:
Net earnings attributable to noncontrolling
interests 731 325 1,049 473
Income tax (benefit) provision (11,698) 4,900 (17,638) (7,062)
Other income, net (223) (1,505) (856) (4,823)
Interest expense 3,699 3,007 7,593 8,964
Operating (loss) income (3,019) 24,726 (1,671) 32,488
Stock-based compensation expense 14,697 8,784 55,031 45,586
Depreciation 13,921 11,244 38,614 27,039
Amortization of intangibles 12,888 14,169 38,846 42,421
Adjusted EBITDA $ 38,487 $ 58,923 $ 130,820 $ 147,534
For a reconciliation of operating (loss) income to Adjusted EBITDA for the
Company's reportable segments, see " Note 7-Segment Information " to the
consolidated financial statements included in " Item 1. Consolidated Financial
Statements ."
Non-Cash Expenses That Are Excluded from Non-GAAP Measure
Stock-based compensation expense consists principally 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 and market-based awards. These expenses are not paid in
cash and we view the economic cost 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.
Performance-based RSUs 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 amount from its current funds.
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Depreciation is a non-cash expense relating to our capitalized software,
leasehold improvements and equipment that 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 service professional relationships, technology,
memberships, customer lists and user base, 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.
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FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCESFinancial Position
September 30 ,December 31, 2020 2019
(In thousands)
Cash and cash equivalents and marketable debt securities
$ 837,611 $ 377,648 All other countries (a) 17,433 12,917 Total cash and cash equivalents 855,044 390,565 Marketable debt securities (United States) 49,992 -
Total cash and cash equivalents and marketable debt securities
$
905,036
Long-term debt Senior Notes$ 500,000 $ - Term Loan 237,188 247,500 Total long-term debt 737,188 247,500 Less: current portion of Term Loan 13,750 13,750 Less: unamortized debt issuance costs 8,030 1,804 Total long-term debt, net$ 715,408 $ 231,946 ________________________ (a) If needed forU.S. operations, the cash and cash equivalents held by the Company's foreign subsidiaries could be repatriated without significant tax consequences. Long-term Debt The outstanding balance of the Term Loan as ofSeptember 30, 2020 is$237.2 million . There are quarterly principal payments of$3.4 million throughDecember 31, 2021 ,$6.9 million for the one-year period endingDecember 31, 2022 and$10.3 million through maturity of the loan when the final amount of$161.6 million is due. Additionally, interest payments are due at least quarterly through the term of the loan. AtSeptember 30, 2020 , the Term Loan bore interest at LIBOR plus 1.50%, or 1.66%. The spread over LIBOR is subject to change in future periods based onANGI Group's consolidated net leverage ratio. OnAugust 20, 2020 ,ANGI Group issued$500 million of its Senior Notes dueAugust 15, 2028 , with interest payableFebruary 15 andAugust 15 of each year, commencingFebruary 15, 2021 . The proceeds from the offering will be used for general corporate purposes, including potential future acquisitions and return of capital. OnAugust 12, 2020 ,ANGI Group entered into a joinder agreement with the Company, the other subsidiaries of the Company that are party to the credit agreement, and each of the other loan parties to the credit agreement, pursuant to whichANGI Group became the successor borrower under the credit agreement andANGI Homeservices Inc.'s obligations thereunder were terminated. The credit agreement governs the Term Loan and Revolving Facility. In addition, onAugust 12, 2020 , the definition of "Permitted Unsecured Ratio Debt" in the credit agreement was amended to remove the requirement that guarantees of certain indebtedness of the borrower be subordinated to the guarantees under the credit agreement. The$250 million Revolving Facility expires onNovember 5, 2023 . AtSeptember 30, 2020 andDecember 31, 2019 , there were no outstanding borrowings under the Revolving Facility. The annual commitment fee on undrawn funds is currently 25 basis points and is based onANGI Group's consolidated net leverage ratio most recently reported. Borrowings under the Revolving Facility bear interest, atANGI Group's option, at either a base rate or LIBOR, in each case plus an applicable margin, which is determined based onANGI Group's consolidated net leverage ratio. 38 -------------------------------------------------------------------------------- Table of Contents The Senior Notes, Term Loan and Revolving Facility are guaranteed by certain ofANGI Group's wholly-owned material domestic subsidiaries andANGI Group's obligations under the Term Loan and the Revolving Facility are secured by substantially all assets ofANGI Group and the guarantors, subject to certain exceptions. The Term Loan and outstanding borrowings, if any, under the Revolving Facility rank equally with each other, and have priority over the Senior Notes to the extent of the value of the assets securing the borrowings under the credit agreement. The terms of the Revolving Facility and the Term Loan requireANGI Group to maintain a consolidated net leverage ratio of not more than 4.5 to 1.0 and a minimum interest coverage ratio of not less than 2.0 to 1.0 (in each case as defined in the credit agreement). In addition, the credit agreement contains covenants that would limitANGI Group's ability to pay dividends or make distributions in the event a default has occurred or ifANGI Group's consolidated net leverage ratio exceeds 4.25 to 1.0. Cash Flow Information In summary, the Company's cash flows are as follows: Nine Months Ended September 30, 2020
2019
(In thousands)
Net cash provided by (used in):
Operating activities $ 173,185 $ 182,084
Investing activities $ (86,894) $ (26,630)
Financing activities $ 378,450 $ (89,924)
Net cash provided by operating activities consists of earnings adjusted for
non-cash items and the effect of changes in working capital. Non-cash
adjustments include provision for credit losses, stock-based compensation
expense, amortization of intangibles, depreciation, and deferred income taxes.
2020
Adjustments to earnings consist primarily of $60.1 million of provision for
credit losses, $55.0 million of stock-based compensation expense, $38.8 million
of amortization of intangibles, and $38.6 million of depreciation, partially
offset by $18.1 million of deferred income taxes. The decrease from changes in
working capital consists primarily of an increase in accounts receivable of
$70.7 million , partially offset by an increase in accounts payable and other
liabilities of $46.9 million . The increase in accounts receivable is due
primarily to revenue growth in North America . The increase in accounts payable
and other liabilities is due primarily to an increase in accrued advertising and
related payables, and accrued compensation costs due, in part, to the deferral
of payroll tax payments under the Coronavirus Aid, Relief, and Economic Security
Act.
Net cash used in investing activities includes purchases of marketable debt
securities of $50.0 million and capital expenditures of $37.6 million , primarily
related to investments in capitalized software to support the Company's products
and services, and leasehold improvements.
Net cash provided by financing activities includes $500.0 million of proceeds
from the issuance of the Senior Notes and a $3.1 million payment from IAC
pursuant to the tax sharing agreement, partially offset by $54.4 million for the
repurchase of 7.7 million shares of Class A common stock, on a settlement date
basis, at an average price of $7.02 per share, $50.0 million for the payment of
withholding taxes on behalf of employees for stock-based awards that were net
settled, $10.3 million in principal payments on the Term Loan, $5.6 million for
debt issuance costs, and $4.3 million for the purchase of redeemable
noncontrolling interests.
2019
Adjustments to earnings consist primarily of $49.3 million of provision for
credit losses, $45.6 million of stock-based compensation expense, $42.4 million
of amortization of intangibles, and $27.0 million of depreciation, partially
offset by $8.3 million of deferred income taxes. The deferred income tax benefit
primarily relates to the net operating loss created by the exercise and vesting
of stock-based awards. The decrease from changes in working capital consists
primarily of an increase in accounts receivable of $66.6 million , partially
offset by an increase in accounts payable and other liabilities of $30.6 million
and a decrease in other assets of $15.7 million . The increase in accounts
receivable was due primarily to revenue growth in North America . The increase in
accounts payable and other liabilities is due primarily to an increase in
accrued advertising and related payables. The decrease in other assets is due,
in part, to a receipt of tenant improvement allowances.
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Net cash used in investing activities includes capital expenditures of $54.8
million , primarily related to investments in capitalized software to support the
Company's products and services, and leasehold improvements, $20.3 million of
cash principally related to the acquisition of Fixd Repair, partially offset by
$25.0 million of proceeds from maturities of marketable debt securities, $23.6
million of net proceeds from the December 31, 2018 sale of Felix.
Net cash used in financing activities includes $34.0 million for the repurchase
of 4.1 million shares of Class A common stock, on a settlement date basis, at an
average price of $8.23 per share, $30.0 million for the payment of withholding
taxes on behalf of employees for stock-based awards that were net settled, a
$11.4 million payment to IAC pursuant to the tax sharing agreement and $10.3
million for the principal payments on the Term Loan.
Liquidity and Capital Resources
During the nine months ended September 30, 2020 , the Company repurchased 7.6
million shares of its Class A common stock, on a trade date basis, at an average
price of $7.00 per share, or $53.4 million in aggregate. At September 30, 2020 ,
the Company has 20.1 million shares remaining in its share repurchase
authorization. The Company may purchase its shares over an indefinite period of
time on the open market and in privately negotiated transactions, depending on
those factors management deems relevant at any particular time, including,
without limitation, market conditions, share price and future outlook.
The Company currently settles all equity awards on a net basis. Assuming all
equity awards outstanding on October 30, 2020 were net settled on that date,
including stock options, RSUs and subsidiary-denominated equity, ANGI would have
issued 10.0 million shares of its Class A common stock and would have remitted
$106.3 million in cash for withholding taxes (assuming a 50% withholding rate).
The Company's 2020 capital expenditures are expected to be lower than 2019
capital expenditures of $68.8 million by approximately 15% to 20%, due primarily
to lower leasehold improvements. The Company's liquidity could be negatively
affected by a decrease in demand for our products and services due to COVID-19
or other factors. As described in the "COVID-19 Update" section above, to date,
the COVID-19 outbreak and measures designed to curb its spread have had an
impact on the Company's business. The longer the global outbreak and measures
designed to curb the spread of the virus have adverse impacts on economic
conditions generally, the greater the adverse impact is likely to be on the
Company's business, financial condition and results of operations. The Company
believes it has ample access to capital to navigate current and coming economic
pressures.
The Company's indebtedness could limit its ability to: (i) obtain additional
financing to fund working capital needs, acquisitions, capital expenditures or
debt service or other requirements; and (ii) use operating cash flow to make
certain acquisitions or investments, in the event a default has occurred or, in
certain circumstances, if ANGI Group's leverage ratio exceeds the ratios set
forth in the Term Loan. There were no such limitations at September 30, 2020 .
The Company's ability to obtain additional financing may also be impacted by any
disruptions in the financial markets caused by COVID-19 or otherwise.
The Company believes its existing cash, cash equivalents, marketable debt
securities, available borrowings under the Revolving Facility 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 foreseeable
future.
At September 30, 2020 , IAC held all Class B shares of ANGI, which represent
84.5% of the economic interest and 98.2% of the voting interest of ANGI. As a
result, IAC has the ability to control ANGI's financing activities, including
the issuance of additional debt and equity securities by ANGI or any of its
subsidiaries, or the incurrence of other indebtedness generally. While ANGI 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 ANGI's capital stock and its representation
on the ANGI board of directors. Additional financing may not be available on
terms favorable to the Company or at all.
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CONTRACTUAL OBLIGATIONS
At September 30, 2020 , there have been no material changes to the Company's
contractual obligations since the disclosure in our Annual Report on Form 10-K
for the year ended December 31, 2019 except for the issuance, by ANGI Group , on
August 20, 2020 of $500 million aggregate principal amount of its Senior Notes
due August 15, 2028 . The proceeds from the offering will be used for general
corporate purposes, including potential future acquisitions and return of
capital.
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