ANGI Homeservices Rises as a New CEO Prepares to Step In
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Shares of ANGI Homeservices (ticker: ANGI) slipped Thursday, cooling the stock’s strong 2018 somewhat on the back of third-quarter results and a mixed outlook for the rest of the year.
ANGI Homeservices, majority owned by IAC/InterActiveCorp (IAC), was created by the September 2017 combination of HomeAdvisor, which connects home-services professionals with customers, and Angie’s List, a rating and review platform for those same workers.
Together, the businesses give ANGI a combination of fee, advertising and subscription revenue. The company believes it’s well positioned to benefit as the process of finding home services moves online and younger “digital natives” become homeowners in greater numbers.
“We have this enormous opportunity in front of us,” said Brandon Ridenour, the company’s chief product officer, who will become CEO on Friday. (Chris Terrill will stay on for a while as an adviser before exploring opportunities outside the IAC umbrella.)
The shares, up 71% in 2018, were down 6.2% to just under $18 on Thursday.
Third-quarter revenue rose 67% to $303 million, yielding net income of about $27 million. The company has reported some $40 million of net profits over the first nine months of the year after losing nearly $45 million over the same period of 2017.
The company also said to expect full-year operating income of $75 million-$85 million and $260 million-$270 million in adjusted earnings before interest, taxes, depreciation, and amortization.
Those numbers were down somewhat from the guidance announced midyear. (The company reported a nearly $150 million operating loss, and $39 million in adjusted Ebitda, last year, mainly reflecting its performance before the Angie’s List deal was completed.)
Meanwhile, ANGI is projecting 25% revenue growth in 2019, which Ridenour characterized as at the high end of the company’s long-term range. Wall Street currently expects 2019 revenue to be 23% higher than estimated full-year 2018 sales.
The outlook reflects planned investment in growth and, especially, in Handy Technologies, a home-gig company it acquired last month. Handy—think “like Uber, but for assembling IKEA furniture”—represents a potentially important buy for ANGI.
The company hasn’t disclosed many financial details about the purchase, though it did say its fourth-quarter numbers will incorporate “losses” from Handy Technologies. (ANGI doesn’t plan to report Handy’s results as a separate segment in the near term.)
In addition to jump-starting its presence in the marketplace for smaller tasks, Ridenour told Barron’s the Handy deal gives ANGI an opportunity to cross-market between its platforms, as well as offering product and technological expertise, and boosting the size of its provider network.
“They have done an amazing job building a very innovative service,” he said. Ridenour, who expects the deal to begin to boost earnings in 2020, now see, his company as poised to benefit from a broader economic and technological shift.
“We believe we’re in the very early days of what is a seismic shift in the home services space—a $400 billion sector of the economy that has remained largely offline,” he told Barron’s.
This story has been updated since it was first published to reflect share price movement and add additional information and context about the company’s outlook.
Email David Marino-Nachison at [email protected]. Follow him at @marinonachison and follow Barron’s Next at @barronsnext.