ANGI: Management’s Discussion and Analysis of Financial Position and Operating Results (Form 10-Q)

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GENERAL

Management Overview
Angi Inc., formerly ANGI Homeservices, Inc., ("Angi Inc.," the "Company," "we,"
"our," or "us") connects quality home service professionals with consumers
across 500 different categories, from repairing and remodeling homes to cleaning
and landscaping. Over 260,000 domestic service professionals actively sought
consumer matches, completed jobs, or advertised work through Angi Inc. platforms
during the three months ended June 30, 2021. Additionally, consumers turned to
at least one of our brands to find a professional for approximately 34 million
projects during the twelve months ended June 30, 2021.

The Company has two operating segments (i) North America (United States and
Canada), which includes Angi (formerly Angie's List), HomeAdvisor Powered by
Angi, and Handy; and (ii) Europe, which includes Travaux, MyHammer, MyBuilder,
Werkspot, and Instapro.

For a more detailed description of the Company’s operating activities, see the Company’s Annual Report on Form 10-K for the year ended. December 31, 2020.

Defined terms and operating parameters:

Unless otherwise indicated or as the context otherwise requires certain terms,
which include the principal operating metrics we use in managing our business,
used in this quarterly report are defined below:
•Marketplace Revenue primarily reflects domestic marketplace revenues, including
consumer connection revenue for consumer matches, revenue from Angi Services
offerings sourced through marketplace platforms, and membership subscription
revenue from service professionals.

•Advertising and Other Revenue primarily includes revenue from service
professionals under contract for advertising and membership subscription fees
from consumers.
•Angi Services are the Company's pre-priced offerings by which the consumer
purchases services directly from the Company and the Company engages a service
professional to perform the service. This will include the Total Home Roofing
acquisition, which closed on July 1, 2021.

•Marketplace Service Requests are fully completed and submitted domestic
customer service requests and includes Angi Services requests sourced through
the marketplace platforms in the period.
•Marketplace Monetized Transactions are fully completed and submitted domestic
customer service requests that were matched to and paid for by a service
professional and includes completed and in-process Angi Services jobs sourced
through the marketplace platforms in the period.
•Marketplace Transacting Service Professionals ("Marketplace Transacting SPs")
are the number of marketplace service professionals that paid for consumer
matches or performed an Angi Services job sourced through the marketplace
platforms in the quarter.
•Advertising Service Professionals ("Advertising SPs") are the number of service
professionals under contract for advertising at the end of the period.
•Senior Notes - On August 20, 2020, ANGI Group, LLC ("ANGI Group"), a direct
wholly-owned subsidiary of the Company, issued $500.0 million of its 3.875%
Senior Notes due August 15, 2028, with interest payable February 15 and August
15 of each year, commencing February 15, 2021.
•ANGI Group Revolving Facility - the $250.0 million ANGI Group revolving credit
facility, which otherwise would have expired on November 5, 2023, was terminated
effective August 3, 2021. No amounts were ever drawn under the ANGI Group
Revolving Facility prior to its termination.
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Contents

Components of Results of Operations
Sources of Revenue
Marketplace Revenue is primarily derived from (i) consumer connection revenue,
which is comprised of fees paid by service professionals for consumer matches
(regardless of whether the service professional ultimately provides the
requested service), (ii) Angi Services, which is comprised of revenue from
completed jobs sourced through the marketplace platforms, and (iii) 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 and Other Revenue is
primarily derived from (i) sales of time-based website, mobile, and call center
advertising to service professionals, and (ii) membership subscription fees from
consumers.
Operating Costs and Expenses:
•Cost of revenue - consists primarily of payments made to independent service
professionals who perform work contracted under Angi Services arrangements
through the marketplace platforms, credit card processing fees, 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 those who 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), provision for
credit losses, software license and maintenance costs, and facilities costs. Our
customer service function includes personnel who provide support to our service
professionals and consumers.
•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 (loss) earnings attributable to Angi Inc. shareholders to
operating (loss) income to consolidated Adjusted EBITDA for the three and six
months ended June 30, 2021 and 2020.
Brand Integration Initiative
On March 17, 2021, the Company updated one of its leading websites and brands,
Angie's List, to Angi, and concentrated its marketing investment in the Angi
brand in order to focus its marketing, sales, and branding efforts on a single
brand.
We rely heavily on free, or organic, search results from search engine
optimization, and paid search engine marketing to drive traffic to our
platforms. Our brand initiative has adversely affected the placement and ranking
of Angi Inc. websites, particularly Angi.com, in organic search results as Angi
does not have the same domain history as Angie's List. In addition, we shifted
marketing to support Angi, away from HomeAdvisor, which has negatively affected
the efficiency of our search engine marketing efforts.
During the second quarter of 2021, these efforts had a pronounced negative
impact on Marketplace Service Requests from organic search results and via our
mobile applications, which in turn has resulted in increased paid search engine
marketing to generate Marketplace Service Requests. The combined effect of this
during the three months ended June 30, 2021, has reduced revenue and increased
marketing spend, materially more than expected at the launch of the brand
initiative in the first quarter of 2021 and more significantly than our
forecasts at the beginning of May 2021. We expect the pronounced negative impact
to
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organic search results, the increased paid search engine marketing costs and the
reduced monetization from our mobile applications to continue until such time as
the new brand establishes search engine optimization ranking and consumer
awareness is established.
Angi Services Investment

Angi Services was launched in August 2019 and for the three and six months ended
June 30, 2021 revenue grew 127% and 96%, respectively, versus the comparable
prior year periods. We have invested significantly in Angi Services and expect
to continue to do so going forward. In the second half of 2021, we expect
significant revenue growth as we expand the business, refine the overall
experience, and increase penetration in certain geographies. This increased
investment in Angi Services has contributed to lower profitability for the
Company for the three and six months ended June 30, 2021 and is expected to
continue to negatively impact profits through the remainder of 2021.
COVID-19 Update

The impact on the Company from the COVID-19 pandemic and the measures designed
to contain its spread has been varied and volatile.
As previously disclosed, the initial impact of COVID-19 on the Company resulted
in a decline in demand for service requests, driven primarily by decreases in
demand in certain categories of jobs (particularly discretionary indoor
projects). While we have experienced a rebound in service requests in the second
half of 2020 and the first half of 2021, many service professionals' businesses
had been adversely impacted by labor and material constraints and many service
professionals had limited capacity to take on new business, which negatively
impacted our ability to monetize this increased level of service requests
through the first quarter of 2021. Although our ability to monetize service
requests rebounded modestly in the second quarter of 2021, we are still not back
to levels we experienced pre-COVID-19. No assurances can be provided that we
will continue to be able to improve monetization, or that service professionals'
businesses will not be adversely impacted in the future.
The extent to which developments related to the COVID-19 pandemic 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 continuing spread of COVID-19, the severity of resurgences of
COVID-19 caused by variant strains of the virus, the effectiveness of vaccines
and attitudes toward receiving them, materials and supply chain constraints,
labor shortages, the scope of governmental and other restrictions on travel,
discretionary services and other activity, and public reactions to these
developments.





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Results of Operations for the three and six months ended June 30, 2021 compared
to the three and six months ended June 30, 2020
Revenue
                                                  Three Months Ended June 30,                                                  Six Months Ended June 30,
                                 2021            $ Change           % Change              2020               2021            $ Change           % Change              2020
                                                                                          (Dollars in thousands)
Revenue:

Marlet :

Consumer connection revenue  $ 240,016          $ (1,999)             (1)%            $ 242,015          $ 461,447          $ 10,828               2%             $ 450,619
Angi Services revenue           72,819            40,724              127%               32,095            127,505            62,549               96%               64,956
Service professional
membership subscription
revenue                         12,390              (627)             (5)%               13,017             24,342            (2,452)             (9)%               26,794
Other revenue                    2,372            (3,674)             (61)%               6,046              5,353            (4,227)             (44)%               9,580
Total Marketplace Revenue      327,597            34,424               12%              293,173            618,647            66,698               12%              551,949
Advertising and Other
revenue                         72,348             8,104               13%               64,244            142,339            12,739               10%              129,600
North America                  399,945            42,528               12%              357,417            760,986            79,437               12%              681,549
Europe                          21,043             3,399               19%               17,644             47,031             9,869               27%               37,162
Total revenue                $ 420,988          $ 45,927               12%            $ 375,061          $ 808,017          $ 89,306               12%            $ 718,711

Percentage of Total Revenue:
North America                       95  %                                                    95  %              94  %                                                    95  %
Europe                               5  %                                                     5  %               6  %                                                     5  %
Total revenue                      100  %                                                   100  %             100  %                                                   100  %

                                                  Three Months Ended June 30,                                                  Six Months Ended June 30,
                                 2021             Change            % Change              2020               2021             Change            % Change              2020
                                                                              (In thousands, rounding differences may occur)
Operating metrics:
Marketplace Service Requests     9,419                38               -%                 9,381             17,128             1,779               12%               15,349
Marketplace Monetized
Transactions                     5,006               492               11%                4,514              9,199             1,095               14%                8,104
Marketplace Transacting SPs        225                31               16%                  194
Advertising SPs                     40                 3               6%                    37


For the three months ended June 30, 2021 compared to the three months ended June
30, 2020
North America revenue increased $42.5 million, or 12%, driven by increases in
Marketplace Revenue of $34.4 million, or 12%, and Advertising and Other revenue
of $8.1 million, or 13%. The increase in Marketplace Revenue is due to an
increase in Angi Services revenue of $40.7 million, or 127%, due primarily to an
11% increase in Marketplace Monetized Transactions to 5.0 million, despite
Marketplace Service Requests being flat. The increase in Advertising and Other
Revenue is due primarily to an increase in Angi revenue driven by a 6% increase
in Advertising SPs.
Europe revenue increased $3.4 million, or 19%, due to strong growth in its
largest markets due to increased consumer demand and the favorable impact of the
weakening of the U.S dollar relative to the Euro and the British Pound.
For the six months ended June 30, 2021 compared to the six months ended June 30,
2020
North America revenue increased $79.4 million, or 12%, driven by increases in
Marketplace Revenue of $66.7 million, or 12%, and Advertising and Other revenue
of $12.7 million, or 10%. The increase in Marketplace Revenue is due to an
increase in Angi Services revenue of $62.5 million, or 96%, and an increase in
consumer connection revenue of $10.8 million, or 2%, due primarily to an
increase of 12% in Marketplace Service Requests to 17.1 million, resulting in a
14% increase in Marketplace Monetized Transactions to 9.2 million, slightly
outpacing the increase in Marketplace Service Requests. The increase in
Advertising and Other Revenue is due primarily to the factors described above in
the three-month section.
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Europe revenue increased $9.9 million, or 27%, due to strong growth across its
markets due to increased consumer demand and the favorable impact of the
weakening of the U.S dollar relative to the Euro and the British Pound.

Cost of revenue
                                               Three Months Ended June 30,                                                  Six Months Ended June 30,
                              2021              $ Change           % Change             2020               2021            $ Change           % Change             2020
                                                                                       (Dollars in thousands)
Cost of revenue
(exclusive of
depreciation shown
separately below)        $   69,704            $ 28,662               70%            $ 41,042          $ 123,532          $ 49,261               66%            $ 74,271
As a percentage of
revenue                        17%                                                       11%               15%                                                      10%


For the three months ended June 30, 2021 compared to the three months ended June
30, 2020
North America cost of revenue increased $28.6 million, or 70%, due primarily to
the growth of Angi Services, resulting in higher payments made to independent
third-party service professionals who perform work contracted under Angi
Services arrangements to complete service requests from consumers.
For the six months ended June 30, 2021 compared to the six months ended June 30,
2020
North America cost of revenue increased $49.3 million, or 67%, and increased as
a percentage of revenue, due primarily to factors described above in the
three-month discussion.
Selling and marketing expense
                                             Three Months Ended June 30,                                                   Six Months Ended June 30,
                            2021             $ Change           % Change              2020               2021            $ Change           % Change              2020
                                                                                      (Dollars in thousands)
Selling and marketing
expense                 $  239,031          $ 49,047               26%            $ 189,984          $ 444,871          $ 64,928               17%            $ 379,943
As a percentage of
revenue                      57%                                                      51%                55%                                                      53%


For the three months ended June 30, 2021 compared to the three months ended June
30, 2020
On a consolidated basis, selling and marketing expense increased to 57% of
revenue from 51% of revenue due primarily to the increase in selling and
marketing expense at North America.

North America selling and marketing expense increased $47.7 million, or 26%,
driven by increases in advertising expense of $29.0 million, compensation
expense of $14.2 million, and consulting costs of $4.2 million. The increase in
advertising expense was due primarily to increases of $21.9 million in online
marketing and $6.8 million in television spend. The increase in online marketing
spend was attributable to the brand integration initiative described above under
"Brand Integration Initiative". The increase in television spend in 2021
reflects the return to historical spending amounts as compared to the cost
cutting initiatives experienced during the second quarter of 2020 due to the
impact of COVID-19. The increase in compensation expense was due primarily to
increased commission expense, in addition to an increase in sales force
headcount. The increase in consulting costs was due primarily to various sales
initiatives at Angi Services.

Europe selling and marketing expense increased $1.3 million, or 21%, driven by
an increase in advertising expense of $1.9 million, partially offset by a
decrease in compensation expense of $0.5 million from lower headcount.
For the six months ended June 30, 2021 compared to the six months ended June 30,
2020
On a consolidated basis, selling and marketing expense increased to 55% of
revenue from 53% of revenue due primarily to the increase in selling and
marketing expense at North America.
North America selling and marketing expense increased $64.4 million, or 18%,
driven by increases in advertising expense of $35.0 million, compensation
expense of $23.2 million, and outsourced personnel and consulting costs of $7.1
million. The increase in advertising expense was due primarily to an increase in
online marketing spend, partially offset by a decrease in television spend. The
increase in online marketing spend was due primarily to the "Brand Integration
Initiative," described above. The decrease in television spend was due primarily
to reduced spend in the first quarter of 2021 compared to the prior
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year period in anticipation of the aforementioned "Brand Integration
Initiative," described above. The increase in compensation expense was due
primarily to the factors described above in the three-month discussion. The
increase in outsourced personnel and consulting costs were due primarily to
various sales initiatives at Angi Services.
Europe selling and marketing expense increased $0.5 million, or 2%, driven by an
increase in advertising expense of $1.7 million, partially offset by a decrease
in compensation expense of $1.1 million from lower headcount.
General and administrative expense
                                                Three Months Ended June 30,                                                   Six Months Ended June 30,
                                2021             $ Change           % Change             2020               2021            $ Change           % Change              2020
                                                                                         (Dollars in thousands)
General and administrative
expense                    $   107,486          $ 22,035               26%            $ 85,451          $ 195,648          $ 15,641               9%             $ 180,007
As a percentage of revenue      26%                                                       23%               24%                                                      25%


For the three months ended June 30, 2021 compared to the three months ended June
30, 2020
North America general and administrative expense increased $20.1 million, or
25%, due primarily to $9.6 million in one-time costs as a result of the Company
reducing its real estate footprint, an $8.4 million increase in professional
fees, and a $1.9 million increase in the provision for credit losses. The real
estate related costs are the result of impairments of right-of-use lease assets,
leasehold improvements and furniture and equipment associated with office space
we are vacating. The increase in professional fees is due primarily to an
increase in outsourced personnel costs, legal fees, and recruiting fees. The
increase in outsourced personnel costs is due primarily to an increase in call
volume related to our customer service function. The increase in the provision
for credit losses is driven by higher Marketplace Revenue.

Europe general and administrative expense increased $2.0 million, or 34%, due
primarily to a $0.9 million increase in professional fees related to corporate
restructuring activities and a $0.5 million increase in compensation expense.
For the six months ended June 30, 2021 compared to the six months ended June 30,
2020
North America general and administrative expense increased $6.9 million, or 4%,
due primarily to an increase of $11.4 million in professional fees, $9.6 million
in one-time costs related to the Company reducing its real estate footprint
described above in the three-month discussion, a $3.2 million increase in the
provision for credit losses, and a $2.3 million increase in software license and
maintenance costs, partially offset by a decrease of $22.0 million in
compensation expense. The increase in professional fees and provision for credit
losses were due primarily to the factors described above in the three-month
discussion. The increase in software license and maintenance expense was due
primarily to increased investment in software to support our customer service
function. The decrease in compensation expense was due primarily to a decrease
of stock-based compensation expense of $28.2 million, partially offset by an
increase of $5.5 million in wage related expenses resulting primarily from
annual wage increases. The decrease in stock-based compensation expense was due
primarily to $17.3 million in stock appreciation rights expense recognized in
the first half of 2020, which was not incurred in 2021 as the awards became
fully vested in 2020, and a net decrease of $7.7 million due to the reversal of
previously recognized expense related to unvested awards that were forfeited due
to management departures in the first quarter of 2021, partially offset by the
issuance of new equity awards since 2020.

Europe general and administrative expense increased $8.8 million, or 65%, due
primarily to a charge of $6.0 million related to the acquisition of an
additional 21% interest in our MyBuilder business at a premium to fair value,
and a $1.4 million increase in professional fees related to restructuring in
Germany.
Product development expense
                                                          Three Months Ended June 30,                                                    Six Months Ended June 30,
                                         2021               $ Change           % Change             2020               2021             $ Change           % Change             2020
                                                                                                  (Dollars in thousands)
Product development expense        $    18,752             $  3,345               22%            $ 15,407          $   36,799          $  4,308               13%            $ 32,491
As a percentage of revenue                4%                                                         4%                 5%                                                       5%




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For the three months ended June 30, 2021 compared to the three months ended June
30, 2020
North America product development expense increased $1.5 million, or 11%, due
primarily to increases in compensation expense of $0.8 million, and software
license and maintenance expense of $0.4 million. The increase in compensation
expense is driven by higher salary expense, due, in part, to increased
headcount, partially offset by capitalized internally developed software
expenses.
Europe product and development expense increased $1.9 million, or 75%, due to an
increase in compensation expense of $1.6 million as a result of fewer projects
being capitalized.
For the six months ended June 30, 2021 compared to the six months ended June 30,
2020
North America product development expense increased $1.0 million, or 4%, due
primarily to increases in outsourced personnel and consulting costs of $0.7
million and software license and maintenance expense of $0.4 million. The
increase in outsourced personnel and consulting costs were in support of
projects for the Angi brand change.
Europe product and development expense increased $3.3 million, or 63%, due to an
increase in compensation expense of $3.1 million due primarily to factors
described above in the three-month discussion.
Depreciation
                                                          Three Months Ended June 30,                                                    Six Months Ended June 30,
                                         2021               $ Change           % Change             2020               2021             $ Change           % Change             2020
                                                                                                  (Dollars in thousands)
Depreciation                       $    15,058             $  2,503               20%            $ 12,555          $   31,027          $  6,334               26%            $ 24,693
As a percentage of revenue                4%                                                         3%                 4%                                                       3%


For the three and six months ended June 30, 2021 compared to the three and six
months ended June 30, 2020
North America and Europe depreciation in 2021 increased from 2020 due primarily
to investments in capitalized software to support our products and services.
Operating (loss) income
                                                  Three Months Ended June 30,                                                  Six Months Ended June 30,
                                 2021              $ Change           % Change             2020               2021             $ Change           % Change             2020
                                                                                          (Dollars in thousands)
North America                $  (32,127)         $ (48,317)              NM             $ 16,190          $ (22,550)         $ (30,632)              NM             $ 8,082
Europe                             (604)            (2,058)              NM                1,454            (10,072)            (3,338)             (50)%            (6,734)
Total                        $  (32,731)         $ (50,375)              NM             $ 17,644          $ (32,622)         $ (33,970)              NM             $ 1,348

As a percentage of revenue       (8)%                                                       5%                (4)%                                                      -%


________________________
NM = Not meaningful
For the three months ended June 30, 2021 compared to the three months ended June
30, 2020
North America operating income decreased $48.3 million to a loss of $32.1
million due to a decrease in Adjusted EBITDA of $60.3 million, described below,
and an increase of $2.2 million in depreciation, partially offset by decreases
of $9.2 million in amortization of intangibles and $5.0 million in stock-based
compensation expense. The increase in depreciation was due primarily to the
investments in capitalized software to support our products and services. The
decrease in stock-based compensation expense was due primarily to $5.6 million
for stock appreciation rights and options expense recognized in the second
quarter of 2020 which were not incurred in 2021 as the awards became fully
vested. The decrease in the amortization of intangibles was due primarily to
certain intangible assets becoming fully amortized during 2020.

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Europe operating income decreased $2.1 million to a loss of $0.6 million due
primarily to an increase in Adjusted EBITDA loss of $2.0 million, described
below, and an increase of $0.2 million in stock-based compensation expense,
partially offset by a decrease of $0.1 million in amortization of intangibles.

At June 30, 2021, there is $74.3 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 2.7 years.
For the six months ended June 30, 2021 compared to the six months ended June 30,
2020
North America operating income decreased $30.6 million to a loss of $22.5
million due to a decrease in Adjusted EBITDA of $70.6 million, described below,
and an increase of $5.5 million in depreciation, partially offset by decreases
of $28.4 million in stock-based compensation expense and $17.0 million in
amortization of intangibles. The increase in depreciation and decrease in
stock-based compensation expense was due primarily to the factors discussed in
the general and administrative expense section above. The decrease in
amortization of intangibles was due primarily to the factors described above in
the three-month discussion.

Europe operating loss increased $3.3 million, or 50%, due primarily to an
increase in Adjusted EBITDA loss of $3.0 million, described below, and an
increase of $0.3 million in stock-based compensation expense, partially offset
by a decrease of $0.2 million in amortization of intangibles.
Adjusted EBITDA
                                                  Three Months Ended June 30,                                                  Six Months Ended June 30,
                                 2021              $ Change           % Change             2020              2021             $ Change           % Change             2020
                                                                                          (Dollars in thousands)
North America                $   (5,302)         $ (60,343)              NM             $ 55,041          $ 25,863          $ (70,569)             (73)%           $ 96,432
Europe                              860             (2,035)             (70)%              2,895            (7,119)            (3,020)             (74)%             (4,099)
Total                        $   (4,442)         $ (62,378)              NM             $ 57,936          $ 18,744          $ (73,589)             (80)%           $ 92,333

 As a percentage of revenue      (1)%                                                       15%               2%                                                       13%


For a reconciliation of net (loss) earnings attributable to Angi Inc.
shareholders to operating (loss) income to consolidated Adjusted EBITDA, see
"  Principles of Financial Reporting  ." 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  ."
For the three months ended June 30, 2021 compared to the three months ended June
30, 2020
North America Adjusted EBITDA decreased $60.3 million to a loss of $5.3 million,
despite higher revenue of $45.9 million, due primarily to increases in selling
and marketing expense of $47.7 million, cost of revenue of $28.6 million, and
general and administrative expense of $25.6 million (excluding stock-based
compensation expense); each of which are described above.
Europe Adjusted EBITDA decreased $2.0 million, or 70%, as higher revenue of $3.4
million was more than offset by the increases in general and administrative
expense of $2.2 million (excluding stock-based compensation expense), product
development expense of $1.9 million and selling and marketing expense of $1.3
million; each of which are described above.
For the six months ended June 30, 2021 compared to the six months ended June 30,
2020
North America Adjusted EBITDA decreased $70.6 million, or 73%, to $25.9 million,
despite higher revenue of $89.3 million, due primarily to increases in selling
and marketing expense $64.4 million, cost of revenue $49.3 million, and general
and administrative expense (excluding stock-based compensation expense) of $35.1
million; each of which are described above. Included in these increases are
$4.0 million in expense related to impairments at the Fixd Services business and
from management changes in the first quarter of 2021, and an increase of $3.2
million in provision for credit losses due to higher Marketplace Revenue.
Europe Adjusted EBITDA loss increased $3.0 million, or 74%, due primarily to the
increase in general and administrative expense of $9.1 million (excluding
stock-based compensation expense), including a charge of $6.0 million related to
the
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Table of contents acquisition of an additional 21% stake in MyBuilder at a premium to fair value, and increased product development costs from $ 3.3 million, partially offset by an increase in $ 9.9 million In income.

Interest charges

Interest expense relates to interest on the ANGI Group Senior Notes and ANGI
Group Term Loan and commitment fees on the undrawn ANGI Group 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 June 30,                                                    Six Months Ended June 30,
                                    2021               $ Change           % Change             2020               2021              $ Change           % Change             2020
                                                                                                 (In thousands)
Interest expense             $    5,814               $  4,194               NM             $ 1,620          $   12,431            $  8,537               NM             $ 3,894


For the three months ended June 30, 2021 compared to the three months ended June
30, 2020
Interest expense increased due primarily to the issuance of the ANGI Group
Senior Notes in August 2020, partially offset by a decrease in interest expense
due to the repayment of the ANGI Group Term Loan during the second quarter of
2021.
For the six months ended June 30, 2021 compared to the six months ended June 30,
2020
Interest expense increased due primarily to the issuance of the Senior Notes in
August 2020, partially offset by a decrease in interest expense of the ANGI
Group Term Loan due primarily to lower interest rates and the decrease in the
average outstanding balance compared to the prior year period.
Other (expense) income, net
                                           Three Months Ended June 30,                                                   Six Months Ended June 30,
                           2021              $ Change           % Change            2020                2021               $ Change           % Change            2020
                                                                                         (In thousands)
Other (expense)
income, net            $     (636)         $    (848)              NM             $  212          $    (1,403)            $ (2,036)              NM             $  633


For the three months ended June 30, 2021 and 2020
Other expense, net in 2021 primarily includes the write-off of $1.1 million of
deferred debt issuance costs related to the ANGI Group Term Loan which was
repaid in its entirety during the second quarter of 2021, partially offset by a
net foreign currency exchange gain of $0.4 million and interest income of $0.1
million.
Other income, net in 2020 principally includes interest income of $0.2 million.
For the six months ended June 30, 2021 and 2020
Other expense, net in 2021 primarily includes the write-off of $1.1 million of
deferred debt issuance costs related to the ANGI Group Term Loan which was
repaid in its entirety during the second quarter of 2021 and net foreign
currency exchange losses of $0.5 million, partially offset by interest income of
$0.1 million.
Other income, net in 2020 primarily includes interest income of $1.4 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 Inc. shares during the first quarter
of 2020.
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Income tax benefit (provision)
                                               Three Months Ended June 30,                                                   Six Months Ended June 30,
                               2021              $ Change           % Change             2020               2021             $ Change           % Change             2020
                                                                                       (Dollars in thousands)
Income tax benefit
(provision)              $    9,129             $ 12,154               NM             $ (3,025)         $   18,418          $ 12,478              210%            $ 5,940
Effective income tax
rate                           23%                                                        19%                40%                                                      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 ended June 30, 2021 compared to the three months ended June
30, 2020
In 2021, the effective income tax rate was higher than the statutory rate of 21%
due primarily to the benefit of the change in the annual expected effective
income tax rate, partially offset by nondeductible stock-based compensation
expense.
In 2020, the effective income tax rate was lower than the statutory rate of 21%
due primarily to benefiting previously unbenefited foreign net operating loss
carryforwards.
For the six months ended June 30, 2021 compared to the six months ended June 30,
2020
In 2021, the effective income tax rate was higher than the statutory rate of 21%
due primarily to excess tax benefits generated by the exercise and vesting of
stock-based awards.

In 2020, the Company recorded an income tax benefit of $5.9 million. The income
tax benefit was due primarily to a $5.7 million reduction to deferred taxes due
to the true-up of the state tax rate of an indefinite-lived intangible asset and
benefiting previously unbenefited foreign net operating loss carryforwards.

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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. Adjusted EBITDA has certain limitations
because it excludes the impact of these expenses.
The following table reconciles net (loss) earnings attributable to Angi Inc.
shareholders to operating (loss) income to consolidated Adjusted EBITDA:
                                                                 Three Months Ended June 30,                 Six Months Ended June 30,
                                                                    2021                 2020                 2021                 2020
                                                                                             (In thousands)

Net income (loss) attributable to Angi inc. shareholders $ (30,293) $ 12,667 $ (28,362) $ 3,709
Add back: Net profit attributable to non-controlling interests

                    241               544                     324               318
Income tax (benefit) provision                                        (9,129)            3,025                 (18,418)           (5,940)
Other expense (income), net                                              636              (212)                  1,403              (633)
Interest expense                                                       5,814             1,620                  12,431             3,894
Operating (loss) income                                              (32,731)           17,644                 (32,622)            1,348
Add back:
Stock-based compensation expense                                       9,543            14,759                  11,577            40,334
Depreciation                                                          15,058            12,555                  31,027            24,693
Amortization of intangibles                                            3,688            12,978                   8,762            25,958
Adjusted EBITDA                                              $        (4,442)         $ 57,936          $       18,744          $ 92,333


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 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.
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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 RESOURCES
Financial Position
                                                                                           December 31,
                                                                    June 30, 2021              2020
                                                                           

(In thousands) Cash and cash equivalents and negotiable debt securities:
United States

                                                     $      563,024          $    793,679
All other countries                                                       21,236                19,026
Total cash and cash equivalents                                          584,260               812,705
Marketable debt securities (United States)                                     -                49,995
Total cash and cash equivalents and marketable debt
securities                                                        $      584,260          $    862,700

Long-term debt:
Senior Notes                                                      $      500,000          $    500,000
Term Loan                                                                      -               220,000
Total long-term debt                                                     500,000               720,000

Less: unamortized debt issuance costs                                      5,805                 7,723
Total long-term debt, net                                         $      494,195          $    712,277


The Company's international cash can be repatriated without significant tax
consequences.
For a detailed description of long-term debt, see "  Note 4-Long-term Debt  " to
the consolidated financial statements included in "  Item 1. Consolidated
Financial Statements  ."
Cash Flow Information
In summary, the Company's cash flows are as follows:
                                          Six Months Ended June 30,
                                             2021                2020
                                               (In thousands)
Net cash provided by (used in):
Operating activities                $       59,253            $ 127,797
Investing activities                $       15,037            $ (23,934)
Financing activities                $     (303,171)           $ (72,863)


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 stock-based compensation expense, provision for credit
losses, amortization of intangibles, depreciation, impairment of long-lived and
right-of-use assets, and deferred income taxes.
2021
Adjustments to earnings consist primarily of $42.7 million of provision for
credit losses, $31.0 million of depreciation, $12.3 million of impairment
charges on long-lived and right-of-use assets, $11.6 million of stock-based
compensation expense, $8.8 million of amortization of intangibles, and $4.7
million of revenue reserves, partially offset by $20.3 million of deferred
income taxes. The decrease from changes in working capital consists primarily of
an increase of $63.2 million in accounts receivable partially offset by
increases of $43.2 million in accounts payable and other liabilities and $5.3
million of deferred revenue. 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. The increase in deferred revenue is driven primarily by
increases in membership payments.
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Net cash provided by investing activities includes proceeds of $50.0 million
from the maturities of marketable debt securities, partially offset by $35.7
million of capital expenditures, primarily related to investments in capitalized
software to support the Company's products and services.
Net cash used in financing activities includes $220.0 million for the prepayment
of the ANGI Group Term Loan, which otherwise would have matured on November 5,
2023, $54.6 million for the payment of withholding taxes on behalf of employees
for stock-based awards that were net settled, $22.9 million for the purchase of
redeemable noncontrolling interests, and $5.6 million for the repurchase of 0.5
million shares of Angi Inc. Class A common stock, on a settlement date basis, at
an average price of $11.87 per share.
2020
Adjustments to earnings consist primarily of $40.3 million of stock-based
compensation expense, $39.3 million of provision for credit losses expense,
$26.0 million of amortization of intangibles, and $24.7 million of depreciation,
partially offset by $6.3 million of deferred income taxes. The deferred income
tax benefit primarily relates to an adjustment to deferred taxes resulting from
a true-up of the state tax rate. The decrease from changes in working capital
consists primarily of an increase in accounts receivable of $48.2 million,
partially offset by an increase in accounts payable and other liabilities of
$35.9 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.
Net cash provided by investing activities includes capital expenditures of $24.7
million, primarily related to investments in capitalized software to support the
Company's products and services and leasehold improvements.
Net cash used in financing activities includes $54.4 million for the repurchase
of 7.7 million shares of ANGI common stock, on a settlement date basis, at an
average price of $7.02 per share, $11.5 million for the payment of withholding
taxes on behalf of employees for stock-based awards that were net settled, $6.9
million for the principal payments on the ANGI Group Term Loan, and $3.2 million
for the purchase of redeemable noncontrolling interests, partially offset by a
$3.1 million payment from IAC pursuant to the tax sharing agreement.

Liquidity and Capital Resources
Financing Arrangements
The ANGI Group Senior Notes were issued on August 20, 2020, the proceeds of
which are intended for general corporate purposes, including potential future
acquisitions and return of capital.

From May 6, 2021, the outstanding balance of the ANGI group term loan has been fully repaid. The outstanding balance of the ANGI group term loan at
December 31, 2020 has been $ 220.0 million and bore interest at 2.16%.

The $250.0 million ANGI Group Revolving Facility, which otherwise would have
expired on November 5, 2023, was terminated effective August 3, 2021. No amounts
were ever drawn under the ANGI Group Revolving Facility prior to its
termination.

Share Repurchase Authorizations and Activity
During the six months ended June 30, 2021, the Company repurchased 0.5 million
shares, on a trade date basis, of its common stock at an average price of $11.87
per share, or $5.6 million in aggregate. From July 1, 2021 through August 3,
2021, Angi Inc. repurchased an additional 0.7 million shares at an average price
of $11.68 per share, or $7.7 million in aggregate. Angi Inc. has 18.1 million
shares remaining in its share repurchase authorization as of August 3, 2021. The
Company may purchase shares over an indefinite period of time on the open market
and in privately negotiated transactions, depending on those factors Angi Inc.
management deems relevant at any particular time, including, without limitation,
market conditions, share price and future outlook.

Outstanding Stock-based Awards
The Company may settle equity awards on a gross or a net basis upon factors
deemed relevant at the time, and if settled on a net basis, with Angi remits
withholding taxes on behalf of the employee At IAC/InterActiveCorp's ("IAC")
option, certain Angi stock appreciation rights can be settled in either Class A
shares of Angi or shares of IAC common stock. If settled in IAC
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common stock, the Company reimburses IAC in either cash or through the issuance
of Class A shares to IAC. The Company currently settles all equity awards on a
net basis.
Pursuant to the employee matters agreement, in the event of a distribution of
Angi capital stock to IAC stockholders in a transaction intended to qualify as
tax-free for U.S. federal income tax purposes, the Compensation Committee of the
IAC Board of Directors has the exclusive authority to determine the treatment of
outstanding IAC equity awards. Such authority includes (but is not limited to)
the ability to convert all or part of IAC equity awards outstanding immediately
prior to the distribution into equity awards denominated in shares of Angi
Class A Common Stock for no compensation, which Angi would be obligated to
assume and which would be dilutive to Angi's stockholders.
The following table summarizes the aggregate intrinsic value of all awards
outstanding as of July 30, 2021; assuming these awards were net settled on that
date, the withholding taxes that would be paid by the Company on behalf of
employees upon exercise or vesting that would be payable (assuming these equity
awards are net settled with a 50% tax rate), and the shares that would have been
issued are as follows:
                                            Aggregate intrinsic             Estimated            Estimated shares to
                                              value of awards           withholding taxes             be issued
                                                outstanding                  payable
                                                                         (In thousands)
Stock appreciation rights                   $           8,455          $          4,228                     367
Other equity awards(a)(b)                             164,636                    69,216                   6,157
Total outstanding employee stock-based
awards                                      $         173,091          $         73,444                   6,524


_______________
(a)Includes stock options, RSUs, and subsidiary denominated equity.
(b)The number of shares ultimately needed to settle subsidiary denominated
equity awards and the cash withholding tax obligation may vary significantly as
a result of the determination of the fair value of the relevant award at the
time of exercise. In addition, the number of shares required to settle these
awards will be impacted by movement in the Company's stock price.

Capital Expenditures
The Company's 2021 capital expenditures are expected to be higher than 2020
capital expenditures of $52.5 million by approximately 35% to 40%, due primarily
to increased investment in capitalized software to support the development of
our products and services.
Liquidity Assessment
The Company's liquidity could be negatively affected by a decrease in demand for
its 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 adversely impacted the Company's business.

At June 30, 2021, IAC held all Class B shares of Angi Inc., which represent
84.1% of the economic interest and 98.1% of the voting interest of the Company.
As a result, IAC has the ability to control Angi Inc.'s financing activities,
including the issuance of additional debt and equity securities by Angi Inc. or
any of its subsidiaries, or the incurrence of other indebtedness generally.
While Angi Inc. 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 Inc.'s capital
stock and its representation on the Angi Inc. board of directors. Additional
financing may not be available on terms favorable to the Company or at all. In
addition, the Company's existing indebtedness could limit its ability to obtain
additional financing.
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 foreseeable
future.
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                            CONTRACTUAL OBLIGATIONS
During the six months ended June 30, 2021, other than the repayment of the
outstanding balance of the ANGI Group Term Loan of $220.0 million, 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,
2020.

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