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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
☒
☐
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 2020
Or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from__________to__________
Commission File No. 001-38220
ANGI HOMESERVICES INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction
of incorporation or organization)
82-1204801
(I.R.S. Employer Identification No.)
3601 Walnut Street, Denver, CO 80205
(Address of registrant's principal executive offices)
(303) 963-7200
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Class A Common Stock, par value $0.001
Trading Symbol
ANGI
Name of exchange on which registered
The Nasdaq Stock Market LLC
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such
files). Yes ☒ No ☐
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or
an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth
company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐
Smaller reporting
company
☐
Emerging growth
company
☐
If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any
new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal
control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.7262(b)) by the registered public accounting firm that prepared or
issued its audit report. ☒
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of January 29, 2021, the following shares of the Registrant's Common Stock were outstanding:
Class A Common Stock
Class B Common Stock
Class C Common Stock
Total outstanding Common Stock
78,192,070
421,861,990
—
500,054,060
The aggregate market value of the voting common stock held by non-affiliates of the Registrant as of June 30, 2020 was $891,291,134. For the purpose
of the foregoing calculation only, all directors and executive officers of the Registrant are assumed to be affiliates of the Registrant.
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Portions of the Registrant's proxy statement for its 2021 Annual Meeting of Stockholders are incorporated by reference into Part III herein.
DOCUMENTS INCORPORATED BY REFERENCE:
TABLE OF CONTENTS
Page
Number
Business
Item 1.
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 2.
Properties
Item 3.
Item 4. Mine Safety Disclosures
Legal Proceedings
PART I
PART II
Item 5. Market For Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Selected Financial Data
Item 6.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 8.
Consolidated Financial Statements and Supplementary Data
Note 1—Organization
Note 2—Summary of Significant Accounting Policies
Note 3—Income Taxes
Note 4—Business Combinations
Note 5—Goodwill and Intangible Assets
Note 6—Financial Instruments and Fair Value Measurements
Note 7—Long-term Debt
Note 8—Shareholders' Equity
Note 9—Accumulated Other Comprehensive Income (Loss)
Note 10—Earnings (Loss) per Share
Note 11—Stock-based Compensation
Note 12—Segment Information
Note 13—Leases
Note 14—Commitments and Contingencies
Note 15—Related Party Transactions with IAC
Note 16—Benefit Plans
Note 17—Consolidated Financial Statement Details
Note 18—Quarterly Results (Unaudited)
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
Item 9.
Item 9A. Controls and Procedures
Item 9B. Other Information
PART III
Item 10. Directors, Executive Officers and Corporate Governance
Item 11. Executive Compensation
Item 12.
Item 13. Certain Relationships and Related Transactions, and Director Independence
Item 14.
Principal Accounting Fees and Services
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Item 15. Exhibits, Financial Statement Schedules
PART IV
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Item 1. Business
Who We Are
PART I
OVERVIEW
ANGI Homeservices Inc. connects quality home service professionals across 500 different categories, from repairing and
remodeling to cleaning and landscaping, with consumers. Over 240,000 domestic service professionals actively sought
consumer matches, completed jobs or advertised work through ANGI Homeservices’ platforms and consumers turned to at least
one of our brands to find a professional for approximately 32 million projects during the year ended December 31, 2020. ANGI
Homeservices has established category-transforming products with brands such as HomeAdvisor, Angie’s List, and Handy.
The Company has two operating segments: (i) North America (United States and Canada), which primarily includes the
operations of HomeAdvisor, Angie’s List, Handy, and HomeStars, and (ii) Europe, which includes the operations of Travaux,
MyHammer, MyBuilder, Werkspot and Instapro.
As used herein, “ANGI Homeservices,” the “Company,” “we,” “our,” “us” and similar terms refer to ANGI Homeservices
Inc. and its subsidiaries (unless the context requires otherwise).
History
We have been incorporated in the State of Delaware since 2017 and operate under the name ANGI Homeservices Inc. We
are a publicly traded holding company that was formed to facilitate the combination of IAC/InterActiveCorp’s (“IAC”)
HomeAdvisor business and Angie’s List, Inc. (the “Combination”), which was completed on September 29, 2017.
We acquired Handy Technologies, Inc. (“Handy”), a leading platform in the United States for connecting individuals
looking for household services (primarily cleaning and handyman services) with top-quality, pre-screened independent service
professionals, on October 19, 2018. Prior to its sale on December 31, 2018, we also operated Felix, a pay-per-call advertising
service business, which was included in our North America segment. ANGI also owns and operates Fixd Repair, a home
warranty and service company, mHelpDesk, a provider of cloud-based field service software for small to mid-size businesses,
and CraftJack, a third-party lead generation service that connects home service professionals with consumers looking to
complete home projects.
DESCRIPTION OF OUR BUSINESSES
Marketplace
Overview
The HomeAdvisor digital marketplace service (“HomeAdvisor”) connects consumers with service professionals
nationwide for home repair, maintenance and improvement projects. HomeAdvisor provides consumers with tools and
resources to help them find local, pre-screened and customer-rated service professionals, as well as instantly book appointments
online. HomeAdvisor also connects consumers with service professionals instantly by telephone, as well as offers several home
services-related resources, such as cost guides for different types of home services projects. Handy connects consumers looking
for household services (primarily cleaning and handyman services) with top-quality, pre-screened independent service
professionals. Consumers request and pay for household services directly through the Handy platform and Handy fulfills the
request through the use of independently established home services providers engaged in a trade, occupation and/or business
that customarily provides such services. Together, we refer to the HomeAdvisor and Handy businesses in the United States as
the “Marketplace.” All Marketplace matching and pre-priced booking services and related tools and directories are provided to
consumers free of charge.
As of December 31, 2020, the Marketplace had a network of approximately 208,000 transacting service professionals, each
of whom paid for consumer matches and/or performed a job sourced or booked through HomeAdvisor and/or Handy.
Collectively, this service professional network provided services in more than 500 categories, ranging from cleaning and
installation services to simple home repairs and larger home remodeling projects, and 400 discrete geographic areas in the
United States. The Marketplace generated approximately 32 million service requests during the year ended December 31, 2020.
Service requests consist of fully completed domestic service requests submitted to HomeAdvisor and completed jobs sourced
through the HomeAdvisor and Handy platforms.
Consumer Services
Consumers can submit a request to be matched with a Marketplace service professional through the HomeAdvisor and
Handy platforms, as well as through certain paths on the Angie’s List, Inc. (“Angie’s List”) platform and various third-party
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affiliate platforms. Depending on the nature of the service request and the path through which it was submitted, consumers are
generally matched with up to four HomeAdvisor service professionals, a Handy service professional or a combination of
HomeAdvisor service professionals and service professionals from the Angie’s List nationwide directory (as and if available for
the given service request).
Matches made through HomeAdvisor platforms and paths and various third-party affiliate platforms are made by way of
HomeAdvisor’s proprietary algorithm, based on several factors (including the type of services desired, location and the number
of service professionals available to fulfill the request). Matches made through Handy platforms and paths are based on the type
of service desired, location and the date and time the consumer wants the service to be provided.
In all cases, service professionals may contact consumers with whom they have been matched directly and consumers can
generally review profiles, ratings and reviews of presented service professionals and select the service professional whom they
believe best meets their specific needs. Consumers are under no obligation to work with any service professional(s) referred by
or found through any of our branded or third-party affiliate platforms.
For matches described above, in the case of HomeAdvisor service professionals, consumers are responsible for booking the
service and paying the service professional directly either separately or via the HomeAdvisor Pro-Pay App. Our mobile
payments platform on our app allows consumers to pay service professionals directly through our mobile app. In 2020, we
expanded our mobile payment platform with the launch of a financing payment option, administered by a third party, to provide
consumers a convenient, contactless alternative to pay for any home improvement job, no matter the project type or size. In the
case of Handy service professionals, 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.
In addition to the general matching services described above, HomeAdvisor also provides several on-demand services,
including Instant Booking and Instant Connect. Also, in the case of certain tasks, HomeAdvisor provides a pre-priced booking
service, 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. Lastly, consumers can also access the online
HomeAdvisor True Cost Guide, which provides project cost information for more than 400 project types nationwide, as well as
a library of home services-related content consisting primarily of articles about home improvement, repair and maintenance,
tools to assist consumers with the research, planning and management of their projects and general advice for working with
service professionals.
In addition to the general matching services described above, in certain markets, consumers can also submit a request to
book a specific Handy service professional for a given job. Also, consumers who purchase furniture, electronics, appliances and
other home-related items from select third-party retail partners online (and in certain markets, in store) can simultaneously
purchase assembly, installation and other related services to be fulfilled by Handy service professionals, which are then paid for
directly through the applicable third-party retail partner platform.
Service Professional Services
HomeAdvisor service professionals pay fees for consumer matches and membership subscription fees for HomeAdvisor
memberships, which are available for purchase through our sales force. The basic HomeAdvisor annual membership package
includes membership in the HomeAdvisor network of service professionals, as well as access to consumer matches through
HomeAdvisor platforms and a listing in the HomeAdvisor online directory and certain other affiliate directories. Membership
also includes a business profile page on HomeAdvisor.com, a mobile application and access to various online tools designed to
help service professionals more effectively market to, manage and connect with, consumers with whom they are matched. In
addition to the commercial membership terms, in order to be admitted into the HomeAdvisor network, service professionals
must satisfy certain criteria, including verification of any required state-level licensing and the owner or principal passing
certain criminal background checks. Once in the network, the service professional must maintain at least a three-star customer
rating. If a service professional in the HomeAdvisor network fails to meet any eligibility criteria during the term of its contract,
refuses to participate in our complaint resolution process, or engages in what we determine to be prohibited behavior through
any of our service channels, the service professional is subject to being removed from our network.
Service professionals on the Handy platform are provided with access to a pool of consumers seeking service professionals.
Professionals must validate their home service experience as well as satisfy credential verification and a background check,
either as an individual professional or as the owner or principal of the business. Service professionals must maintain an
acceptable rating to remain on the Handy platform. Access to the Handy platform will be revoked for repeatedly receiving low
customer satisfactions ratings.
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Angie’s List
Overview
Angie’s List connects consumers with service professionals for local services through a nationwide online directory of
service professionals in over 700 service categories, as well as provides consumers with valuable tools, services and content
(including verified reviews of local service professionals), to help them research, shop and hire for local services. Consumers
can access the Angie’s List nationwide online directory and related basic tools and services free of charge, as well as via
purchased membership packages. Angie’s List also sells time-based website, mobile and call center advertising to service
professionals.
Consumer Services
Through Angie’s List, consumers can currently register and search for a service professional in the Angie’s List
nationwide online directory and/or be matched with a service professional. Consumers who register can access ratings and
reviews and search for service professionals, as well as access certain promotions. Free registration is required in order to
access the directory and related basic tools and services. Two premium membership packages are available for a fee, which
include varying degrees of online and phone support, access to exclusive promotions and features and the award-winning
Angie’s List print magazine.
Consumers can rate service professionals listed in the Angie’s List nationwide online directory on an “A” to “F” grading
scale based on a variety of criteria, including overall experience, availability, price, quality, responsiveness, punctuality and
professionalism and other criteria, depending on the type of service provided. Ratings on each applicable criterion are weighted
across all reviews submitted for the service professional to produce such professional’s grade on Angie’s List. Consumers can
also provide a detailed description of (and commentary regarding) their service experience. Ratings and reviews cannot be
submitted anonymously and there are processes in place to prevent service professionals from reporting on themselves or their
competitors, as well as to detect fraudulent or otherwise problematic reviews.
Service Professional Services
Angie’s List provides service professionals with a variety of services and tools. Generally, service professionals with an
overall member grade below a “B” are not eligible for certification. Service professionals must satisfy certain criteria for
certification, including retaining the requisite member grade, and the owner passing certain criminal background checks and
attesting to applicable licensure requirements.
Once eligibility criteria are satisfied, service professionals must purchase term-based advertising to obtain certification. As
of December 31, 2020, we had approximately 39,000 certified service professionals under contract for advertising. If a certified
service professional fails to meet any eligibility criteria during the term of his or her contract, refuses to participate in our
complaint resolution process or engages in what we determine to be prohibited behavior through any of our service channels,
we suspend any existing advertising and exclusive promotions and the related advertising contract is subject to termination.
Certified service professionals rotate among the first service professionals listed in directory search results for an
applicable category (together with their company name, overall rating, number of reviews, certification badge and basic profile
information), with non-certified service professionals appearing below certified service professionals in directory search results.
Certified service professionals can also provide exclusive promotions to members. When consumers choose to be matched with
a service professional, HomeAdvisor’s proprietary algorithm will determine where a given service professional appears within
related results.
Our International Businesses
We also operate several international businesses that connect consumers with home service professionals. These
international businesses include: (i) Travaux, MyHammer and Werkspot, the leading home services marketplaces in France,
Germany and the Netherlands, respectively, (ii) MyBuilder, HomeStars and Instapro, leading home services marketplaces in the
United Kingdom, Canada and Italy, respectively, and (iii) the Austrian operations of MyHammer. We own controlling interests
in MyHammer and MyBuilder and wholly-own HomeStars, Travaux, Werkspot and Instapro. The business models of our
international businesses vary by jurisdiction and differ in certain respects from the HomeAdvisor and Handy business models.
Revenue
Our revenue is primarily derived from consumer connection revenue, which consists of fees paid by HomeAdvisor service
professionals for consumer matches (regardless of whether the service professional ultimately provides the requested service)
and revenue from completed jobs sourced through the HomeAdvisor and Handy platforms. Consumer connection revenue
varies based upon several factors, including the service requested, product experience offered and geographic location of
service.
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Revenue is also derived from: (i) sales of time-based website, mobile and call center advertising to service professionals
by Angie’s List, (ii) HomeAdvisor service professional membership subscription fees, (iii) membership subscription fees from
consumers and (iv) service warranty subscription and other services revenue.
Marketing
We market our various products and services to consumers primarily through digital marketing (primarily paid search
engine marketing, display advertising and third-party affiliate agreements) and traditional offline marketing (national television
and radio campaigns), as well as through e-mail. Pursuant to third-party affiliate agreements, third parties agree to advertise and
promote our products and services (and those of our service professionals) on their platforms. In exchange for these efforts,
these third parties are paid a fixed fee when visitors from their platforms click through and submit a valid service request
through our platforms, or when visitors submit a valid service request on the affiliate platform and the affiliate transmits the
service request to us. We also market our products and services to consumers through relationships with select third-party retail
partners and, to a lesser extent, through partnerships with other contextually related websites and direct mail.
We market HomeAdvisor matching services and membership subscriptions to service professionals primarily through our
sales forces based in the Denver, Colorado area; Lenexa, Kansas; New York, New York; Indianapolis, Indiana; and Chicago,
Illinois; as well as remotely based sales representatives. These products and services are also marketed, together with our
Handy products and services and our pre-priced bookings and various directories, through paid search engine marketing, digital
media advertising and direct relationships with trade associations and manufacturers. Term-based advertising and related
products are marketed to service professionals primarily through our Indianapolis based sales force.
We have made, and expect to continue to make, substantial investments in digital and traditional offline marketing (with
continued expansion into new and existing digital platforms) to consumers and service professionals to promote our products
and services and drive visitors to our various platforms and service professionals.
Technology
Each of our brands and businesses develops its own technology to support its products and services, leveraging both open-
source and vendor supported software technology. Each of our various brands and businesses has dedicated engineering teams
responsible for software development and the creation of new features to support our products and services across a full range
of devices (desktop, mobile web, native mobile applications and digital voice assistant platforms). Our engineering teams use
an agile development process that allows us to deploy frequent iterative releases for product and service features.
Competition
The home services industry is highly competitive and fragmented, and in many important respects, local in nature. We
compete with, among others: (i) search engines and online directories, (ii) home and/or local services-related platforms, (iii)
providers of consumer ratings, reviews and referrals and (iv) various forms of traditional offline advertising (primarily local in
nature), including radio, direct marketing campaigns, yellow pages, newspapers and other offline directories. We also compete
with local and national retailers of home improvement products that offer or promote installation services. We believe our
biggest competition comes from the traditional methods most people currently use to find service professionals, which are by
word-of-mouth and through referrals.
We believe that our ability to compete successfully will depend primarily upon the following factors:
•
•
•
•
•
•
the size, quality, diversity and stability of our network of service professionals and the breadth of our online directory
listings;
our ability to consistently generate service requests and pre-priced bookings through the Marketplace and leads
through our online directories that convert into revenue for our service professionals in a cost-effective manner;
our ability to increasingly engage with consumers directly through our platforms, including our various mobile
applications (rather than through search engine marketing or via free search engine referrals);
the functionality of our websites and mobile applications and the attractiveness of their features and our products and
services generally to consumers and service professionals, as well as our continued ability to introduce new products
and services that resonate with consumers and service professionals generally;
our ability to continue to build and maintain awareness of, and trust in and loyalty to, our various brands, particularly
our Angie’s List, HomeAdvisor and Handy brands; and
the quality and consistency of our service professional pre-screening processes and ongoing quality control efforts, as
well as the reliability, depth and timeliness of customer ratings and reviews.
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Intellectual Property
We regard our intellectual property rights as critical to our success generally, with our trademarks, service marks and
domain names being especially critical to the continued development and awareness of our brands and our marketing efforts.
We protect our intellectual property rights through a combination of trademarks, trade dress, domain name registrations,
trade secrets and patent applications, as well as through contractual restrictions and reliance on federal, state and common law.
We enter into confidentiality and proprietary rights agreements with employees, consultants, contractors and business partners,
and employees and contractors are also subject to invention assignment provisions.
We have several registered trademarks in the United States (the most significant of which relate to our Angie’s List and
HomeAdvisor brands), as well as other trademarks in Canada and Europe, and several pending trademark applications in the
United States and certain other jurisdictions. We have also registered a variety of domestic and international domain names, the
most significant of which relate to our HomeAdvisor and Angie’s List brands. In addition, we have one patent in the United
States that expires in November 2035 and six patent applications pending in the United States.
Government Regulation
We are subject to laws and regulations that affect companies conducting business on the Internet generally and through
mobile applications, including laws relating to the liability of providers of online services for their operations and the activities
of their users. As a result, we could be subject to claims based on negligence, various torts and trademark and copyright
infringement, among other actions.
In addition, because we receive, transmit, store and use a substantial amount of information received from or generated by
consumers and service professionals, we are also impacted by laws and regulations governing privacy, the storage, sharing, use,
processing, disclosure and protection of personal data and data breaches. See “Item 1A-Risk Factors-Risks Related to Our
Business and Industry-The processing, storage, use and disclosure of personal data could give rise to liabilities and increased
costs.”
We are particularly sensitive to laws and regulations that adversely impact the popularity or growth in use of the Internet
and/or online products and services generally, restrict or otherwise unfavorably impact the ability or manner in which we
provide our products and services, regulate the practices of third parties upon which we rely to provide our products and
services and undermine open and neutrally administered Internet access. For example, in April 2019, the United Kingdom
published proposed legislation that would create a new regulatory body responsible for establishing duties of care for Internet
companies and for assessing related compliance. As proposed, failure to comply with the legislation could result in fines,
blocking of services and personal liability for senior management. To the extent our businesses are required to implement new
measures and/or make changes to our products and services to ensure compliance, our business, financial condition and results
of operations could be adversely affected. Compliance with this legislation or similar or more stringent legislation in other
jurisdictions could be costly, and the failure to comply could result in service interruptions and negative publicity, any or all of
which could adversely affect our business, financial condition and results of operations. In addition, in December 2017, the U.S.
Federal Communications Commission (the “FCC”) adopted an order reversing net neutrality protections in the United States,
including the repeal of specific rules against blocking, throttling or “paid prioritization” of content or services by Internet
service providers. To the extent Internet service providers take such actions, our business, financial condition and results of
operations could be adversely affected. Similarly, there have been various legislative efforts to restrict the scope of the
protections available to online platforms under Section 230 of the Communications Decency Act, and our current protections
from liability for third-party content in the United States could decrease or change as a result. Any future adverse changes to
Section 230 could result in additional compliance costs for us and/or exposure for additional liabilities.
We are also generally sensitive to the adoption of new tax laws. The European Commission and several European
countries have recently adopted (or intend to adopt) proposals that would change various aspects of the current tax framework
under which our European businesses are taxed, including proposals to change or impose new types of non-income taxes
(including taxes based on a percentage of revenue). For example, France enacted a Digital Services Tax in 2019, which is
applicable to revenues over specified thresholds generated by businesses that provide intermediary services (any digital
interface that enables users to contact and interact with others) to, and/or publish advertising-based user data linked to, users
residing in France. The proposal, which is applicable retroactively to revenues earned from and after January 1, 2019, would
likely apply to our operations in France. The United Kingdom previously enacted a similar proposal, the Digital Services Tax,
which is applicable to revenues of social media platforms, online marketplaces and search engines linked to users residing in
the United Kingdom and earned from and after April 1, 2020, which applies to certain of our operations in United
Kingdom. One or more of these or similar proposed tax laws could adversely affect our business, financial condition and results
of operations.
As a provider of products and services with a membership-based element, we are also sensitive to the adoption of laws
and regulations affecting the ability of our businesses to periodically charge for recurring membership or subscription
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payments. For example, the European Union Payment Services directive, which became effective in 2018, could impact the
ability of our businesses to process auto-renewal payments for, as well offer promotional or differentiated pricing to, users who
reside in the European Union, and similar new (and proposed changes to similar existing) legislation or regulations, are being
considered in many U.S. states. The adoption of any law that adversely affects revenue from recurring membership or
subscription payments could adversely affect our business, financial condition and results of operations.
We are also subject to laws governing marketing and advertising activities conducted by/through telephone, e-mail,
mobile devices and the Internet, including the Telephone Consumer Protection Act of 1991, the Telemarketing Sales Rule, the
CAN-SPAM Act and similar state laws, as well as federal, state, and local laws and agency guidelines governing background
screening.
Human Capital Management
As of December 31, 2020, we employ approximately 5,100 full-time employees worldwide, the substantial majority of
which provided services to our brands and businesses located in the United States. We also retain consultants, independent
contractors, and temporary and part-time workers.
Talent and Development
The development, attraction and retention of employees is critical to our success. We strive to provide an atmosphere
that fosters teamwork and growth. We are investing in a more productive, engaged, diverse and inclusive workforce. To support
the advancement of our employees, we offer training and development programs and encourage advancement from within. In
2020, we launched a Learning Management system for broader facilitation of training resources. We leverage both formal and
informal programs to identify, foster, and retain top talent. We believe that our rich culture enables us to create, develop and
fully leverage the strengths of our workforce to exceed consumer expectations and meet our growth objectives. We also place a
high value on inclusion, engaging employees in our Diversity, Equity and Inclusion Council, or DEI, which is staffed by
employees with diverse backgrounds, experiences or characteristics who share a common interest in professional development,
improving corporate culture and delivering sustained business results. Recent DEI initiatives include unconscious bias training
and a women in leadership program.
Total Rewards and Benefits
As part of our compensation philosophy, we believe that we must offer and maintain market competitive total rewards
programs for our employees in order to attract and retain superior talent. These programs include base wages and incentives in
support of our pay for performance culture, as well as health, welfare, and retirement benefits, vision, dental, life, prescription,
and long-term disability insurance plans. We also provide employee paid supplemental life and accident insurance plans. To
help employees cover medical expenses pre-tax, we offer employees a Flexible Spending Account. We also focus many
programs on employee wellness and have implemented solutions including mental health support access, telemedicine, and
fitness programs. We also offer our US-based full-time employees a 401(k) retirement plan with a Company match.
Community
We encourage our employees to become involved in their communities by providing full-time employees eight hours
of paid-time off to volunteer in local community-based programs.
COVID Response
In response to the COVID-19 pandemic, we quickly implemented safety and health standards and protocols for our
employees to ensure a safe work environment. Employees in our offices have been working remotely since March 2020. When
our employees return to the office, we will adhere to the recommended protocols of the Centers for Disease Control or local
regulations.
Ethics
Our employees are required to annually agree to comply with our Code of Business Conduct and Ethics and any
deviations by our directors and executive officers are required to be approved by our Board. We also maintain an Ethics Hotline
that is available to all of our employees to report (anonymously if desired) any matter of concern. Communications to the
hotline (which is facilitated by an independent third party) are routed to appropriate functions (whether Human Resources,
Legal or Finance) for investigation and resolution. In addition, any shareholder or other interested party may send
communications to the Board of Directors, either individually or as a group, through a process that is outlined in the Investor
Relations section of our website.
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Additional Information
Company Website and Public Filings
We maintain a website at www.angihomeservices.com. Neither the information on this website, nor the information on the
websites of any of our brands and businesses, is incorporated by reference into this annual report, or into any other filings with,
or into any other information furnished or submitted to, the U.S. Securities and Exchange Commission (“SEC”).
We also make available, free of charge through our website, our Annual Reports on Form 10-K, Quarterly Reports on
Form 10-Q and Current Reports on Form 8-K (including related amendments) as soon as reasonably practicable after they have
been electronically filed with (or furnished to) the SEC.
Code of Ethics
Our code of ethics applies to all of our employees (including our principal executive officer, principal financial officer and
principal accounting officer) and directors and is posted on our website at http://ir.angihomeservices.com under the heading
“Code of Ethics.” This code of ethics complies with Item 406 of SEC Regulation S-K and the rules of The Nasdaq Stock
Market LLC. Any changes to this code of ethics that affect the provisions required by Item 406 of Regulation S-K (and any
waivers of such provisions of the code of ethics for our executive officers, senior financial officers or directors) will also be
disclosed on our website.
RELATIONSHIP WITH IAC
Equity Ownership and Vote
We have two classes of capital stock outstanding, Class A common stock and Class B common stock, with one vote and
ten votes per share, respectively. Our shares of Class B common stock are convertible into shares of Class A common stock on
a share for share basis. As of December 31, 2020, IAC owned 421,861,990 shares of Class B common stock, representing 100%
of our outstanding Class B common stock, and did not own any shares of our Class A common stock. As of that date, IAC’s
Class B common stock holdings represented approximately 84.3% of our total outstanding shares of capital stock and
approximately 98.2% of the total combined voting power of our outstanding capital stock.
Intercompany Agreements
In connection with the Combination, we and IAC entered into certain agreements to govern our relationship following the
Combination. These agreements include the following:
Contribution Agreement
Under the contribution agreement: (i) we agreed to assume all of the assets and liabilities related to the HomeAdvisor
business and indemnify IAC against any losses arising out of any breach by us of the contribution agreement or any other
transaction related agreement described below and (ii) IAC agreed to indemnify us against losses arising out of any breach by
IAC of the contribution agreement or any other transaction related agreement described below.
Investor Rights Agreement
Under the investor rights agreement, IAC has certain registration, preemptive and governance rights related to us and the
shares of our capital stock it holds. The investor rights agreement also provides certain governance rights for the benefit of
stockholders other than IAC.
Services Agreement
The services agreement currently governs services that IAC has agreed to provide to us through September 29, 2021, with
automatic renewal for successive one-year terms, subject to IAC’s continued ownership of a majority of the total combined
voting power of our voting stock and any subsequent extension(s) or truncation(s) agreed to by us and IAC. Services currently
provided to us by IAC pursuant this agreement include: (i) assistance with certain legal, M&A, human resources, finance, risk
management, internal audit and treasury functions, health and welfare benefits, information security services and insurance and
tax affairs, including assistance with certain public company and unclaimed property reporting obligations; (ii) accounting,
controllership and payroll processing services; (iii) investor relations services and (iv) tax compliance services. The scope,
nature and extent of services may be changed from time to time as we and IAC may agree.
Tax Sharing Agreement
The tax sharing agreement governs our and IAC’s rights, responsibilities and obligations with respect to tax liabilities and
benefits, entitlements to refunds, preparation of tax returns, tax contests and other tax matters regarding U.S. federal, state, local
and foreign income taxes. Under the tax sharing agreement, we are generally responsible and required to indemnify IAC for: (i)
all taxes imposed with respect to any consolidated, combined or unitary tax return of IAC or its subsidiaries that includes us or
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any of our subsidiaries (to the extent attributable to us or any of our subsidiaries, as determined under the tax sharing
agreement) and (ii) all taxes imposed with respect to any consolidated, combined, unitary or separate tax returns of us or our
subsidiaries.
Employee Matters Agreement
The employee matters agreement addresses certain compensation and benefit issues related to the allocation of liabilities
associated with: (i) employment or termination of employment; (ii) employee benefit plans and (iii) equity awards. Under the
employee matters agreement, our employees participate in IAC’s U.S. health and welfare plans, 401(k) plan and flexible
benefits plan and we reimburse IAC for the costs of such participation. In the event IAC no longer retains shares representing at
least 80% of the aggregate voting power of shares entitled to vote in the election of our board of directors, we will no longer
participate in IAC’s employee benefit plans, but will establish our own employee benefit plans that will be substantially similar
to the plans sponsored by IAC.
In addition, under the employee matters agreement, we are required to reimburse IAC for the cost of any IAC equity
awards held by our current and former employees, with IAC electing to receive payment either in cash or shares of our Class B
common stock. This agreement also provides that IAC may require stock appreciation rights granted prior the closing of the
Combination and equity awards in our subsidiaries to be settled in either shares of our Class A common stock or IAC common
stock. To the extent shares of IAC common stock are issued in settlement of these awards, we are obligated to reimburse IAC
for the cost of those shares by issuing shares of our Class A common stock in the case of stock appreciation rights granted prior
to the closing of the Combination and shares of our Class B common stock in the case of equity awards in our subsidiaries.
Lastly, 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 of part of IAC equity awards outstanding immediately prior to
the distribution into equity awards denominated in shares of ANGI Class A Common Stock, which ANGI would be obligated to
assume and which would be dilutive to ANGI's stockholders.
Item 1A. Risk Factors
Cautionary Statement Regarding Forward-Looking Information
This annual report on Form 10-K contains “forward-looking statements” within the meaning of the Private Securities
Litigation Reform Act of 1995. The use of words such as “anticipates”, “estimates”, “expects”, “plans”, “intends”, “will
continue”, “may”, “could” and “believes”, among similar expressions, generally identify forward-looking statements. These
forward-looking statements include, among others, statements relating to: our future business, financial condition, results of
operations and financial performance, our business strategy, trends in the home services industry and other similar matters.
These forward-looking statements are based on the expectations and assumptions of our management about future events as of
the date of this annual report, which are inherently subject to uncertainties, risks and changes in circumstances that are difficult
to predict.
Actual results could differ materially from those contained in these forward-looking statements for a variety of reasons,
including, among others, the risk factors set forth below. Other unknown or unpredictable factors that could also adversely
affect our business, financial condition and results of operations may arise from time to time. In light of these risks and
uncertainties, the forward-looking statements discussed in this annual report may not prove to be accurate. Accordingly, you
should not place undue reliance on these forward-looking statements, which only reflect the views of our management as of the
date of this annual report. We do not undertake to update these forward-looking statements.
Risk Factors
Risks Related to Our Business and Industry
Our brands and businesses operate in an especially competitive and evolving industry.
The home services industry is competitive, with a consistent and growing stream of new products, services and entrants.
Some of our competitors may enjoy better competitive positions in certain geographical areas, with certain consumer and
service professional demographics and/or in other key areas that we currently serve or may serve in the future. Generally, we
compete with search engines, online marketplaces and social media platforms that have the ability to market their products and
services online in a more prominent and cost-effective manner than we can, as well as better tailor their products and services to
individual users. Any of these advantages could enable these competitors to offer products and services that are more appealing
to consumers and service professionals than our products and services, respond more quickly and/or cost effectively than we do
to evolving market opportunities and trends and/or display their own integrated or related home services products and services
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in search results and elsewhere in a more prominent manner than our products and services, which could adversely affect our
business, financial condition and results of operations.
In addition, since most home services products and services are offered to consumers for free, consumers can easily
switch among home services offerings (or use multiple home services offerings simultaneously) at no cost to them. And while
service professionals may incur additional or duplicative near-term costs, the costs for switching to a competing platform over
the long term are generally not prohibitive. Low switching costs, coupled with the propensity of consumers to try new products
and services generally, will most likely result in the continued emergence of new products and services, entrants and business
models in the home services industry. Our inability to continue to innovate and compete effectively against new products,
services and competitors could result in decreases in the size and level of engagement of our consumer and service professional
bases, any of which could adversely affect our business, financial condition and results of operations.
Our success will depend, in substantial part, on the continued migration of the home services market online.
We believe that the digital penetration of the home services market remains low, with the vast majority of consumers
continuing to search for, select and hire service professionals offline. While many consumers have historically been (and
remain) averse to finding service professionals online, others have demonstrated a greater willingness to embrace the online
shift. Service professionals must also continue to embrace the online shift, which will depend, in substantial part, on whether
online products and services help them to better connect and engage with consumers relative to traditional offline efforts. The
speed and ultimate outcome of the shift of the home services market online for consumers and service professionals is uncertain
and may not occur as quickly as we expect, or at all. The failure or delay of a meaningful number of consumers and/or service
professionals to migrate online and/or the return of a meaningful number of existing participants in the online home services
market to offline solutions, could adversely affect our business, financial condition and results of operations.
Our brands and businesses are sensitive to general economic events or trends, particularly those that adversely impact
consumer confidence and spending behavior.
We have historically been, and will continue to be, particularly sensitive to events and trends that result in consumers
delaying or foregoing home services projects and/or service professionals being less likely to pay for consumer matches and
Marketplace subscriptions. Any such event or trend (for example, a general economic downturn or sudden disruption in
business conditions, consumer confidence, spending levels and access to credit) could result in decreases in Marketplace service
requests, pre-priced bookings and directory searches. Any such decreases could result in turnover at the Marketplace and/or any
of our directories, adversely impact the number and quality of service professionals at the Marketplace and our directories and/
or adversely impact the reach of (and breath of services offered through) the Marketplace and our directories, any or all of
which could adversely affect our business, financial condition and results of operations.
Lastly, we have historically been, and will continue to be, sensitive to events and trends that could result in decreased
marketing and advertising expenditures by service professionals. Adverse economic conditions and trends could result in
service professionals decreasing and/or delaying fees paid for consumer matches, pre-priced bookings, membership
subscriptions and/or time-based advertising spend, any or all of which would result in decreased revenue and could adversely
affect our business, financial condition and results of operations.
The expansion of our pre-priced booking services, while balancing the overall mix of our service request and directory
services in our Marketplace, is critical to our business, financial condition and results of operations.
For our pre-priced booking services offering, we contract with a service professional to perform a specific task for a
consumer at a contracted price. Compared to our Marketplace service requests, which match a service professional to a
consumer opportunity, our pre-priced booking services contractually connect a service professional to a consumer’s task. Pre-
priced booking services potentially offer higher margin opportunities, but also involve greater financial risk because we bear the
impact of cost overruns, which could result in increased costs and expenses. An increase in the percentage of pre-priced
booking services may also reduce service professional’s level of participation in our Marketplace service request and directory
offering(s). As we expand our pre-priced booking services, we expect our mix of pre-priced booking services will be increasing
over time.
An increase in the percentage of pre-priced booking services in our mix of offerings could increase the risk that we suffer
losses if we underestimate the level of effort or costs required to perform the consumer’s task. Our profits could be adversely
affected if our costs exceed the assumptions we used in offering the contracted task. For example, we may miscalculate the
costs, materials, or time needed to complete a task or we might be provided with inaccurate information by the consumer, which
could result in us charging consumers too little for contracted tasks, which in turn would result in us having to absorb the actual,
higher cost for contracted tasks or risk not being able to find service professionals to perform contracted tasks at the contracted
rate. Our business, financial condition and results of operations could be adversely affected if our actual costs exceed the
assumptions we used in offering the contracted task in our pre-priced booking service.
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The global outbreak of COVID-19 and other similar outbreaks could adversely affect our business, financial condition and
results of operations.
The coronavirus outbreak (“COVID-19”) has caused a widespread global health crisis, resulting in significant social
disruption and has had (and is likely to continue to have) an adverse effect on economic conditions generally, as well as on
consumer confidence and spending, all of which could have an adverse effect on our businesses, financial condition and results
of operations. When COVID-19 first impacted North America and Europe in the early spring of 2020, we experienced a decline
in demand for service requests, driven primarily by decreases in demand in certain categories of jobs (particularly discretionary
indoor projects). Toward the end of the spring of 2020, we experienced a rebound in service requests, exceeding pre-COVID-19
growth levels, driven by increased demand from consumers who spent more time at home due to measures taken to reduce the
spread of COVID-19. However, throughout 2020 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 our ability to monetize this increased level of service requests. Also, North America, which represents 95%
of our revenue for twelve months ended December 31, 2020, experienced a significant resurgence of the COVID-19 virus with
record levels of infections being reported during the fourth quarter of 2020 and continuing into the first quarter of 2021. 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 materially and adversely affect our business, financial
condition and results of operations.
In addition, in response to the COVID-19 outbreak and government-imposed measures to control its spread, our ability to
conduct ordinary course business activities has been (and may continue to be) impaired for an indefinite period of time. For
example, we have taken several precautions that could adversely impact employee productivity, such as requiring employees to
work remotely for the first time in the Company’s history, as well as imposing travel restrictions and temporarily closing office
locations. While we have found that our employees (including call center and sales employees) have transitioned to working
remotely with limited disruption to date, no assurances can be provided that their productivity and efficiency will remain at pre-
pandemic levels, particularly if they are required to continue working remotely for an extended period of time. Also, working
remotely may involve increased operational risks, such as increased risks of “phishing,” other cybersecurity attacks or the
unauthorized dissemination of personally identifiable information or proprietary and confidential information. Lastly, moving
employees back to the office may introduce distraction that could have a temporary negative impact on the Company’s
productivity, and in turn, revenue. We may also experience increased operating costs as we gradually resume normal operations
and enhance preventative measures, including with respect to real estate, compliance and insurance-related expenses. Moreover,
we may also experience business disruption if the ordinary course operations of our contractors, vendors or business partners
are adversely affected. Any of these measures or impairments could adversely affect our business, financial condition and
results of operations.
The COVID-19 outbreak may also have the effect of heightening many of the other risks described in this “Risks Related
to Our Business and Industry” section.
We must establish and maintain relationships with quality service professionals.
We must continue to attract, retain and grow the number of skilled and reliable service professionals who can provide
services that consumers want in a timely manner across our various brands and businesses. If we do not offer innovative
products and services that resonate with consumers and service professionals generally, as well provide service professionals
with an attractive return on their marketing and advertising investments (quality matches and leads that convert into jobs), the
number of service professionals affiliated with our various brands and businesses could decrease. Any such decrease would
result in smaller and less diverse networks and directories of service professionals, and in turn, decreases in number of pre-
priced bookings, service requests and directory searches, which could adversely affect our business, financial condition and
results of operations.
The trustworthiness of our Marketplaces and the connections within our Marketplace are important to our success. Our
success will depend, in substantial part, on our ability to maintain and/or enhance our various brands.
We own and operate two of the leading home services brands in the United States (Angie’s List and HomeAdvisor), as
well as leading brands in several foreign jurisdictions. We believe that our success depends, in substantial part, on our
continued ability to maintain and enhance our established brands, as well as build awareness of (and loyalty to) new and
emerging brands. Events that could negatively impact our brands and brand-building efforts include (among others): product
and service quality concerns, service professional quality concerns, consumer and service professional complaints and lawsuits,
lack of awareness of our policies or confusion about how the policies are applied, a failure to respond to feedback from our
service professionals and consumers, ineffective advertising, inappropriate and/or unlawful acts perpetrated by service
professionals and consumers, actions or proceedings commenced by governmental or regulatory authorities, data protection and
security breaches and related bad publicity. Any factors that negatively impact the Angie’s List and/or HomeAdvisor brand(s)
could materially and adversely affect our business, financial condition and results of operations.
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In addition, trust in the integrity and objective, unbiased nature of the ratings and reviews found across our various brands
contributes significantly to public perception of these brands and their ability to attract consumers and service professionals. If
consumer reviews are perceived as not authentic in general, the reputation and strength of the relevant brand could be materially
and adversely affected. While we use, and will continue to use, filters (among other processes) to detect fraudulent reviews, the
accuracy of consumer reviews cannot be guaranteed. If fraudulent or inaccurate reviews (positive or negative) increase and we
are unable to effectively identify and remove such reviews, the overall quality of the ratings and reviews across our various
brands could decrease and the reputation of affected brands might be harmed. This could deter consumers and service
professionals from using our products and services, which in turn could adversely affect our business, financial condition and
results of operations.
Our success depends, in part, on our ability to establish and maintain relationships with quality and trustworthy service
professionals.
We must continue to attract, retain and grow the number of skilled and reliable service professionals who can provide
services across our platforms. If we do not offer innovative products and services that resonate with consumers and service
professionals generally, as well provide service professionals with an attractive return on their marketing and advertising
investments, the number of service professionals affiliated with our platforms, would decrease. Any such decrease would result
in smaller and less diverse networks and directories of service professionals, and in turn, decreases in service requests, pre-
priced bookings and directory searches, which could adversely impact our business, financial condition and results of
operations.
In addition to skill and reliability, consumers want to work with service professionals whom they can trust to work in their
homes and with whom they can feel safe. While we maintain screening processes (which generally include certain, limited
background checks) to try and prevent unsuitable service professionals from joining our platforms, these processes have
limitations and, even with these safety measures, no assurances can be provided regarding the future behavior of any service
provider on our platforms. Inappropriate and/or unlawful behavior of service professionals generally, (particularly any such
behavior that compromises the trustworthiness of service providers and/or of the safety of consumers) could result in decreases
in service requests, bad publicity and related damage to our reputation, brands and brand-building efforts and/or actions by
governmental and regulatory authorities, criminal proceedings and/or litigation. The occurrence or any of these events could, in
turn, adversely affect our business, financial condition and results of operations.
Marketing efforts designed to drive traffic to our brands and businesses may not be successful or cost-effective.
Attracting consumers and service professionals to our brands and businesses involves considerable expenditures for online
and offline marketing. We have made, and expect to continue to make, significant marketing expenditures, primarily for digital
marketing (primarily paid search engine marketing, display advertising and third-party affiliate agreements) and traditional
offline marketing (national television and radio campaigns). These efforts may not be successful or cost-effective. Historically,
we have had to increase marketing expenditures over time to attract and retain users and service professionals and sustain our
growth.
Our ability to market our brands on any given property or channel is subject to the policies of the relevant third-party seller,
publisher of advertising (including search engines and social media platforms with extraordinarily high levels of traffic and
numbers of users) or marketing affiliate. As a result, we cannot assure you that these parties will not limit or prohibit us from
purchasing certain types of advertising (including the purchase by ANGI Homeservices of advertising with preferential
placement), advertising certain of our products and services and/or using one or more current or prospective marketing channels
in the future. If a significant marketing channel took such an action generally, for a significant period of time and/or on a
recurring basis, our business, financial condition and results of operations could be adversely affected. In addition, if we fail to
comply with the policies of third-party sellers, publishers of advertising and/or marketing affiliates, our advertisements could be
removed without notice and/or our accounts could be suspended or terminated, any of which could adversely affect our
business, financial condition and results of operations.
In addition, our failure to respond to rapid and frequent changes in the pricing and operating dynamics of search engines,
as well as changing policies and guidelines applicable to keyword advertising (which may unilaterally be updated by search
engines without advance notice), could adversely affect our paid search engine marketing efforts (and free search engine
traffic). Such changes could adversely affect paid listings (both their placement and pricing), as well as the ranking of our
brands and businesses within search results, any or all of which could increase our marketing expenditures (particularly if free
traffic is replaced with paid traffic). Any or all of these events could adversely affect our business, financial condition and
results of operations.
Evolving consumer behavior (specifically, increased consumption of media through digital means) can also affect the
availability of profitable marketing opportunities. To continue to reach and engage consumers and service professionals and
grow in this environment, we will need to continue to identify and devote more of our overall marketing expenditures to newer
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digital advertising channels (such as online video and other digital platforms), as well as target consumers and service
professionals via these channels. Since newer advertising channels are undeveloped and unproven relative to traditional
channels (such as television), it could be difficult to assess returns on marketing investments in newer channels, which could
adversely affect our business, financial condition and results of operations.
Lastly, we also enter into various arrangements with third parties to drive visitors to our HomeAdvisor platforms. These
arrangements are generally more cost-effective than traditional marketing efforts. If we are unable to renew existing (and enter
into new) arrangements of this nature, sales and marketing costs as a percentage of revenue would increase over the long-term,
which could adversely affect our business, financial condition and results of operations. In addition, the quality and
convertibility of traffic and leads generated through third-party arrangements are dependent on many factors, most of which are
outside our control. If the quality and/or convertibility of traffic and leads do not meet the expectations of our users and/or
HomeAdvisor service professionals, they could leave the Marketplace and/or decrease their budgets for consumer matches or
participation in pre-priced booking services, any or all of which could adversely affect our business, financial condition and
results of operations.
We rely on Internet search engines to drive traffic to our various properties. Certain operators of search services offer
products and services that compete directly with our products and services. If links to websites offering our products and
services are not displayed prominently in search results, traffic to our properties could decline and our business could be
adversely affected.
In addition to paid marketing, we rely heavily on Internet search engines, such as Google, to drive traffic to our properties
through their unpaid search results. Although search results have allowed us to attract a large audience with low organic traffic
acquisition costs in the past, if they fail to continue to drive sufficient traffic to our properties, we may need to increase our
marketing spend to acquire additional traffic. We cannot assure you that the value we ultimately derive from any such
additional traffic would exceed the cost of acquisition, and any increase in marketing expense may in turn harm our operating
results.
The amount of traffic we attract from search engines is due in large part to how and where information from (and links to
websites offering our products and services) are displayed on search engine results pages. The display, including rankings, of
unpaid search results can be affected by a number of factors, many of which are not in our direct control, and may change
frequently. Search engines have made changes in the past to their ranking algorithms, methodologies and design layouts that
have reduced the prominence of links to websites offering our products and services, and negatively impacted traffic to such
websites, and we expect that search engines will continue to make such changes from time to time in the future.
However, we may not know how (or otherwise be in a position) to influence actions of this nature taken by search engines.
With respect to search results in particular, even when search engines announce the details of their methodologies, their
parameters may change from time to time, be poorly defined or be inconsistently interpreted.
In addition, in some instances, search engines may change their displays or rankings in order to promote their own
competing products or services, or the products or services of one or more of our competitors. Any such action could negatively
impact the search rankings of links to websites offering our products and services, or the prominence with which such links
appear in search results. Our success depends on the ability of our products and services to maintain a prominent position in
search results, and in the event operators of search engines promote their own competing products in the future in a manner that
has the effect of reducing the prominence or ranking of our products and services, our business, financial condition and results
of operations could be adversely affected.
Our ability to communicate with consumers and service professionals via e-mail (or other sufficient means) is critical to our
success.
Historically, one of our primary means of communicating with consumers and service professionals and keeping them
engaged with our products and services has been via e-mail communication. Through e-mail, we provide consumers and service
professionals with service request and pre-priced booking service updates, as well as present or suggest new products and
services (among other things) and market our products and services in a cost-effective manner. As consumers increasingly
communicate via mobile and other digital devices and messaging and social media apps, usage of e-mail (particularly among
younger consumers) has declined and we expect this trend to continue. In addition, deliverability and other restrictions could
limit or prevent our ability to send e-mails to consumers and service professionals. A continued and significant erosion in our
ability to communicate with consumers and service professionals via e-mail could adversely impact the overall user experience,
consumer and service professional engagement levels and conversion rates, which could adversely affect our business, financial
condition and results of operations. We cannot assure you that any alternative means of communication (for example, push
notifications and text messaging) will be as effective as e-mail has been historically.
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Our success depends, in part, on our ability to access, collect and use personal data about consumers.
We depend on search engines, digital app stores and social media platforms, in particular, those operated by Google, Apple
and Facebook, to market, distribute and monetize our products and services. Consumers engage with these platforms directly,
and as a result, these platforms may receive personal data about consumers that we would otherwise receive if we transacted
with them directly. Certain of these platforms have restricted our access to personal data about users of our products and
services obtained through their platforms. If these platforms limit or increasingly limit, eliminate or otherwise interfere with our
ability to access, collect and use personal data about users of our products and services that they have collected, our ability to
identify and communicate with a meaningful portion of our user base may be adversely impacted. If so, our customer
relationship management efforts, our ability to identify, target and reach new segments of our user base and the population
generally and the efficiency of our paid marketing efforts could be adversely affected. We cannot assure you that search
engines, digital app stores and social media platforms upon which we rely will not limit or increasingly limit, eliminate or
otherwise interfere with our ability to access, collect and use personal data about users of our products and services that they
have collected. To the extent that any or all of them do so, our business, financial condition and results of operations could be
adversely affected.
Our success depends, in part, on our ability to continue to develop and monetize versions of our products and services for
mobile and other digital devices.
As consumers increasingly access our products and services through mobile and other digital devices (including through
digital voice assistants), we will need to continue to devote significant time and resources to ensure that our products and
services are accessible across these platforms (and multiple platforms generally). If we do not keep pace with evolving online,
market and industry trends (including the introduction of new and enhanced digital devices and changes in the preferences and
needs of consumers and service professionals generally), offer new and/or enhanced products and services in response to such
trends that resonate with consumers and service professionals, monetize products and services for mobile and other digital
devices as effectively as our traditional products and services and/or maintain related systems, technology and infrastructure in
an efficient and cost-effective manner, our business, financial condition and results of operations could be adversely affected.
In addition, the success of our mobile and other digital products and services depends on their interoperability with various
third-party operating systems, technology, infrastructure and standards, over which we have no control. Any changes to any of
these things that compromise the quality or functionality of our mobile and other digital products and services could adversely
affect their usage levels and/or our ability to attract consumers and service professionals, which could adversely affect our
business, financial condition and results of operations.
There may be adverse tax, legal and other consequences if the contractor classification or employment status of the service
professionals who use our platform is challenged.
We are particularly sensitive to the adoption of worker classification laws, specifically, laws that could effectively require
us to change our classification of certain of our service professionals from independent contractors to employees, as well as
changes to state and local laws or judicial decisions related to the definition and/or classification of independent contractors. For
example, California recently passed a worker classification statute (AB 5), which effectively narrowed the definition of an
independent contractor by requiring hiring entities to use a stricter test to determine a given worker’s classification. In addition,
AB 5 places the burden of proof for classifying workers as independent contractors on the hiring entity and provides
enforcement powers to the state and certain cities. In addition, AB 5 has been the subject of widespread national discussion and
it is possible that other jurisdictions, including New York and New Jersey, may enact similar laws. Since we currently treat
service professionals who provide services through our business as independent contractors for all purposes, we do not withhold
federal, state and local income or other employment related taxes, make federal or state unemployment tax or Federal Insurance
Contributions Act payments or provide workers’ compensation insurance with respect to these individuals. If we are required as
the result of new laws to reclassify these individuals as employees, we could be exposed to various liabilities and additional
costs, including exposure (for prior and future periods) under federal, state and local tax laws, and workers’ compensation,
unemployment benefits, labor, and employment laws, as well as potential liability for penalties and interest, any or all of which
could adversely affect our business, financial condition and results of operations. We are involved in various legal proceedings
and investigations challenging the classification of these individuals as independent contractors, and may become involved in
other proceedings and investigations in the future.
We may not be able to protect our systems, technology and infrastructure from cyberattacks and cyberattacks experienced by
third parties may adversely affect us.
We are regularly under attack by perpetrators of malicious technology-related events, such as the use of botnets, malware
or other destructive or disruptive software, distributed denial of service attacks, phishing, attempts to misappropriate user
information and account login credentials and other similar malicious activities. The incidence of events of this nature (or any
combination thereof) is on the rise worldwide. We continuously develop and maintain systems designed to detect and prevent
events of this nature from impacting our systems, technology, infrastructure, products, services and users. We have invested
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(and continue to invest) heavily in these efforts and related personnel and training and deploy data minimization strategies
(where appropriate), these efforts are costly and require ongoing monitoring and updating as technologies change and efforts to
overcome preventative security measures become more sophisticated. Despite these efforts, some of our systems have
experienced past security incidents, none of which had a material adverse effect on our business, financial condition and results
of operations, and we could experience significant events of this nature in the future.
Any event of this nature that we experience could damage our systems, technology and infrastructure and/or those of our
users, prevent us from providing our products and services, compromise the integrity of our products and services, damage our
reputation, erode our brands and/or be costly to remedy, as well as subject us to investigations by regulatory authorities, fines
and/or litigation that could result in liability to third parties. Even if we do not experience such events firsthand, the impact of
any such events experienced by third parties could have a similar effect. For example, although we did not experience any
material impacts from the SolarWinds Orion cybersecurity breach that was widely publicized in December 2020, we cannot
assure you that we will not experience future events involving third party service providers that may be material. We may not
have adequate insurance coverage to compensate for losses resulting from any of these events. If we (or any third-party with
whom we do business or otherwise rely upon) experience(s) an event of this nature, our business, financial condition and results
of operations could be adversely affected.
If personal, confidential or sensitive user information that we maintain and store is breached or otherwise accessed by
unauthorized persons, it may be costly to mitigate and our reputation could be harmed.
We receive, process, store and transmit a significant amount of personal, confidential or sensitive user information and, in
certain cases, enable users to share their personal information with each other. While we continuously develop and maintain
systems designed to protect the security, integrity and confidentiality of this information, we cannot guarantee that inadvertent
or unauthorized use or disclosure will not occur or that third parties will not gain unauthorized access to this information. When
such events occur, we may not be able to remedy them, we may be required by law to notify regulators and impacted
individuals and it may be costly to mitigate the impact of such events and to develop and implement protections to prevent
future events of this nature from occurring. When breaches of security (ours or that of any third-party we engage to store
information) occur, we could face governmental enforcement actions, significant fines, litigation (including consumer class
actions) and the reputation of our brands and business could be harmed, which could adversely affect our business, financial
condition and results of operations. In addition, if any of the search engines, digital app store or social media platform through
which we market, distribute and monetize our products and services were to experience a breach, third parties could gain
unauthorized access to personal data about our users and subscribers, which could indirectly harm the reputation of our brands
and businesses and in turn, adversely affect our business, financial condition and results of operations. See also “The
processing, storage, use and disclosure of personal data could give rise to liabilities and increased costs.”
The processing, storage, use and disclosure of personal data could give rise to liabilities and increased costs.
We receive, transmit and store a large volume of personal information in connection with the provision of our products and
services. The manner in which we share, store, use, disclose and protect this information is determined by the respective privacy
and data security policies of our various businesses, as well as federal, state and foreign laws and regulations and evolving
industry standards and practices, which are changing, and in some cases, inconsistent and conflicting and subject to differing
interpretations. In addition, new laws, regulations, standards and practices of this nature are proposed and adopted from time to
time.
For example, a comprehensive European Union privacy and data protection reform, the General Data Protection Regulation
(the “GDPR”), became effective in May 2018. The GDPR, which applies to companies that are organized in the European
Union or otherwise provide services to (or monitor) consumers who reside in the European Union, imposes significant penalties
(monetary and otherwise) for non-compliance, as well as provides a private right of action for individual claimants. The GDPR
will continue to be interpreted by European Union Data protection regulators, which may require that we make changes to our
business practices and could generate additional risks and liabilities. The European Union is also considering an update to its
Privacy and Electronic Communications Directive to impose stricter rules regarding the use of cookies.
Also, the exit from the European Union by the United Kingdom could result in the application of new and conflicting data
privacy and protection laws and standards to our operations in the United Kingdom and our handling of personal data of users
located in the United Kingdom. At the same time, many jurisdictions abroad in which we do business have already or are
currently considering adopting privacy and data protection laws and regulations.
Moreover, multiple legislative proposals concerning privacy and the protection of user information are being considered by
the U.S. Congress and various state legislatures (including those in Illinois, New York, Virginia and Washington). Other U.S.
state legislatures have already enacted privacy legislation, one of the strictest and most comprehensive of which is the
California Consumer Privacy Act of 2018, which became effective January 1, 2020 (the “CCPA”). The CCPA provides new
data privacy rights for California consumers, including the right to know what personal information is being collected about
them and how it is being used, as well as significant rights over the use of their personal information (including the right to have
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such information deleted and the right to object to the sale of such information) and new operational requirements for
businesses (primarily providing consumers with enhanced privacy-related disclosures). The CCPA restricts the ability of our
businesses to use personal California user and subscriber information in connection with our various products, services and
operations, which could adversely affect our business, financial condition and results of operations. The CCPA also provides
consumers with a private right of action for security breaches, as well as provides for statutory damages of up to $750 per
violation, with the California Attorney General maintaining authority to enforce the CCPA and seek civil penalties for
intentional violations of the CCPA of up to $7,500 per violation. In addition, California Privacy Rights Act (“CPRA”) was
passed in November 2020 and will take effect on January 1, 2023, which could further restrict the ability of our businesses to
use personal California user and subscriber information in connection with our various products, services and operations and/or
impose additional operational requirements on our businesses, which could adversely affect our business, financial condition
and results of operations. Lastly, the Federal Trade Commission has also increased its focus on privacy and data security
practices, as evidenced by the first-of-its-kind, $5 billion dollar fine against a social media platform for privacy violations.
While we believe that we comply with applicable privacy and data protection policies, laws and regulations and industry
standards and practices in all material respects, we could still be subject to claims of non-compliance that we may not be able to
successfully defend and/or significant fines and penalties. Moreover, any non-compliance or perceived non-compliance by us
(or any third-party we engage to store or process information) or any compromise of security that results in unauthorized access
to (or use or transmission of) personal information could result in a variety of claims against us, including governmental
enforcement actions, significant fines, litigation (including consumer class actions), claims of breach of contract and indemnity
by third parties and adverse publicity. When such events occur, our reputation could be harmed and the competitive positions of
our various brands and businesses could be diminished, which could adversely affect our business, financial condition and
results of operations. Additionally, to the extent multiple U.S. state-level (or European Union member-state level) laws are
introduced with inconsistent or conflicting standards and there is no federal or European Union regulation to preempt such
laws, compliance could be even more difficult to achieve and our potential exposure to the risks discussed above could increase.
Lastly, ongoing compliance with existing (and compliance with future) privacy and data protection laws worldwide could
be costly. The devotion of significant costs to compliance (versus the development of products and services) could result in
delays in the development of new products and services, us ceasing to provide problematic products and services in existing
jurisdictions and us being prevented from introducing products and services in new and existing jurisdictions, which could
adversely affect our business, financial condition and results of operations.
Credit card data security breaches or fraud could adversely affect our business, financial condition and results of
operations.
We accept payments (including recurring payments) from service professionals and consumers, primarily through credit
and debit card transactions. The ability to access payment information on a real-time basis without having to proactively reach
out to service professionals and consumers to process payments is critical to our success.
When third parties (including credit card processing companies, as well as any business that offers products and services
online or offline) experience a data security breach involving credit card information, affected cardholders will often cancel
their credit cards. The more sizable a given affected third-party’s customer base, the greater the number of accounts impacted
and the more likely it will be that our service professionals and consumers would be impacted by such a breach. If such a
breach were to impact our service professionals and consumers were affected, we would need to contact affected service
professionals and consumers to obtain new payment information. It is likely that we would not be able to reach all affected
service professionals and consumers, and even if we could, new payment information for some may not be obtained and
pending payments may not be processed, which could adversely affect our business, financial condition and results of
operations.
Even if our service professionals and consumers are not directly impacted by a given data security breach, they may lose
confidence in the ability of providers of online products and services to protect their personal information generally. As a result,
they may stop using their credit cards online and choose alternative payment methods that are not as convenient for us or
restrict our ability to process payments without significant effort, which could adversely affect our business, financial condition
and results of operations.
Our success depends, in part, on the integrity, quality, efficiency and scalability of our systems, technology and
infrastructure, and those of third parties.
We rely on our systems, technology and infrastructure to perform well on a consistent basis. From time to time in the past
we have experienced (and in the future we may experience) occasional interruptions that make some or all of this framework
and related information unavailable or that prevent us from providing products and services; any such interruption could arise
for any number of reasons. We also rely on third-party data center service providers and cloud-based, hosted web service
providers, as well as third-party computer systems and a variety of communications systems and service providers in
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connection with the provision of our products and services generally, as well as to facilitate and process certain payment and
other transactions with users. We have no control over any of these third parties or their operations.
The framework described above could be damaged or interrupted at any time due to fire, power loss, telecommunications
failure, natural disasters, acts of war or terrorism, acts of God and other similar events or disruptions. Any event of this nature
could prevent us from providing our products and services at all (or result in the provision of our products and services on a
delayed or intermittent basis) and/or result in the loss of critical data. While we and the third parties upon whom we rely have
certain backup systems in place for certain aspects of our respective frameworks, none of our frameworks are fully redundant
and disaster recovery planning is not sufficient for all eventualities. In addition, we may not have adequate insurance coverage
to compensate us for losses from a major interruption. When such damages, interruptions or outages occur, our reputation could
be harmed and the competitive positions of our various brands and businesses could be diminished, any or all of which could
adversely affect our business, financial condition and results of operations.
We also continually work to expand and enhance the efficiency and scalability of our framework to improve the consumer
and service professional experience, accommodate substantial increases in the number of visitors to our various platforms,
ensure acceptable load times for our various products and services and keep up with changes in technology and user
preferences. If we do not do so in a timely and cost-effective manner, the user experience and demand across our brands and
businesses could be adversely affected, which could adversely affect our business, financial condition and results of operations.
We may experience risks related to acquisitions.
We have made numerous acquisitions in the past and we continue to seek to identify potential acquisition candidates to
expand our business generally in the future. If we do not identify suitable acquisition candidates or complete acquisitions on
satisfactory pricing or other terms, our growth could be adversely affected. Even if we complete what we believe to be suitable
acquisitions, we may experience related operational and financial risks. As a result, to the extent that we continue to grow
through acquisitions, we will need to:
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properly value prospective acquisitions, especially those with limited operating histories;
successfully integrate the operations, as well as the various functions and systems, of acquired businesses with our
existing operations, functions and systems;
successfully identify and realize potential synergies among acquired and existing business;
retain or hire senior management and other key personnel at acquired businesses; and
successfully manage acquisition-related strain on our management, operations and financial resources.
We may not be successful in addressing these challenges or any other problems encountered in connection with historical
and future acquisitions. In addition, the anticipated benefits of one or more acquisitions may not be realized. Also, future
acquisitions could result in increased operating losses, dilutive issuances of equity securities and/or the assumption of
contingent liabilities. Lastly, the value of goodwill and other intangible assets acquired could be impacted by one or more
continuing unfavorable events and/or trends, which could result in significant impairment charges. The occurrence of any these
events could have an adverse effects on our business, financial condition and results of operations.
We face additional risks in connection with our international operations.
We currently operate businesses under various regional brands in Canada, France, Germany, Austria, the United Kingdom,
the Netherlands and Italy and intend to seek to expand our international presence, both through acquisitions and organic growth.
Operating abroad, particularly in jurisdictions where we have limited experience, exposes us to additional risks, including:
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operational and compliance challenges caused by distance, language barriers and cultural differences;
difficulties in staffing and managing international operations;
differing levels (or lack) of social and technological acceptance of online services generally, as well as online home
services offerings specifically;
slow or lagging growth in the commercial use and acceptance of the Internet;
foreign currency fluctuations;
restrictions on the transfer of funds among countries and back to the United States and related repatriation costs;
differing and potentially adverse tax laws;
compliance challenges;
competitive environments that favor local businesses;
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•
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limitations on the level of intellectual property protection; and
trade sanctions, political unrest, terrorism, war and epidemics or the threat of any of these events.
The occurrence of any or all of the events described above could adversely affect our international operations, and in turn,
our business, financial condition and results of operations.
We may fail to adequately protect our intellectual property rights or may be accused of infringing the intellectual property
rights of third parties.
We rely heavily upon trademarks, trade dress and related domain names and logos to market our brands and businesses and
to build and maintain brand loyalty and recognition, as well as upon trade secrets and patents.
We rely on a combination of laws and contractual restrictions on access to and use of proprietary information with
employees, customers, suppliers, affiliates and others to establish and protect our and their various intellectual property rights.
For examples, we have generally registered and continue to apply to register and renew, or secure by contract where
appropriate, trademarks and service marks as they are developed and used, and reserve, register and renew domain names as we
deem appropriate. We also generally seek to apply for patents or for similar statutory protections as and if we deem appropriate,
based on then current facts and circumstances, and will continue to do so in the future. No assurances can be given that these
efforts will result in adequate trademark and service mark protection, adequate domain name rights and protections, the
issuance of a patent or adequate patent protection against competitors and similar technologies. Third parties could also create
new products or methods that achieve similar results without infringing upon patents we own.
Despite these measures, challenges to our intellectual property rights could still arise, third parties could copy or otherwise
obtain and use the intellectual property without authorization and/or laws regarding the enforceability of existing intellectual
property rights could change in an adverse manner. The occurrence of any of these events could result in the erosion of our
various brands and limitations on our ability to control marketing online using our various domain names, as well as impede our
ability to effectively compete against competitors with similar technologies, any of which could adversely affect our business,
financial condition and results of operations.
We depend on our key personnel.
Our future success depends upon our ability to identify, hire, develop, motivate and retain highly skilled, diverse
individuals, particularly in the case of senior and executive management. Competition for well-qualified employees across our
various businesses is intense and we must attract new (and retain existing) employees to compete effectively. While we have
established programs, we may not be able to continue to attract new (and retain existing) key and other employees in the future,
especially in the technical fields of engineering and product. In addition, if we do not ensure the effective transfer of knowledge
and smooth transitions (particularly in the case of senior and executive management) across our various businesses, our
business, financial condition and results of operations, could be adversely affected.
Launch of consumer financing payment operation could be interrupted as a result of conditions outside of our control.
Our ability to launch a new consumer financing option for our consumers could be negatively affected by conditions
outside our control. If capital market conditions have a material negative change, there is a risk that our business partner that
administers the consumer financing program may not be able to fulfill its obligations under that agreement. In addition, the
tightening of credit markets may restrict the ability and willingness of consumers to make book services in our Marketplace.
Failure to obtain and maintain required licenses or to comply with applicable regulations could adversely affect our
business, financial condition and results of operations.
We may be required under certain state and local government regulations to obtain and maintain licenses to perform pre-
priced booking services in our Marketplace. Typically, licenses must be renewed annually and may be revoked or suspended for
cause at any time. In some jurisdictions, the loss of a license for cause may lead to the loss of licenses in other jurisdictions and
could make it more difficult to obtain additional licenses. Although we do not anticipate any material difficulties occurring in
the future, the failure to receive or retain a license, or any other required permit, in a particular location, or to continue to
qualify for, or renew licenses, could negatively impact our business. We may also spend significant amounts of money and
effort to obtain licenses and continued compliance with applicable regulations. If we fail to comply with such licensing and
permit regulations, we may be subject to various sanctions and/or penalties and fines or may be required to cease operations in
such location until we achieve compliance, which could have an adverse effect on our business, financial condition and results
of operations.
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Risks Related to Our Relationship with IAC
IAC controls our company and will have the ability to control the direction of our business.
As of January 31, 2021, IAC owned all of our outstanding Class B common stock, representing approximately 84.3% of
our total outstanding shares of capital stock and approximately 98.2% of the total combined voting power of our outstanding
capital stock. For so long as IAC owns shares of our capital stock that represent a majority of the combined voting power of our
outstanding capital stock, it will be able to control any corporate action that requires a stockholder vote, regardless of the vote
of any other stockholder (subject to certain limited exceptions for certain class votes). As a result, IAC has (and we expect will
continue to have) the ability to control significant corporate activities, including:
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the election of our board of directors (subject to certain provisions of the investor rights agreement between us and
IAC) and, through our board of directors, decision-making with respect to our business direction and policies,
including the appointment and removal of our officers;
acquisitions or dispositions of businesses or assets, mergers or other business combinations;
issuances of shares of our Class A common stock, Class B common stock and Class C common stock and our capital
structure generally;
corporate opportunities that may be suitable for us and IAC, subject to the corporate opportunity provisions in our
amended and restated certificate of incorporation (as described below);
stock repurchases;
our financing activities, including the issuance of debt securities and/or the incurrence of other indebtedness generally;
the payment of one-time or recurring dividends; and
the number of shares available for issuance under our equity incentive plans.
This voting control will limit the ability of other stockholders to influence corporate matters and, as a result, we may take
actions that stockholders other than IAC do not view as beneficial. This voting control may also discourage transactions
involving a change of control of our company, including transactions in which holders of shares of our Class A common stock
might otherwise receive a premium for their shares.
Even if IAC owns shares of our capital stock representing less than a majority of the total combined voting power of our
outstanding capital stock, so long as IAC owns shares representing a significant percentage of our total combined voting power,
IAC will have the ability to substantially influence these significant corporate activities.
In addition, pursuant to the investor rights agreement between us and IAC, IAC has the right to maintain its level of
ownership in us to the extent we issue additional shares of our capital stock in the future and, pursuant to the employee matters
agreement between us and IAC, IAC may receive payment for certain compensation expenses through the receipt of additional
shares of our capital stock. For a more complete summary of our various agreements with IAC, see “Note 15-Related Party
Transactions with IAC” to the consolidated financial statements included in “Item 8-Consolidated Financial Statements and
Supplementary Data.”
Until such time as IAC no longer controls or has the ability to substantially influence us, we will continue to face the risks
described in this “Risk Factors” section relating to IAC’s control of us and the potential conflicts of interest between us and
IAC.
Our amended and restated certificate of incorporation could prevent us from benefiting from certain corporate
opportunities.
Our amended and restated certificate of incorporation has a “corporate opportunity” provision that requires us to renounce
any interests or expectancy in corporate opportunities for both us and IAC. This provision also includes a disclaimer that states
that we recognize that: (i) any of our directors or officers who are also officers, directors, employees or other affiliates of IAC
or its affiliates (except that we and our subsidiaries are not considered affiliates of IAC or its affiliates for purposes of this
provision) and (ii) IAC itself, will have no duty to offer or communicate information regarding such corporate opportunities to
us. Generally, neither IAC nor any of our officers or directors who are also officers or directors of IAC or its affiliates will be
liable to us or any of our stockholders for breach of any fiduciary duty by reason of the fact that any such person pursues or
acquires any corporate opportunity for the account of IAC or any of its affiliates, directs or transfers such corporate opportunity
to IAC or any of its affiliates or does not communicate information regarding such corporate opportunity to us. This corporate
opportunity provision may exacerbate conflicts of interest between us and IAC because the provision effectively permits any of
our directors or officers who also serves as a director or officer of IAC to choose to direct a corporate opportunity to IAC
instead of us.
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IAC’s interests may conflict with our interests and the interests of our other stockholders. Conflicts of interest between us
and IAC could be resolved in a manner unfavorable to us and our other stockholders.
Various conflicts of interest between us and IAC could arise. As of the date of this report, five of our eleven directors are
current directors or executive officers of IAC. Ownership interests of these individuals and IAC in our capital stock and
ownership interests of our directors and officers in IAC capital stock, or service by an individual as either a director and/or
officer of both companies, could create or appear to create potential conflicts of interest when such individuals are faced with
decisions relating to us. These decisions could include:
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corporate opportunities;
the impact that operating or capital decisions (including the incurrence of indebtedness) relating to our business may
have on IAC's consolidated financial statements and/or current or future indebtedness (including related covenants);
business combinations involving us;
our dividend and stock repurchase policies;
• management stock ownership; and
•
the intercompany agreements and services between us and IAC.
Potential conflicts of interest could also arise if we decide to enter into new commercial arrangements with IAC in the
future or in connection with IAC’s desire to enter into new commercial arrangements with third parties. Additionally, IAC may
be constrained by the terms of agreements relating to its indebtedness from taking actions, or permitting us to take actions, that
may be in our best interest.
Furthermore, disputes may arise between us and IAC relating to our past and ongoing relationships, and these potential
conflicts of interest may make it more difficult for us to favorably resolve such disputes, including those related to:
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tax, employee benefit, indemnification and other matters arising from the Combination;
the nature, quality and pricing of services IAC agrees to provide to us;
sales or other disposals by IAC of all or a portion of its ownership interest in us; and
business combinations involving us.
We may not be able to resolve any potential conflicts, and even if we do, the resolution may be less favorable to us than if
we were dealing with an unaffiliated third-party. While we are controlled by IAC, we may not have the leverage to negotiate
amendments to our various agreements with IAC (if required) on terms as favorable to us as those we would negotiate with an
unaffiliated third-party.
We rely on exemptions from certain NASDAQ corporate governance requirements that provide protection to stockholders of
other companies.
Because IAC owns more than 50% of the combined voting power of our outstanding capital stock, we are a “controlled
company” under the Marketplace Rules of The Nasdaq Stock Market, LLC (the “Marketplace Rules”). As a “controlled
company,” we are exempt from compliance with certain Marketplace Rules related to corporate governance, including the
following requirements:
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that a majority of our board of directors consists of “independent directors” (as defined in the Marketplace Rules); and
that we have a nominating/governance committee composed entirely of independent directors with a written charter
addressing the committee’s purpose and responsibilities.
Accordingly, for so long as we are a “controlled company” and avail ourselves of these exemptions, our stockholders will
not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance
requirements of the Marketplace Rules.
IAC’s desire to maintain flexibility with respect to its ability to distribute the shares of our capital stock it holds on a tax-free
basis to its stockholders, and its desire to preserve the ability to maintain tax consolidation for U.S. federal income tax
purposes, may prevent us from pursuing opportunities to raise capital, acquire other businesses or provide equity incentives
to our employees, or otherwise impact our ability to manage our capital structure.
Under current laws, IAC must retain beneficial ownership of at least 80% of our combined voting power and 80% of each
class of our non-voting capital stock (if any is outstanding) in order to effect a tax-free distribution of our shares held by IAC to
its stockholders. IAC has advised us that it does not have any present intention or plans to undertake such a tax-free
distribution. However, IAC does currently intend to use its majority voting interest to retain its ability to engage in such a
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transaction. In addition, IAC must maintain ownership of at least 80% of our outstanding capital stock in order to maintain tax
consolidation with us for U.S. federal income tax purposes. IAC has advised us that it currently intends to take such actions, or
cause the Company to take such actions, as may be necessary in order to preserve tax consolidation. Each of these intentions
may cause IAC not to support transactions that we wish to pursue that involve issuing shares of our capital stock, including for
capital-raising purposes, as consideration for an acquisition or as equity incentives to our employees, or otherwise impact our
overall capital management strategy. Our inability to pursue such transactions, or any reduced flexibility in the management of
our capital structure, may adversely affect our business, financial condition and results of operations.
Our agreements with IAC will require us to indemnify IAC for certain tax liabilities and may limit our ability to engage in
desirable strategic or capital-raising transactions.
Pursuant to our tax sharing agreement with IAC, we generally will be responsible and will be required to indemnify IAC
for: (i) all taxes imposed with respect to any consolidated, combined or unitary tax return of IAC or its subsidiaries that includes
us or any of our subsidiaries to the extent attributable to us or any of our subsidiaries (excluding certain taxes attributable to
Angie’s List and its subsidiaries for taxable periods (or portions thereof) ending on or before the completion of the
Combination), as determined under the tax sharing agreement, and (ii) all taxes imposed with respect to any consolidated,
combined, unitary or separate tax returns of ours or any of our subsidiaries. To the extent IAC fails to pay taxes imposed with
respect to any consolidated, combined or unitary tax return of IAC or one of its subsidiaries that includes us or any of our
subsidiaries, the relevant taxing authority could seek to collect such taxes (including taxes for which IAC is responsible under
the tax sharing agreement) from us or our subsidiaries.
IAC does not have a present plan or intention to undertake a tax-free spin-off of its interest in us. Under the tax sharing
agreement, we generally will be responsible for any taxes and related amounts imposed on IAC or us (or our respective
subsidiaries) that arise from the failure of a future spin-off of IAC’s retained interest in us to qualify as a transaction that is
generally tax-free for U.S. federal income tax purposes under Section 368(a)(1)(D) and/or Section 355 of the Internal Revenue
Code of 1986, as amended (the “Code”), to the extent that the failure to so qualify is attributable to: (i) a breach of the relevant
representations and covenants made by us in the tax sharing agreement (or any representation letter provided in support of any
tax opinion or ruling obtained by IAC with respect to the U.S. federal income tax treatment of such spin-off), (ii) an acquisition
of our equity securities or assets or (iii) any other action or inaction by us after any such spin-off.
To preserve the tax-free treatment of any potential future spin-off by IAC of its interest in us, the tax sharing agreement
restricts us and our subsidiaries, for the two-year period following any such spin-off (except in specific circumstances), from:
(i) entering into any transaction pursuant to which shares of our capital stock would be acquired above a certain threshold,
(ii) merging, consolidating or liquidating, (iii) selling or transferring assets above certain thresholds, (iv) redeeming or
repurchasing stock (with certain exceptions), (v) altering the voting rights of our capital stock, (vi) actions and inactions that
are inconsistent with representations or covenants in any tax opinion or private letter ruling document or (vii) ceasing to engage
in any active trade or business as defined in the Code. The indemnity obligations and other limitations under the tax sharing
agreement could have an adverse effect on our business, financial condition and results of operations.
Future sales or distributions of shares of our capital stock by IAC could depress the price of our Class A common stock.
IAC has the right to sell or distribute to its stockholders all or a portion of the shares of our capital stock that it holds.
Although as of the date of this report IAC has advised us that it does not have any present intention or plans to undertake such a
sale or distribution, sales by IAC in the public market or distributions to its stockholders of substantial amounts of our capital
stock (shares of Class B common stock or Class A common stock) could depress the price of our Class A common stock. In
addition, IAC has the right, subject to certain conditions, to require us to file registration statements covering the sale of the
shares of our capital stock it holds or to include such shares in other registration statements that we may file. If IAC exercises
these registration rights and sells all or a portion of the shares of our capital stock it holds, the price of our Class A common
stock could decline.
The services that IAC provides to us may not be sufficient to meet our needs.
We expect IAC to continue to provide us with corporate and shared services related to corporate functions, such as
executive oversight, risk management, information technology, accounting, audit, legal, investor relations, tax, treasury and
other services in exchange for the fees specified in the services agreement between us and IAC. Since the services agreement
automatically renews for one (1) year periods for as long as IAC holds a majority of the outstanding shares of our common
stock, we may not be able to modify these services in a manner desirable to us as a standalone public company. Although we
intend to replace portions of the services currently provided by IAC, we may not be able to perform these services ourselves
and/or find appropriate third parties to do so at a reasonable cost (or at costs at or below those charged by IAC), which could
adversely affect our business, financial condition and results of operations.
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Risks Related to Our Indebtedness
Our current and future indebtedness could affect our ability to operate our business, which could have a material adverse
effect on our financial condition and results of operations.
As of December 31, 2020, we had total debt outstanding of approximately $500.0 million related our senior notes, $220.0
million under our term loan agreement, and borrowing availability of $250.0 million under our revolving credit facility. The
indebtedness outstanding under our term loan agreement is (and indebtedness under our revolving credit facility will be)
guaranteed by our wholly owned material domestic subsidiaries and secured by substantially all of our assets and those of our
guarantors, subject to certain exceptions. Our term loan agreement and revolving credit facility contain several covenants that
impose significant operating and financial restrictions on us, including restrictions on our ability to, among other things:
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create liens on certain assets;
incur additional indebtedness;
• make certain investments and acquisitions;
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•
•
consolidate, merge, sell or otherwise dispose of all or substantially all of our assets;
sell certain assets;
pay dividends on (or make distributions in respect of) our capital stock or make restricted payments or stock
repurchases;
enter into certain transactions with our affiliates; and
place restrictions on distributions from subsidiaries.
Any of these restrictions could limit our ability to plan for or react to market conditions and could otherwise restrict how
we operate our business. Any failure to comply with these covenants could result in a default under the term loan agreement,
which if not waived, could cause our lenders to foreclose on the assets we pledged to secure our term loan indebtedness and
force us into bankruptcy or liquidation. In addition, a default under our term loan agreement could trigger a cross default under
other current of future agreements (including our revolving credit facility).
In addition to the restrictions that limit our flexibility in operating our business, the terms of our indebtedness could:
•
•
•
•
•
limit our ability to obtain additional financing to fund working capital needs, acquisitions, capital expenditures, other
debt service requirements or for other purposes;
limit our ability to use operating cash flow in other areas of our business because we must dedicate a substantial
portion of these funds to service our indebtedness;
limit our ability to compete with other companies who are not as highly leveraged;
restrict us from making strategic acquisitions, developing properties or exploiting business opportunities; and
limit our ability to react to changing general economic conditions and market conditions in our industry.
Subject to certain restrictions, we and our subsidiaries may incur additional unsecured and secured indebtedness. If
additional indebtedness incurred in compliance with these restrictions is significant, the risks described above could increase.
We may not be able to generate sufficient cash to service all of our indebtedness.
Our ability to satisfy our debt obligations will depend upon, among other things:
•
•
our future financial and operating performance, which will be affected by prevailing economic conditions and
financial, business, regulatory and other factors, many of which are beyond our control; and
our future ability to borrow under our revolving credit facility, the availability of which will depend on, among other
things, our ability to comply with the covenants governing our indebtedness.
We may not be able to generate sufficient cash flow from our operations and/or borrow under our revolving credit facility
in amounts sufficient to meet our scheduled debt obligations. If so, we could be forced to reduce or delay capital expenditures,
sell assets or seek additional capital in a manner that complies with the terms (including certain restrictions and limitations) of
our current indebtedness. If these efforts do not generate sufficient funds to meet our scheduled debt obligations, we would
need to seek additional financing and/or negotiate with our lenders to restructure or refinance our indebtedness. Our ability to
do so would depend on the condition of the capital markets and our financial condition at such time. Any such financing,
restructuring or refinancing could be on less favorable terms than those governing our current indebtedness and would need to
comply with the terms (including certain restrictions and limitations) of our existing indebtedness.
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Our variable rate indebtedness subjects us to interest rate risk.
As of December 31, 2020, we have $220.0 million of indebtedness outstanding under our term loan, which bears interest at
variable rates. Indebtedness under our term loan is (and any indebtedness under our revolving credit facility will be) at variable
interest rates, which exposes us to interest rate risk. For details regarding interest rates applicable to the indebtedness
outstanding under our term loan as of December 31, 2020, see “Item 7A-Quantitative and Qualitative Disclosures About
Market Risk.”
Risks Related to Ownership of Our Class A Common Stock
The multiclass structure of our capital stock has the effect of concentrating voting control with IAC and limiting the ability
of holders of our Class A common stock to influence corporate matters.
Each share of our Class B common stock has ten votes per share and each share of our Class A common stock has one vote
per share. As of January 31, 2021, IAC owned all of the shares of our outstanding Class B common stock, representing
economic and voting interests in us of approximately 84.4% and 98.2%, respectively. Due to the ten-to-one voting ratio
between our Class B common stock and Class A common stock, IAC (and any future holders of our Class B common stock,
collectively) will continue to control a substantial majority of the combined voting power of our capital stock. This concentrated
control will significantly limit the ability of holders of our Class A common stock to influence matters submitted to our
stockholders for approval.
The difference in the voting rights of our Class B common stock and Class A common stock may harm the value and
liquidity of our Class A common stock.
This difference in voting rights between our Class B common stock and Class A common stock could harm the value of
our Class A common stock to the extent that any investor or potential future purchaser of our Class A common stock ascribes
value to the right of the holders of our Class B common stock to ten votes per share. The existence of two classes of common
stock with different voting rights could result in less liquidity for our Class A common stock than if there were only one class of
common stock, which could adversely affect the price of our Class A common stock.
We do not expect to pay any cash dividends in the foreseeable future.
We have never declared or paid cash dividends and we currently have no plans to pay cash dividends on our Class A
common stock and/or Class B common stock. Instead, we currently anticipate that all of our future earnings will be retained to
support our operations and finance the growth and development of our business. Any future determination relating to our
dividend policy will be made by our board of directors and will depend on a number of factors, including:
•
•
•
•
•
•
•
•
our historic and projected financial condition, liquidity and results of operations;
our capital levels and needs;
tax considerations;
any acquisitions that we may consider;
statutory and regulatory prohibitions and other limitations;
the terms of any credit agreement or other borrowing arrangements that restrict our ability to pay cash dividends,
including our term loan agreement and revolving credit facility;
general economic conditions; and
other factors deemed relevant by our board of directors.
We are not obligated to pay dividends on our Class A common stock or Class B common stock. Consequently, investors
may need to rely on sales on their Class A common stock after price appreciation, which may never occur, as the only way to
realize any future gains on their investment.
The Delaware General Corporation Law and certain provisions in our amended and restated certificate of incorporation and
bylaws may discourage, delay or prevent a change of control of our company and/or changes in our management.
The Delaware General Corporation Law (the “DGCL”) and our amended and restated certificate of incorporation and
bylaws contain provisions that could discourage, delay or prevent a change in control of our Company and/or changes in our
management that our stockholders may deem advantageous, including provisions that: (i) authorize the issuance of “blank
check” preferred stock, which our board of directors could issue to discourage a takeover attempt; (ii) limit the ability of our
stockholders to call special meetings of stockholders; and (iii) provide that our board of directors is expressly authorized to
make, alter or repeal our bylaws.
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Any provision of the DGCL or our amended and restated certificate of incorporation and bylaws that has the effect of
delaying or deterring a change in control could limit the opportunity for our stockholders to receive a related premium for their
Class A common stock and could also affect the price that some investors are willing to pay for our Class A common stock.
The choice of forum provision in our amended and restated bylaws could limit the ability of our stockholders to obtain the
judicial forum of their choice for certain disputes.
Our amended and restated bylaws provide that unless we consent in writing to the selection of an alternative forum, a state
court within the State of Delaware (or, if no state court located within Delaware has jurisdiction, the federal district court for the
District of Delaware) will be the sole and exclusive forum for all of the following actions: (i) any derivative action or
proceeding brought on our behalf, (ii) any action asserting a claim for (or based on breach of) fiduciary duty owed by any of our
current or former directors, officers or other employees to us or to our stockholders, (iii) any action asserting a claim against us
or any of our current or former directors, officers or other employees pursuant to the DGCL, our certificate of incorporation or
our bylaws, (iv) any action asserting a claim relating to or involving us that is governed by the internal affairs doctrine or
(v) any action asserting an “internal corporate claim” (as defined under the DGCL). This choice of forum provision may limit
the ability of our stockholders to bring claims in a judicial forum that they find favorable for disputes with us or our current or
former directors, officers or other employees, which may discourage such lawsuits. Alternatively, if a court were to find our
choice of forum provision to be inapplicable or unenforceable in an action, we could incur additional costs associated with
resolving such action in other jurisdictions, which could harm our business, results of operations, and financial condition.
Our Class A common stock is currently ineligible for inclusion in certain stock market indices which may adversely affect
the trading market for our Class A common stock.
Policies adopted by certain operators of U.S. stock market indices exclude equity securities of companies with multiple
classes of outstanding publicly traded equity securities and/or companies with outstanding classes of publicly traded equity
securities that have no voting rights (or “low” voting rights relative to another outstanding class of equity securities) from their
stock indices and similar policies may be implemented by other operators of stock market indices in the future. Given the
multiclass structure of our capital stock and IAC’s control over us, our Class A common stock is not currently eligible for
inclusion in the S&P Composite 1500 (and its three component indices) and any indices managed by FTSE Russell and, as a
result, mutual funds, exchange-traded funds and other investment vehicles that attempt to passively track these indices will not
be investing in our stock. Exclusion from these stock market indices (and any others in the future) could make our Class A
common stock less attractive which could adversely affect the market price of our Class A common stock.
Item 1B. Unresolved Staff Comments
Not applicable.
Item 2. Properties
We believe that the facilities for our management and operations are generally adequate for our current and near-term
future needs. Our facilities, most of which are leased in the United States and abroad, consist of executive and administrative
offices, sales offices and data centers. We do not anticipate any future problems renewing or obtaining suitable leases for us or
any of our businesses. We currently lease approximately 152,000 square feet of office for our corporate headquarters,
HomeAdvisor business and administrative and sales force personnel in Denver, Colorado.
Item 3. Legal Proceedings
Overview
In the ordinary course of business, the Company and its subsidiaries are (or may become) parties to claims, suits,
regulatory and government investigations, and other proceedings involving property, personal injury, intellectual property,
privacy, tax, labor and employment, competition, commercial disputes, consumer protection and other claims, as well as
stockholder derivative actions, class action lawsuits and other matters. Such claims, suits, regulatory and government
investigations, and other proceedings could result in fines, civil or criminal penalties, or other adverse consequences. The
amounts that may be recovered in such matters may be subject to insurance coverage. Although the results of legal proceedings
and claims cannot be predicted with certainty, neither the Company nor any of its subsidiaries is currently a party to any legal
proceedings the outcome of which, we believe, if determined adversely to us, would individually or in the aggregate have a
material adverse effect on our business, financial condition or results of operations. However, the outcome of such matters is
inherently unpredictable and subject to significant uncertainties.
The litigation matter described below involves issues or claims that may be of particular interest to our stockholders,
regardless of whether this matter may be material to our financial position or operations based upon the standard set forth in the
rules of the Securities and Exchange Commission.
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Service Professional Class Action Litigation against HomeAdvisor
In July 2016, a putative class action, Airquip, Inc. et al. v. HomeAdvisor, Inc. et al., No. 1:16-cv-1849, was filed in the
U.S. District Court for the District of Colorado. The complaint, as amended in November 2016, alleges that our HomeAdvisor
business engages in certain deceptive practices affecting the service professionals who join its network, including charging
them for substandard customer leads and failing to disclose certain charges. The complaint seeks certification of a nationwide
class consisting of all HomeAdvisor service professionals since October 2012, asserts claims for fraud, breach of implied
contract, unjust enrichment and violation of the federal RICO statute and the Colorado Consumer Protection Act (“CCPA”),
and seeks injunctive relief and damages in an unspecified amount. In December 2016, HomeAdvisor filed a motion to dismiss
the RICO and CCPA claims. In September 2017, the court issued an order granting the motion and dismissing those claims. In
October 2017, HomeAdvisor filed an answer denying the material allegations of the remaining claims in the complaint. In May
2018, the plaintiffs filed a motion for leave to file a second amended complaint that would add nine new named plaintiffs, five
new defendants (including ANGI Homeservices), and 55 new claims, most of them for various alleged violations of the laws of
nine separate states. In June 2018, HomeAdvisor opposed the motion on grounds including that it was filed more than one year
after the court’s deadline to amend pleadings.
In July 2018, the plaintiffs’ counsel filed a separate putative class action in the U.S. District Court for the District of
Colorado, Costello et al. v. HomeAdvisor, Inc. et al., No. 1:18-cv-1802, on behalf of the same nine proposed new plaintiffs in
the Airquip case, naming as defendants HomeAdvisor, ANGI Homeservices and IAC (as well as an unrelated company), and
asserting 45 claims largely duplicative of those asserted in the proposed second amended complaint in the Airquip case. In
November 2018, the judge presiding over the Airquip case issued an order consolidating the two cases to proceed before him
under the caption In re HomeAdvisor, Inc. Litigation.
In January 2019, the plaintiffs renewed their motion for leave to file a consolidated second amended complaint, naming as
defendants, in addition to HomeAdvisor, ANGI Homeservices and IAC, CraftJack, Inc. (a wholly-owned subsidiary of the
Company and thus, an entity affiliated with HomeAdvisor) and two unrelated entities. In February 2019, the defendants
opposed the motion on various grounds. In September 2019, the court issued an order granting the plaintiffs’ motion. In
October and December 2019, the four defendants affiliated with HomeAdvisor filed motions to dismiss certain claims in the
amended complaint. On September 29, 2020, the court issued an order granting in part and denying in part the defendants’
motions to dismiss. Discovery in the case is well underway and the issue of class certification remains to be litigated.
The Company believes that the allegations in this lawsuit are without merit and will continue to defend vigorously against
them.
Item 4. Mine Safety Disclosures
Not applicable.
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Market for Registrant’s Common Equity and Related Stockholder Matters
Our Class A common stock is quoted on The Nasdaq Global Select Market (“NASDAQ”) under the ticker symbol
“ANGI.” There is no established public trading market for our Class B common stock.
As of January 29, 2021, there were 30 holders of record of our Class A common stock. Because the substantial majority of
the outstanding shares of our Class A common stock are held by brokers and other institutions on behalf of shareholders, we are
not able to estimate the total number of beneficial shareholders represented by these record holders. As of January 29, 2021,
there was one holder of record and beneficial shareholder of our Class B common stock.
Dividends
We do not currently expect that any cash or other dividends will be paid to holders of our Class A or Class B common
stock in the near future. Any future cash dividend or other dividend declarations are subject to the determination of the
Company’s Board of Directors.
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Unregistered Sales of Equity Securities
There were no unregistered sales of our capital stock during the quarter ended December 31, 2020.
Issuer Purchases of Equity Securities
The following table sets forth purchases by the Company of its Class A common stock during the quarter ended
December 31, 2020:
Period
October 2020
November 2020
December 2020
Total
(a)
Total Number of
Shares
Purchased
(b)
Average Price
Paid Per Share
(c)
Total Number of
Shares
Purchased as
Part of
Publicly
Announced
Plans or
Programs(1)
(d)
Maximum
Number of
Shares that May
Yet Be
Purchased Under
Publicly
Announced
Plans or
Programs(2)
— $
— $
781,969 $
781,969 $
—
—
11.86
11.86
—
—
781,969
781,969
20,053,530
20,053,530
19,271,561
19,271,561
________________________________________
(1)
(2)
Reflects repurchases made pursuant to the share repurchase authorizations previously announced in March 2020 and February 2019.
Represents the total number of shares of Class A common stock that remained available for repurchase as of December 31, 2020 pursuant to the
March 2020 and February 2019 share repurchase authorizations. The Company may repurchase shares pursuant to this share repurchase
authorization over an indefinite period of time in the open market and in privately negotiated transactions, depending on those factors Company
management deems relevant at any particular time, including, without limitation, market conditions, share price and future outlook.
From January 1, 2021 through February 4, 2021, the Company repurchased an additional approximately 0.4 million shares at an average price of
$11.85 per share. As of February 4, 2021, there were approximately 18.9 million shares remaining in the March 2020 and February 2019 share
repurchase authorizations.
Item 6. Selected Financial Data
Not required.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
MANAGEMENT OVERVIEW
ANGI 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 240,000 domestic service professionals actively sought consumer matches, completed jobs or advertised work
through ANGI Homeservices’ platforms and consumers turned to at least one of our brands to find a professional for
approximately 32 million projects during the year ended December 31, 2020. We have established category-transforming
products with brands such as HomeAdvisor, Angie’s List, and Handy.
The HomeAdvisor digital marketplace service connects consumers with service professionals nationwide for home repair,
maintenance and improvement projects. HomeAdvisor provides consumers with tools and resources to help them find local,
pre-screened and customer-rated service professionals, as well as instantly book appointments with those professionals online
or connect with them by telephone. On October 19, 2018, the Company acquired Handy Technologies, Inc. (“Handy”), a
leading platform for connecting individuals looking for household services (primarily cleaning and handyman services) with
top-quality, pre-screened independent service professionals. We refer to the HomeAdvisor and Handy businesses in the United
States as the (“Marketplace”). The Company also owns and operates Angie’s List, Inc. (“Angie’s List”), which connects
consumers with service professionals for local services through a nationwide online directory of service professionals in over
700 service categories and provides consumers with valuable tools, services and content, including verified reviews, to help
them research, shop and hire for local services. We also own and operate Fixd Repair, mHelpDesk, and CraftJack.
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The Company has two operating segments: (i) North America (United States and Canada), which includes HomeAdvisor,
Angie’s List, Handy, Fixd Repair, mHelpDesk, HomeStars, and CraftJack and (ii) Europe, which includes Travaux,
MyHammer, MyBuilder, Werkspot and Instapro.
In the U.S., the Company markets its services to consumers through search engine marketing, television advertising and
affiliate agreements with third parties. The Company also markets its services to consumers through email, digital display
advertisements, partnerships with other contextually related websites and, to a lesser extent, through relationships with certain
retailers, direct mail and radio advertising. The Company markets subscription packages and time-based advertising to service
professionals primarily through its sales force, as well as through search engine marketing, digital media advertising and direct
relationships with trade associations and manufacturers. We have made, and expect to continue to make, substantial investments
in digital and traditional advertising (with continued expansion into new and existing digital platforms) to consumers and
service professionals to promote our products and services and to drive traffic to our various platforms and service
professionals.
Defined Terms and Operating Metrics:
Unless otherwise indicated or as the context otherwise requires certain terms used in this annual report, which include the
principal operating metrics we use in managing our business, as defined below:
• Marketplace Revenue primarily includes revenue from the HomeAdvisor and Handy domestic marketplaces,
including consumer connection revenue for consumer matches, revenue from pre-priced jobs sourced through the
HomeAdvisor and Handy platforms and service professional membership subscription revenue. It excludes revenue
from Angie’s List and HomeStars. Effective January 1, 2020, Fixd Repair has been moved to Marketplace from
Advertising and Other and prior year amounts have been reclassified to conform to the current year presentation.
•
Advertising and Other Revenue includes Angie’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 and Handy 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 and Handy platforms in the period.
• Marketplace Transacting Service Professionals (“Marketplace Transacting SPs”) are the number of
HomeAdvisor and Handy domestic service professionals that paid for consumer matches or performed a job sourced
through the HomeAdvisor and Handy platforms during the most recent quarter.
•
•
•
•
Advertising Service Professionals (“Advertising SPs”) are the total number of Angie’s List 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 Term Loan - due November 5, 2023. Pursuant to the joinder agreement entered into on August 12,
2020, ANGI Group became the successor borrower under the ANGI Group Term Loan and ANGI Homeservices
Inc.’s obligations thereunder were terminated. The outstanding balance of the ANGI Group Term Loan as of
December 31, 2020 is $220.0 million and quarterly principal payments are required through maturity. In December
2020, ANGI Group prepaid its required quarterly principal payments for the year ending December 31, 2021 in the
aggregate amount of $13.8 million. At December 31, 2020 and 2019, the ANGI Group Term Loan bore interest at
LIBOR plus 2.00% and 1.50%, respectively. The interest rate was 2.16% and 3.25% at December 31, 2020 and 2019,
respectively.
ANGI Group Revolving Facility - The ANGI Group $250.0 million revolving credit facility expires on November
5, 2023. Pursuant to the joinder agreement entered into on August 12, 2020, ANGI Group became the successor
borrower under the ANGI Group Revolving Facility and ANGI Homeservices Inc.’s obligations thereunder were
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terminated. At December 31, 2020 and 2019, there were no outstanding borrowings under the ANGI Group
Revolving Facility. The ANGI Group Revolving Facility and ANGI Group Term Loan are collectively referred to as
the ANGI Group Credit Agreement.
Components of Results of Operations
Sources of 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 revenue from completed jobs sourced through the HomeAdvisor and Handy 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 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.
Prior to January 1, 2020, Handy recorded revenue on a net basis. Effective January 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 effective January 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 effective
January 1, 2020. The change to gross revenue reporting for Handy and HomeAdvisor’s pre-priced product offering, effective
January 1, 2020, resulted in an increase in revenue of $73.8 million during the year ended December 31, 2020.
Operating Costs and Expenses:
•
•
Cost of revenue - consists primarily of payments made to independent service professionals who perform work
contracted under pre-priced arrangements through the HomeAdvisor and Handy platforms, credit card processing
fees, compensation expense and other employee-related costs 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 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
earnings attributable to ANGI Homeservices Inc. shareholders to operating (loss) income to consolidated Adjusted EBITDA for
the years ended December 31, 2020 and 2019.
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The following discussion should be read in conjunction with Item 8. Consolidated Financial Statements and
Supplementary Data. For a discussion regarding our financial condition and results of operations for the year ended
December 31, 2019 compared to the year ended December 31, 2018, please refer to Part II, Item 7, “Management’s Discussion
and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended
December 31, 2019, filed with the SEC on February 27, 2020.
COVID-19 Update
The impact on the Company from the COVID-19 outbreak, which has been declared a “pandemic” by the World 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.
When COVID-19 first impacted North America and Europe in the spring of 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). Toward the end of the spring of 2020, the Company experienced a rebound in service requests, exceeding pre-
COVID-19 growth levels, driven by increased demand from homeowners who 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 second half
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 addition, North America, which represents 95% of the Company’s revenue for the year ended December 31, 2020,
experienced a significant resurgence of the COVID-19 virus with record levels of infections being reported during the fourth
quarter of 2020 and continuing into the first quarter of 2021. 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 materially and adversely affect our business, financial condition and results of operations.
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Results of Operations for the Years Ended December 31, 2020 and 2019
Revenue
Revenue:
Marketplace:
2020
Years Ended December 31,
$ Change
(Amounts in thousands)
% Change
2019
Consumer connection revenue
$
1,054,660
$
141,127
15%
$
913,533
Service professional membership subscription revenue
Other revenue
Total Marketplace Revenue
Advertising and Other Revenue
North America
Europe
Total Revenue
Percentage of Total Revenue:
North America
Europe
Total Revenue
Operating metrics:
Marketplace Service Requests
Marketplace Monetized Transactions
Marketplace Transacting SPs
Advertising SPs
50,975
25,685
1,131,320
264,108
1,395,428
72,497
(12,897)
(20)%
10,422
138,652
6,884
145,536
(3,816)
68%
14%
3%
12%
(5)%
11%
$
1,467,925
$
141,720
95 %
5 %
100 %
63,872
15,263
992,668
257,224
1,249,892
76,313
$
1,326,205
94 %
6 %
100 %
Years Ended December 31,
2020
Change
% Change
2019
(Amounts in thousands)
32,412
16,672
208
39
5,036
604
22
2
18 %
4 %
12 %
5 %
27,376
16,068
186
37
North America revenue increased $145.5 million, or 12%, driven by an increase in Marketplace Revenue of $138.7
million or 14%, in addition to an increase of $6.9 million, or 3%, in Advertising and Other Revenue. The increase in
Marketplace Revenue was primarily due to an increase in consumer connection revenue of $141.1 million, or 15%, which was
driven by an 18% increase in Marketplace Service Requests to 32.4 million resulting in a 4% increase in Marketplace
Monetized Transactions up to 16.7 million, and an increase in revenue of $73.8 million from the change to gross revenue
reporting for Handy and HomeAdvisor’s pre-priced product offering, effective January 1, 2020.
Europe revenue decreased $3.8 million, or 5%, 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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Cost of revenue
Cost of revenue (exclusive of depreciation shown separately
below)
As a percentage of revenue
________________________
NM = Not meaningful
2020
Years Ended December 31,
$ Change
(Dollars in thousands)
% Change
2019
$
173,281 $
126,788
NM
$
46,493
12%
4%
North America cost of revenue increased $126.8 million, due primarily to the change from net to gross revenue reporting
for Handy and HomeAdvisor's pre-priced product offering effective January 1, 2020, as well as growth of the pre-priced
product offering itself.
Selling and marketing expense
Selling and marketing expense
As a percentage of revenue
2020
Years Ended December 31,
$ Change
(Dollars in thousands)
% Change
2019
$
762,590 $
29,367
4%
$
733,223
52%
55%
North America selling and marketing expense increased $34.2 million, or 5%, driven by increases of $23.1 million in
compensation expense, $7.1 million in outsourced personnel and consulting costs, $6.1 million in advertising expense and $1.5
million software license and maintenance costs, partially offset by a decrease of $3.8 million in travel related expenses resulting
from the impact of COVID-19. The increase in compensation expense was due primarily to increased commission expense. The
increase in outsourced personnel and consulting costs was due primarily to various sales initiatives at Handy. 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 rather than the cost of each 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.
Europe selling and marketing expense decreased $4.8 million, or 11%, driven by decreases in advertising expense of
$2.8 million and compensation expense of $1.5 million. The decrease in advertising expense is due, in part, to mitigating the
negative impact of COVID-19 on revenue. 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 associated with headcount
reductions in France.
General and administrative expense
General and administrative expense
As a percentage of revenue
2020
Years Ended December 31,
$ Change
(Dollars in thousands)
% Change
2019
$
374,096 $
25,849
7%
$
348,247
25%
26%
North America general and administrative expense increased $25.1 million, or 8%, due primarily to increases of $13.9
million in the provision for credit losses due to higher Marketplace Revenue, the impact from COVID-19 on expected credit
losses and anticipated losses from Advertising service professionals, $13.9 million in compensation expense and $5.0 million in
professional fees, partially offset by decreases of $3.1 million in travel related expenses resulting from the impact of COVID-19
and $2.4 million in software license and maintenance costs. The increase in compensation expense is due primarily to an
increase of $17.2 million in stock-based compensation expense, partially offset by a decrease of $6.0 million in salary expense
resulting from reduced headcount. The increase in stock-based compensation expense is due primarily to the issuance of new
equity awards since 2019, a modification charge of $14.1 million related to the departure of the president and chief operating
officer of the Company in December 2020, and the reversal of $7.3 million in cumulative expense in 2019 related to certain
performance-based awards that did not vest. The increase in professional fees is due primarily to an increase in legal fees and
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outsourced personnel costs. The increase in outsourced personnel costs is due primarily to an increase in call volume related to
our customer service function.
Europe general and administrative expense increased $0.7 million, or 3%, due primarily to an increase of $1.2 million in
compensation expense resulting from severance costs associated with headcount reductions in France and an increase of $0.1
million in the provision for credit losses due, in part, from the impact of COVID-19 on expected credit losses, partially offset by
a $0.6 million in travel related expenses resulting from the impact of COVID-19.
Product development expense
Product development expense
As a percentage of revenue
2020
Years Ended December 31,
$ Change
(Dollars in thousands)
% Change
2019
$
68,803 $
4,603
7%
$
64,200
5%
5%
North America product development expense increased $4.0 million, or 7%, due primarily to increases in compensation
expense of $3.0 million and software license and maintenance costs of $0.9 million.
Europe product development expense increased $0.6 million, or 6%, due primarily to an increase of $0.8 million in
compensation expense due primarily to increased headcount.
Depreciation
Depreciation
As a percentage of revenue
2020
Years Ended December 31,
$ Change
(Dollars in thousands)
% Change
2019
$
52,621 $
12,706
32%
$
39,915
4%
3%
North America depreciation increased $11.0 million, or 29%, due primarily to continued growth, including the
development of capitalized software to support our products and services, partially offset by a decrease in leasehold
improvements.
Europe depreciation increased $1.7 million, or 69%, due primarily to continued growth, including the development of
capitalized software to support products and services.
Operating (loss) income
North America
Europe
Total
2020
Years Ended December 31,
$ Change
(Dollars in thousands)
% Change
2019
$
$
$
4,811 $
(44,156)
(90)% $
48,967
(11,179)
(857)
(6,368) $
(45,013)
(8)%
NM
(10,322)
$
38,645
As a percentage of revenue
—%
3%
North America operating income decreased $44.2 million, due to the decrease in Adjusted EBITDA of $29.3 million,
described below, and increases of $15.3 million in stock-based compensation expense and $11.0 million in depreciation,
partially offset by a decrease of $11.5 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 factors described above in the general and
administrative expense discussion. The increase in depreciation was due primarily to the development of capitalized software to
support our products and services, partially offset by a decrease in leasehold improvements. The decrease in amortization of
intangibles was due primarily to lower expense as certain intangible assets became fully amortized in 2019 and 2020.
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Europe operating loss increased $0.9 million or 8%, due to an increase in Adjusted EBITDA loss of $0.2 million,
described below, and decreases of $1.1 million in amortization of intangibles and $0.1 million in stock-based compensation
expense.
At December 31, 2020, there is $77.2 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 2.2 years.
Adjusted EBITDA
North America
Europe
Total
2020
Years Ended December 31,
$ Change
(Dollars in thousands)
% Change
2019
$
$
178,854 $
(29,338)
(14)% $
208,192
(6,050)
(155)
(3)%
(5,895)
172,804 $
(29,493)
(15)% $
202,297
As a percentage of revenue
12%
15%
For a reconciliation of net earnings attributable to ANGI Homeservices 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 12—Segment Information” to the consolidated financial
statements included in “Item 8. Consolidated Financial Statements and Supplementary Data.”
North America Adjusted EBITDA decreased $29.3 million, or 14%, to $178.9 million, despite higher revenue, due
primarily to an increases of $126.9 million in cost of revenue and $13.9 million in the provision for credit losses due primarily
to the factors described above in the general and administrative expense discussion.
Europe Adjusted EBITDA loss increased $0.2 million, or 3%, to $6.1 million due primarily to the decrease of $3.8
million in revenue and an increase in the provision for credit losses of $0.1 million, partially offset by decreases in advertising
expense of $2.8 million and travel related expenses resulting from the impact of COVID-19 of $1.0 million.
Interest expense
Interest expense relates to interest on the Senior Notes and Term Loan and commitment fees on the undrawn Revolving
Facility.
For a detailed description of long-term debt, net see “Note 7—Long-term Debt” to the consolidated financial statements
included in “Item 8. Consolidated Financial Statements and Supplementary Data.”
Interest expense
2020
Years Ended December 31,
$ Change
(Dollars in thousands)
% Change
2019
$
14,178 $
2,685
23%
$
11,493
Interest expense increased primarily due to the issuance of the Senior Notes in August 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.
Other income, net
Other income, net
2020
Years Ended December 31,
$ Change
(Dollars in thousands)
% Change
2019
$
1,218 $
(5,276)
(81)% $
6,494
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Other income, net in 2020 principally includes interest income of $1.7 million, partially offset by a $0.2 million mark-to-
market charge for an indemnification claim related to the Handy acquisition that was settled in ANGI shares held in escrow.
Other income, net in 2019 principally included interest income of $8.0 million and net foreign currency exchange gains of
$0.6 million, partially offset by a $1.8 million mark-to-market charge for an indemnification claim related to the Handy
acquisition that was settled in ANGI shares held in escrow in 2020.
Income tax benefit
Income tax benefit
Effective income tax rate
2020
Years Ended December 31,
$ Change
(Dollars in thousands)
% Change
2019
$
15,168 $
13,500
NM
$
1,668
NM
NM
For further details of income tax matters, see “Note 3—Income Taxes” to the consolidated financial statements included
in “Item 8. Consolidated Financial Statements and Supplementary Data.”
In 2020, the income tax benefit was due primarily to a reduction to deferred taxes due to the true-up of the state tax rate of
an indefinite-lived intangible asset, a change in judgement about the valuation allowance at the beginning of the year, and
excess tax benefits generated by the exercise and vesting of stock-based awards.
In 2019, the income tax benefit, despite pre-tax income, was due primarily to excess tax benefits generated by the exercise
and vesting of stock-based awards.
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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 (loss) earnings attributable to ANGI Homeservices Inc. shareholders to operating (loss)
income to consolidated Adjusted EBITDA:
Net (loss) earnings attributable to ANGI Homeservices Inc. shareholders
$
(6,283) $
34,829
Years Ended December 31,
2020
2019
(In thousands)
Add back:
Net earnings attributable to noncontrolling interests
Income tax benefit
Other income, net
Interest expense
Operating (loss) income
Add back:
Stock-based compensation expense
Depreciation
Amortization of intangibles
Adjusted EBITDA
2,123
(15,168)
(1,218)
14,178
(6,368)
485
(1,668)
(6,494)
11,493
38,645
83,649
52,621
42,902
172,804 $
68,255
39,915
55,482
202,297
$
For a reconciliation of operating (loss) income to Adjusted EBITDA for the Company’s reportable segments, see “Note
12—Segment Information” to the consolidated financial statements included in “Item 8. Consolidated Financial Statements and
Supplementary Data.”
Non-Cash Expenses That Are Excluded From Our 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
(“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 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.
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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.
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
Cash and cash equivalents and marketable debt securities:
United States
All other countries
Total cash and cash equivalents
Marketable securities (United States)
Total cash and cash equivalents and marketable debt securities
Long-term debt:
Senior Notes
Term Loan
Total long-term debt
Less: current portion of Term Loan
Less: unamortized debt issuance costs
Total long-term debt, net
December 31,
2020
2019
(In thousands)
$
793,679 $
$
$
$
19,026
812,705
49,995
862,700 $
500,000 $
220,000 $
720,000
—
7,723
$
712,277 $
377,648
12,917
390,565
—
390,565
—
247,500
247,500
13,750
1,804
231,946
The Company’s international cash can be repatriated without significant tax consequences.
Cash Flow Information
In summary, the Company’s cash flows are as follows:
Net cash provided by (used in):
Operating activities
Investing activities
Financing activities
Years Ended December 31,
2020
2019
(In thousands)
$
188,419 $
(103,954)
337,053
214,161
(40,633)
(121,532)
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, deferred income taxes, depreciation, and (gain) loss from the sale of a business.
2020
Adjustments to earnings consist primarily of $83.6 million of stock-based compensation expense, $78.2 million of
provision for credit losses, $52.6 million of depreciation, and $42.9 million of amortization of intangibles. The decrease from
changes in working capital consists primarily of an increase in accounts receivable of $79.8 million, partially offset by an
increase in accounts payable and other liabilities of $17.2 million, and a decrease in other assets of $6.0 million. The increase in
accounts receivable is primarily due 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 $100.0 million, capital
expenditures of $52.5 million, primarily related to investments in the development of capitalized software to support the
Company’s products and services, $2.3 million related to the acquisition of a business, partially offset by $50.0 million of
proceeds from maturities of marketable debt securities, and $0.7 million of net proceeds received in 2020 related to the
December 31, 2018 sale of Felix.
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Net cash provided by financing activities includes $500.0 million of proceeds from the issuance of the ANGI Group
Senior Notes and a $3.1 million distribution from IAC pursuant to the tax sharing agreement, net of $63.7 million for the
repurchase of 8.5 million of ANGI common stock, on a settlement date basis, at an average price of $7.47 per share, $64.1
million for the payment of withholding taxes on behalf of employees for stock-based awards that were net settled, $27.5 million
of principal payments on the Term Loan, including prepayment of the $13.8 million of principal payments that were otherwise
due in 2021, $6.5 million of debt issuance costs, and $4.3 million for the purchase of redeemable noncontrolling interests.
2019
Adjustments to earnings consist primarily of $68.3 million of stock-based compensation expense, $64.3 million of bad
debt expense, $55.5 million of amortization of intangibles, and $39.9 million of depreciation. The decrease from changes in
working capital consists primarily of an increase in accounts receivable of $79.0 million and an increase in accounts payable
and other liabilities of $13.6 million, and a decrease in other assets of $13.4 million. The increase in accounts receivable is
primarily due to revenue growth in North America. The increase in accounts payable and other liabilities is primarily due 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.
Net cash used in investing activities includes capital expenditures of $68.8 million, primarily related to investments in the
development of 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, and $23.6 million of net proceeds received in 2019 related to the December 31, 2018
sale of Felix.
Net cash used in financing activities includes $56.9 million for the repurchase of 7.2 million of ANGI common stock, on a
settlement date basis, at an average price of $7.90 per share, $35.3 million for the payment of withholding taxes on behalf of
employees for stock-based awards that were net settled, $13.8 million of principal payments on the Term Loan, and an $11.4
million distribution to IAC pursuant to the tax sharing agreement.
Liquidity and Capital Resources
Financing Transactions During the Year Ended December 31, 2020
On August 20, 2020, ANGI Group issued $500.0 million of its Senior Notes due August 15, 2028, with interest payable
February 15 and August 15 of each year, commencing February 15, 2021. The proceeds from the offering are being used for
general corporate purposes, which may include potential future acquisitions and return of capital.
On August 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 which
ANGI Group became the successor borrower under the credit agreement (“ANGI Group Credit Agreement”) and ANGI
Homeservices Inc.’s obligations thereunder were terminated. The ANGI Group Credit Agreement governs the ANGI Group
Term Loan and ANGI Group Revolving Facility. In addition, on August 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 ANGI Group Credit Agreement.
The $250.0 million ANGI Group Revolving Facility expires on November 5, 2023. At December 31, 2020 and 2019,
there were no outstanding borrowings under the Revolving Facility. The annual commitment fee on undrawn funds is and is
based on ANGI Group’s consolidated net leverage ratio most recently reported and was 35 basis points and 25 basis points at
December 31, 2020 and 2019, respectively. Borrowings under the Revolving Facility bear interest, at ANGI Group’s option, at
either a base rate or LIBOR, in each case plus an applicable margin, which is determined based on ANGI Group’s consolidated
net leverage ratio.
Share Repurchase Authorizations and Activity
On March 9, 2020 and February 6, 2019, the Board of Directors of ANGI Homeservices authorized the Company to
repurchase up to 20 million and 15 million shares of its common stock, respectively. During the year ended December 31, 2020,
the Company repurchased 8.4 million shares, on a trade date basis, of its common stock at an average price of $7.45 per share,
or $62.6 million in aggregate. From January 1, 2021 through February 4, 2021, the Company repurchased an additional 0.4
million shares at an average price of $11.85 per share, or $4.9 million in aggregate. The Company had 18.9 million shares
remaining in its share repurchase authorization as of February 4, 2021. The Company may purchase shares over an indefinite
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period of time on the open market and in privately negotiated transaction, depending on those factors ANGI management
deems relevant at any particular time, 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. In connection
with the Combination, previously issued stock appreciation rights related to the common stock of HomeAdvisor (US) were
converted into ANGI stock appreciation rights that are settleable, at the Company’s option, on a net basis with ANGI remitting
withholding taxes on behalf of the employee or on a gross basis with the Company issuing a sufficient number of Class A
shares to cover the withholding taxes. In addition, at IAC’s option, these awards can be settled in either Class A shares of ANGI
or shares of IAC common stock. If settled in IAC common stock, ANGI 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, 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 January 29, 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
value of awards
outstanding
Estimated
withholding taxes
payable
Estimated shares to
be issued
(In thousands)
(Shares in thousands)
ANGI
ANGI stock appreciation rights
Other ANGI equity awards(a)(b)
Total ANGI outstanding employee stock-based awards
$
$
92,126 $
162,112
254,238 $
46,063
81,056
127,119
3,295
5,798
9,093
_______________
(a) The number of shares ultimately needed to settle these awards and the cash withholding tax obligation may vary significantly as a result of the
determination of the fair value of the relevant subsidiary. In addition, the number of shares required to settle these awards will be impacted by
movement in the stock price of ANGI.
(b)
Includes stock options, RSUs and subsidiary denominated equity.
For a detailed description of employee stock-based awards, see “Note 11—Stock-based Compensation” to the financial
statements included in “Item 8. Consolidated Financial Statements and Supplementary Data.”
Capital and Other Expenditures
The Company’s 2021 capital expenditures are expected to be higher than 2020 capital expenditures of $52.5 million by
approximately 40% to 45%, due primarily to the development of capitalized software to support products and services. 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
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exceeds the ratios set forth in the Term Loan. There were no such limitations at December 31, 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 December 31, 2020, IAC held all Class B shares of ANGI which represent 84.3% 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
AS OF DECEMBER 31, 2020
Payments Due by Period
Contractual Obligations(a)
Less Than
1 Year
1–3
Years
3–5
Years
More Than
5 Years
Total
Long-term debt(b)
Operating leases(c)
Purchase obligations(d)
$
23,656 $
267,414 $
38,750 $
558,125 $
22,421
12,916
42,037
22
39,187
—
43,376
—
887,945
147,021
12,938
Total contractual obligations
$
58,993 $
309,473 $
77,937 $
601,501 $
1,047,904
(in thousands)
______________________________________________
(a) The Company has excluded $5.3 million in unrecognized tax benefits and related interest from the table above as we are unable to make a
reasonably reliable estimate of the period in which these liabilities might be paid. For additional information on income taxes, see “Note 3—Income
Taxes” to the consolidated financial statements included in “Item 8. Consolidated Financial Statements and Supplementary Data.”
(b) Long-term debt at December 31, 2020 consists of $500.0 million of Senior Notes, which bear interest at a fixed rate of 3.875% and $220.0 million
of the Term Loan, which bears interest at a variable rate. The Term Loan bore interest at LIBOR plus 2.00%, or 2.16%, at December 31, 2020. The
amount of interest ultimately paid on the variable rate debt may differ based on changes in interest rates. For additional information on long-term
debt, see “Note 7—Long-term Debt” to the financial statements included in “Item 8. Consolidated Financial Statements and Supplementary Data.”
(c) The Company leases office space, data center facilities and equipment used in connection with operations under various operating leases, the
majority of which contain escalation clauses. Operating lease obligations include legally binding minimum lease payments for leases signed but not
yet commenced. The Company is also committed to pay a portion of the related operating expenses under certain lease agreements. These operating
expenses are not included in the table above. For additional information on operating leases, see “Note 13—Leases” to the consolidated financial
statements included in “Item 8. Consolidated Financial Statements and Supplementary Data.”
(d) The purchase obligations primarily consist of payments for advertising commitments and the Company’s allocable share of a three year cloud
computing arrangement between IAC and a third party provider. For additional information on purchase obligations, see “Note 14—Commitments
and Contingencies” to the consolidated financial statements included in “Item 8. Consolidated Financial Statements and Supplementary Data.”
Off-Balance Sheet Arrangements
See the commitments section of “Note 14—Commitments and Contingencies” to the consolidated financial statements
included in “Item 8. Consolidated Financial Statements and Supplementary Data” for additional information on our off-balance
sheet arrangements.
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CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The following disclosure is provided to supplement the descriptions of ANGI Homeservices’ accounting policies
contained in “Note 2—Summary of Significant Accounting Policies” to the consolidated financial statements included “Item 8.
Consolidated Financial Statements and Supplementary Data” in regard to significant areas of judgment. Management of the
Company is required to make certain estimates, judgments and assumptions during the preparation of its consolidated financial
statements in accordance with GAAP. These estimates, judgments and assumptions impact the reported amount of assets,
liabilities, revenue and expenses and the related disclosure of contingent assets and liabilities. Actual results could differ from
these estimates. Because of the size of the financial statement elements to which they relate, some of our accounting policies
and estimates have a more significant impact on our financial statements than others. What follows is a discussion of some of
our more significant accounting policies and estimates.
Credit Loss and Revenue Reserves
The Company makes judgments as to its ability to collect outstanding receivables and provides reserves when it has
determined that all or a portion of the receivable will not be collected. The Company maintains a credit loss reserve to provide
for the estimated amount of accounts receivable that will not be collected. The credit loss reserve is based upon a number of
factors, including the length of time accounts receivable are past due, the Company’s previous loss history and the specific
customer’s ability to pay its obligation to the Company. The term between the Company’s issuance of an invoice and payment
due date is not significant. The Company also maintains reserves for potential revenue adjustments. The amounts of these
reserves are based primarily upon historical experience. The carrying value of the credit loss and revenue reserves is $27.8
million and $20.3 million at December 31, 2020 and 2019, respectively. The provision for credit losses was $78.2 million and
$64.3 million for the years ended December 31, 2020 and 2019, respectively.
Business Combinations
Acquisitions, which are generally referred to in GAAP as business combinations, are an important part of the Company’s
growth strategy. The Company invested $2.7 million and $20.3 million in acquisitions for the years ended December 31, 2020
and 2019, respectively. The purchase price of each acquisition is attributed to the assets acquired and liabilities assumed based
on their fair values at the date of acquisition, including identifiable intangible assets that either arise from a contractual or legal
right or are separable from goodwill.
Management makes two critical determinations at the time of an acquisition, the reporting unit that will benefit from the
acquisition and to which goodwill will be assigned and the allocation of the purchase price of the business to the assets acquired
and the liabilities assumed based upon their fair values. The reporting unit determination is important beyond the initial
allocation of purchase price because future impairment assessments of goodwill, as described below, are performed at the
reporting unit level. At October 1, 2020, the Company has two reporting units: North America and Europe. Historically, when
the Company’s acquisitions have been complementary to these reporting units the goodwill has been assigned to either the
North America or Europe reporting unit.
The allocation of purchase price to the assets acquired and liabilities assumed based upon their fair values is complex
because of the judgments involved in determining these values. The determination of purchase price and the fair value of
monetary assets acquired and liabilities assumed is typically the least complex aspect of the Company’s accounting for business
combinations due to management’s experience and the inherently lower level of complexity. Due to the higher degree of
complexity associated with the valuation of intangible assets, the Company usually obtains the assistance of outside valuation
experts in the allocation of purchase price to the identifiable intangible assets acquired, which can be both definite-lived, such
as acquired technology, customer and contractor relationships, or indefinite lived, such as acquired trade names and trademarks.
While outside valuation experts may be used, management has ultimate responsibility for the valuation methods, models and
inputs used and the resulting purchase price allocation. The excess purchase price over the net tangible and identifiable
intangible assets is recorded as goodwill and is assigned to the reporting unit that is expected to benefit from the business
combination as of the acquisition date.
Recoverability of Goodwill and Indefinite-Lived Intangible Assets
The carrying value of goodwill is $891.8 million and $884.0 million at December 31, 2020 and 2019, respectively.
Indefinite-lived intangible assets, which consist of the Company’s acquired trade names and trademarks, have a carrying value
of $171.9 million and $171.6 million at December 31, 2020 and 2019, respectively.
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Goodwill and indefinite-lived intangible assets are assessed annually for impairment as of October 1, or more frequently if
an event occurs or circumstances change that would indicate that it is more likely than not that the fair value of a reporting unit
or the fair value of an indefinite-lived intangible asset has declined below its carrying value. In performing its annual goodwill
impairment assessment, the Company has the option under GAAP to qualitatively assess whether it is more likely than not that
the fair value of a reporting unit is less than its carrying value; if the conclusion of the qualitative assessment is that there are no
indicators of impairment, the Company does not perform a quantitative test, which would require a valuation of the reporting
unit, as of October 1. GAAP provides a not all-inclusive set of examples of macroeconomic, industry, market and company
specific factors for entities to consider in performing the qualitative assessment described above; management considers the
factors it deems relevant in making its more likely than not assessments. While the Company also has the option under GAAP
to qualitatively assess whether it is more likely than not that the fair values of its indefinite-lived intangible assets are less than
their carrying values, the Company’s policy is to quantitatively determine the fair value of each of its indefinite-lived intangible
assets annually as of October 1, in part, because the level of effort required to perform the quantitative and qualitative
assessments is essentially equivalent.
If the conclusion of our qualitative assessment is that there are indicators of impairment and a quantitative test is required,
the annual or interim quantitative test of the recovery of goodwill involves a comparison of the estimated fair value of the
Company’s reporting unit that is being tested to its carrying value. If the estimated fair value of a reporting unit exceeds its
carrying value, goodwill of the reporting unit is not impaired. If the carrying value of a reporting unit exceeds its estimated fair
value, a goodwill impairment equal to the excess is recorded.
The Company’s annual assessment of the recovery of goodwill begins with management’s reassessment of its operating
segments and reporting units. A reporting unit is an operating segment or one level below an operating segment, which is
referred to as a component. This reassessment of reporting units is also made each time the Company changes its operating
segments. If the goodwill of a reporting unit is allocated to newly formed reporting units, the allocation is usually made to each
reporting unit based upon their relative fair values.
For the Company’s annual goodwill test at October 1, 2020, a qualitative assessment of the North America and Europe
reporting units’ goodwill was performed and the Company concluded it was more likely than not that the fair value of these
reporting units was in excess of their respective carrying values. In the aggregate, ANGI Homeservices’ October 1, 2020
market capitalization of $5.5 billion exceeded its carrying value by approximately $4.3 billion. The primary factor that the
Company considered in its qualitative assessment for its Europe reporting unit were valuations performed during 2020 that
indicated a fair value in excess of the carrying value. The fair value based on the valuation that was most proximate to, but not
as of, October 1, 2020 exceeded the carrying value of the Europe reporting unit by $131.4 million. The primary factor that the
Company considered in its qualitative assessment for its North America reporting unit was the significant excess of the
estimated fair value of the North America reporting unit over its carrying value. The fair value of the North America reporting
unit was estimated by subtracting the fair value of the Europe reporting unit, based on the valuation described above, from the
October 1, 2020 market capitalization of the Company; the estimated fair value of the North America reporting unit exceeded
its carrying value by approximately $4.1 billion.
The fair value of the Company’s Europe reporting unit is determined using both an income approach based on discounted
cash flows (“DCF”) and a market approach when it tests goodwill for impairment, either on an interim basis or annual basis as
of October 1 each year. Determining fair value using a DCF analysis requires the exercise of significant judgment with respect
to several items, including the amount and timing of expected future cash flows and appropriate discount rates. The expected
cash flows used in the DCF analyses are based on the Company’s most recent forecast and budget and, for years beyond the
budget, the Company’s estimates, which are based, in part, on forecasted growth rates. The discount rates used in the DCF
analyses are intended to reflect the risks inherent in the expected future cash flows of the respective reporting units.
Assumptions used in the DCF analyses, including the discount rate, are assessed based on the reporting units' current results and
forecasted future performance, as well as macroeconomic and industry specific factors. The discount rate used in determining
the fair value of the Company’s Europe reporting unit was 15% in both 2020 and 2019. Determining fair value using a market
approach considers multiples of financial metrics based on both acquisitions and trading multiples of a selected peer group of
companies. From the comparable companies, a representative market multiple is determined which is applied to financial
metrics to estimate the fair value of a reporting unit. To determine a peer group of companies for our respective reporting units,
we considered companies relevant in terms of consumer use, monetization model, margin and growth characteristics, and brand
strength operating in their respective sectors.
The Company determines the fair value of indefinite-lived intangible assets using an avoided royalty DCF valuation
analysis. Significant judgments inherent in this analysis include the selection of appropriate royalty and discount rates and
estimating the amount and timing of expected future cash flows. The discount rates used in the DCF analyses are intended to
reflect the risks inherent in the expected future cash flows generated by the respective intangible assets. The royalty rates used
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in the DCF analyses are based upon an estimate of the royalty rates that a market participant would pay to license the
Company’s trade names and trademarks. The future cash flows are based on the Company's most recent forecast and budget
and, for years beyond the budget, the Company’s estimates, which are based, in part, on forecasted growth rates. Assumptions
used in the avoided royalty DCF analyses, including the discount rate and royalty rate, are assessed annually based on the actual
and projected cash flows related to the asset, as well as macroeconomic and industry specific factors. The discount rates used in
the Company’s annual indefinite-lived impairment assessment ranged from 11.5% to 15.0% in 2020 and 11.5% to 27.5% in
2019, and the royalty rates used ranged from 2.0% to 5.5% in 2020 and 1.5% to 5.5% in 2019.
The 2020 and 2019 annual assessments of goodwill and indefinite-lived intangible assets identified no impairments.
Recoverability and Estimated Useful Lives of Long-Lived Assets
We review the carrying value of all long-lived assets, comprising of leased right-of-use assets (“ROU assets”), capitalized
software, leasehold improvements and equipment and definite-lived intangible assets, for impairment whenever events or
changes in circumstances indicate that the carrying value of an asset may not be recoverable. The carrying value of a long-lived
asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual
disposition of the asset. If the carrying value is deemed not to be recoverable, an impairment loss is recorded equal to the
amount by which the carrying value of the long-lived asset exceeds its fair value. In addition, the Company reviews the useful
lives of its long-lived assets whenever events or changes in circumstances indicate that these lives may be changed. The
carrying value of these long-lived assets is $234.2 million and $284.7 million at December 31, 2020 and 2019, respectively.
Income Taxes
The Company is included within IAC’s tax group for purposes of federal and consolidated state income tax return filings.
In all periods presented, the income tax provision and/or benefit has been computed for the Company on an as if standalone,
separate return basis and payments to and refunds from IAC for the Company’s share of IAC’s consolidated federal and state
tax return liabilities/receivables calculated on this basis have been reflected within cash flows from operating activities in the
accompanying consolidated statement of cash flows. The tax sharing agreement between the Company and IAC governs the
parties’ respective rights, responsibilities and obligations with respect to tax matters, including responsibility for taxes
attributable to the Company, entitlement to refunds, allocation of tax attributes and other matters and, therefore, ultimately
governs the amount payable to or receivable from IAC with respect to income taxes. Any differences between taxes currently
payable to or receivable from IAC under the tax sharing agreement and the current tax provision computed on an if standalone,
separate return basis for GAAP are reflected as adjustments to additional paid-in capital in the consolidated statement of
shareholders’ equity and financing activities within the consolidated statement of cash flows. The portion of the December 31,
2020 deferred tax assets that will be payable to IAC pursuant to the tax sharing agreement, upon realization, is $88.0 million.
The Company accounts for income taxes under the liability method, and deferred tax assets and liabilities are recognized
for the future tax consequences attributable to differences between the financial statement carrying values of existing assets and
liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the
year in which those temporary differences are expected to be recovered or settled. A valuation allowance is provided if it is
determined that it is more likely than not that the deferred tax asset will not be realized. At December 31, 2020 and 2019, the
balance of the Company’s net deferred tax asset is $84.4 million and $69.1 million, respectively.
The Company evaluates and accounts for uncertain tax positions using a two-step approach. Recognition (step one) occurs
when the Company concludes that a tax position, based solely on its technical merits, is more-likely-than-not to be sustainable
upon examination. Measurement (step two) determines the amount of benefit that is greater than 50% likely to be realized upon
ultimate settlement with a taxing authority that has full knowledge of all relevant information. De-recognition of a tax position
that was previously recognized would occur when the Company subsequently determines that a tax position no longer meets the
more-likely-than-not threshold of being sustained. This measurement step is inherently difficult and requires subjective
estimations of such amounts to determine the probability of various possible outcomes. At December 31, 2020 and 2019, the
Company has unrecognized tax benefits, including interest, of $5.3 million and $4.1 million, respectively. We consider many
factors when evaluating and estimating our tax positions and unrecognized tax benefits, which may require periodic adjustment
and which may not accurately anticipate actual outcomes. Although management currently believes changes to unrecognized
tax benefits from period to period and differences between amounts paid, if any, upon resolution of issues raised in audits and
amounts previously provided will not have a material impact on the liquidity, results of operations, or financial condition of the
Company, these matters are subject to inherent uncertainties and management’s view of these matters may change in the future.
The ultimate amount of deferred income tax assets realized and the amounts paid for deferred income tax liabilities and
unrecognized tax benefits may vary from our estimates due to future changes in income tax law, state income tax apportionment
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or the outcome of any review of our tax returns by the various tax authorities, as well as actual operating results of the
Company that vary significantly from anticipated results.
Stock-Based Compensation
The stock-based compensation expense reflected in our statements of operations includes expense related to the
Company’s stock options, stock appreciation rights, RSU awards, including those that are linked to the achievement of the
Company’s stock price, known as market-based awards (“MSUs”) and those that are linked to the achievement of a
performance target, known as performance-based awards (“PSUs”), equity instruments denominated in shares of subsidiaries,
and IAC denominated stock options.
The Company recorded stock-based compensation expense of $83.6 million and $68.3 million for the years ended
December 31, 2020 and 2019, respectively. Included in stock-based compensation expense in the years ended December 31,
2020 and 2019 is $22.2 million and $32.6 million, respectively, related to the modification of previously issued HomeAdvisor
equity awards and Angie’s List equity awards, both of which were converted into ANGI Homeservices’ equity awards when the
businesses combined on September 29, 2017. These modified awards continue to vest through the first quarter of 2021.
Additionally, in connection with the departure of the president and chief operating officer of the Company in December 2020,
the Company recognized $14.1 million of expense related to the acceleration of vesting of his unvested stock appreciation
rights and RSUs and the extension of the post-termination exercise period for his vested and exercisable stock appreciation
rights.
Stock-based compensation at the Company is complex due to our desire to attract, retain, inspire and reward outstanding
entrepreneurs and managers at each of our companies, including recently acquired companies, by allowing them to benefit
directly from the value they help to create. We accomplish these objectives, in part, by issuing equity awards denominated in
the equity of our subsidiaries as well as in ANGI. We further refine this approach by tailoring certain equity awards to the
applicable circumstances. For example, we issue certain equity awards for which vesting is linked to the achievement of a
performance target such as revenue or profits; these awards are referred to as performance-based awards. In other cases, we link
the vesting of equity awards to the achievement of a value target for a subsidiary or ANGI’s stock price, as applicable; these
awards are referred to as market-based awards. The nature and variety of these types of equity-based awards creates complexity
in our determination of stock-based compensation expense.
In addition, acquisitions are an important part of the Company’s growth strategy. These transactions may result in the
modification of equity awards which creates additional complexity and additional stock-based compensation expense. Also, our
internal reorganizations can also lead to modifications of equity awards and result in additional complexity and stock-based
compensation expense.
Finally, the means by which we settle our equity-based awards also introduces complexity into our financial reporting. We
provide a path to liquidity by settling the subsidiary denominated awards in IAC or ANGI shares. In addition, certain former
HomeAdvisor (US) awards can be settled in IAC or ANGI awards at IAC’s election. These features increase the complexity of
our earnings per share calculations.
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There were no stock options or stock appreciation rights granted by the Company for the years ended December 31, 2020,
2019 or 2018. The Company estimates the fair value of modified stock appreciation rights and stock options, including equity
instruments denominated in shares of subsidiaries, using the Black-Scholes option-pricing model. The Black-Scholes option-
pricing model requires the use of highly subjective and complex assumptions, the most significant of which include expected
term, expected volatility of the underlying shares, risk-free interest rates and the expected dividend yield. In addition, the
recognition of stock-based compensation expense is impacted by our estimated forfeiture rates, which are based, in part, on
historical forfeiture rates. For stock appreciation rights and stock options, including equity instruments denominated in shares of
subsidiaries, the grant date fair value of the award is recognized as an expense on a straight-line basis, net of estimated
forfeitures, over the requisite service period, which is the vesting period of the award. The Company also issues RSUs, PSUs
and MSUs. For RSUs, the value of the instrument is measured at the grant date as the fair value of the underlying ANGI
Homeservices common stock and expensed as stock-based compensation expense over the vesting term. For PSUs, the value of
the instrument is measured at the grant date as the fair value of the underlying ANGI Homeservices common stock and
expensed as stock-based compensation over the vesting term when the performance targets are considered probable of being
achieved. For MSUs, a lattice model is used to estimate the value of the awards.
Recent Accounting Pronouncements
For a discussion of recent accounting pronouncements, see “Note 2—Summary of Significant Accounting Policies” to the
consolidated financial statements included in “Item 8. Consolidated Financial Statements and Supplementary Data.”
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Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Risk
The Company’s exposure to market risk for changes in interest rates relates primarily to the Company’s long-term debt,
including current maturities.
At December 31, 2020, the principal amount of the Company’s outstanding debt totals $720.0 million, $500.0 million of
which is the ANGI Group Senior Notes, which bears interest at a fixed rate, and $220.0 million of which is the ANGI Group
Term Loan, which bears interest at a variable rate. If market rates decline, the Company runs the risk that the related required
payments of the ANGI Group Senior Notes will exceed those based on market rates. A 100-basis point increase or decrease in
the level of interest rates would, respectively, decrease or increase the fair value of the fixed-rate debt by $32.3 million. Such
potential increase or decrease in fair value is based on certain simplifying assumptions, including an immediate increase or
decrease in the level of interest rates with no other subsequent changes for the remainder of the period. At December 31, 2020,
the outstanding balance of the ANGI Group Term Loan of $220.0 million bore interest at LIBOR plus 2.00%, or 2.16%. If
LIBOR were to increase or decrease by 100 basis points, then the annual interest expense on the ANGI Group Term Loan
would increase or decrease by $2.2 million.
Foreign Currency Exchange Risk
The Company has operations in certain foreign markets, primarily in various jurisdictions within the European Union and
the United Kingdom. The Company has exposure to foreign currency exchange risk related to its foreign subsidiaries that
transact business in a functional currency other than the U.S. dollar. As a result, as foreign currency exchange rates fluctuate,
the translation of the statement of operations of the Company’s international businesses into U.S. dollars affects year-over-year
comparability of operating results.
In addition, certain of the Company’s U.S. operations have customers in international markets. International revenue,
which is measured based upon where the customer is located, accounted for 6%, 7%, and 7% for the years ended December 31,
2020, 2019 and 2018, respectively.
The company is also exposed to foreign currency transaction gains and losses to the extent it or its subsidiaries conduct
transactions in and/or have assets and/or liabilities that are denominated in a currency other than the entity’s functional
currency. The Company recorded foreign exchange gains and (losses) of $(0.1) million, $0.6 million, and $(0.2) million for the
year ended December 31, 2020, 2019 and 2018, respectively.
The Company’s exposure to foreign currency exchange gains or losses have not been material to the Company, therefore,
the Company has not hedged any foreign currency exposures. Any growth and expansion of our international operations
increases our exposure to foreign exchange rate fluctuations. Significant foreign exchange rate fluctuations, in the case of one
currency or collectively with other currencies, could have a significant impact on our future results of operations.
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Item 8. Consolidated Financial Statements and Supplementary Data
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of ANGI Homeservices Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of ANGI Homeservices Inc. and subsidiaries (the Company) as
of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive operations, shareholders’
equity and cash flows for each of the three years in the period ended December 31, 2020, and the related notes and the financial
statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”). In our
opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at
December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended
December 31, 2020, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company’s internal control over financial reporting as of December 31, 2020, based on criteria established in
Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(2013 framework) and our report dated February 16, 2021 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on
the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to
error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that
was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that
are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The
communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole,
and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on
the accounts or disclosures to which it relates.
50
Stock-Based Compensation
Description of
the Matter
During the year ended December 31, 2020, the Company recorded stock-based compensation expense of $83.6
million. As discussed in Note 11 to the consolidated financial statements, the Company issues various types of
equity awards, including stock options, restricted stock units, performance-based stock units, market-based awards
and equity instruments denominated in the shares of certain subsidiaries.
Auditing the Company’s accounting for stock-based compensation required complex auditor judgment due to the
number and the variety of the types of equity awards, the prevalence of modifications, the subjectivity of
assumptions used to value stock-based awards, the use of market-based vesting conditions and the existence of
awards denominated in the shares of certain subsidiaries.
How We
Addressed the
Matter in Our
Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company’s
controls over stock-based compensation. For example, we tested controls over the Company’s process to
assess the completeness of its share-based awards and for measuring and recording stock-based
compensation, including management’s review of the underlying calculations, the significant assumptions
used in valuing certain awards and related valuation reports prepared by its specialists.
To test stock-based compensation expense, we performed audit procedures that included, among others,
assessing the completeness of the awards granted and evaluating the methodologies used to estimate the fair
value of the awards granted and the significant assumptions described above. Our procedures also included,
evaluating the key terms and conditions of awards granted to assess the accounting treatment for a sample of
awards, testing the clerical accuracy of the calculation of the expense recorded and assessing the Company’s
accounting for award modifications. Additionally, for certain awards issued by the Company, we involved
our internal valuation specialists to assess the valuation methodologies and assumptions used in estimating
the fair value of the awards.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2017.
New York, New York
February 16, 2021
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ANGI HOMESERVICES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
ASSETS
Cash and cash equivalents
Marketable debt securities
Accounts receivable, net of reserves of $27,839 and $20,293, respectively
Other current assets
Total current assets
Capitalized software, leasehold improvements and equipment, net of amortization and
depreciation
Goodwill
Intangible assets, net of amortization
Other non-current assets
TOTAL ASSETS
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES:
Current portion of long-term debt
Accounts payable
Deferred revenue
Accrued expenses and other current liabilities
Total current liabilities
Long-term debt, net
Deferred income taxes
Other long-term liabilities
December 31,
2020
2019
(In thousands, except par value amounts)
$
$
$
812,705 $
49,995
43,148
71,958
977,806
108,842
891,797
209,717
180,020
2,368,182 $
— $
30,805
54,654
148,219
233,678
712,277
1,296
111,710
390,565
—
41,669
67,759
499,993
103,361
883,960
251,725
182,572
1,921,611
13,750
25,987
58,220
116,997
214,954
231,946
3,441
121,055
Redeemable noncontrolling interests
26,364
26,663
Commitments and contingencies
SHAREHOLDERS’ EQUITY:
Class A common stock, $0.001 par value; authorized 2,000,000 shares, issued 94,238 and 87,007
shares, respectively, and outstanding 78,333 and 79,681, respectively
Class B convertible common stock, $0.001 par value; authorized 1,500,000 shares; 421,862 and
421,570 shares issued and outstanding
Class C common stock, $0.001 par value; authorized 1,500,000 shares; no shares issued and
outstanding
Additional paid-in capital
Retained earnings
Accumulated other comprehensive income (loss)
Treasury stock, 15,905 and 7,326, respectively
Total ANGI Homeservices Inc. shareholders’ equity
Noncontrolling interests
Total shareholders’ equity
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
$
94
422
—
1,379,469
9,749
4,637
(122,081)
1,272,290
10,567
1,282,857
2,368,182 $
87
422
—
1,357,075
16,032
(1,379)
(57,949)
1,314,288
9,264
1,323,552
1,921,611
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
52
ANGI HOMESERVICES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
Revenue
Operating costs and expenses:
Cost of revenue (exclusive of depreciation shown separately below)
Selling and marketing expense
General and administrative expense
Product development expense
Depreciation
Amortization of intangibles
Total operating costs and expenses
Operating (loss) income
Interest expense
Other income, net
(Loss) earnings before income taxes
Income tax benefit
Net (loss) earnings
Net earnings attributable to noncontrolling interests
Net (loss) earnings attributable to ANGI Homeservices Inc.
shareholders
Years Ended December 31,
2020
2019
2018
(In thousands, except per share data)
$
1,467,925 $
1,326,205 $
1,132,241
173,281
762,590
374,096
68,803
52,621
42,902
46,493
733,223
348,247
64,200
39,915
55,482
55,739
541,469
323,462
61,143
24,310
62,212
1,474,293
1,287,560
1,068,335
(6,368)
38,645
(14,178)
(11,493)
1,218
(19,328)
15,168
(4,160)
(2,123)
6,494
33,646
1,668
35,314
63,906
(11,623)
17,741
70,024
7,483
77,507
(485)
(189)
$
(6,283) $
34,829 $
77,318
Per share information attributable to ANGI Homeservices Inc. shareholders:
Basic (loss) earnings per share
Diluted (loss) earnings per share
Stock-based compensation expense by function:
Selling and marketing expense
General and administrative expense
Product development expense
Total stock-based compensation expense
$
$
$
(0.01) $
(0.01) $
0.07 $
0.07 $
0.16
0.15
4,662 $
3,717 $
73,846
5,141
56,475
8,063
$
83,649 $
68,255 $
3,368
84,028
9,682
97,078
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
53
ANGI HOMESERVICES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMPREHENSIVE OPERATIONS
Net (loss) earnings
Other comprehensive income (loss):
Change in foreign currency translation adjustment
Change in unrealized gains and losses on available-for-sale debt
securities
Total other comprehensive income (loss)
Comprehensive income
Components of comprehensive (income) loss attributable to noncontrolling
interests:
Years Ended December 31,
2020
2019
2018
(In thousands)
$
(4,160) $
35,314 $
77,507
6,827
—
6,827
2,667
399
(4,862)
(3)
396
35,710
3
(4,859)
72,648
Net earnings attributable to noncontrolling interests
(2,123)
(485)
(189)
Change in foreign currency translation adjustment attributable to
noncontrolling interests
Comprehensive (income) loss attributable to noncontrolling interests
Comprehensive (loss) income attributable to ANGI Homeservices Inc.
shareholders
(811)
(2,934)
86
(399)
766
577
$
(267) $
35,311 $
73,225
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
54
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ANGI HOMESERVICES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY
Years Ended December 31, 2020, 2019 and 2018
ANGI Homeservices Inc. Shareholders’ Equity
Class A
Common Stock
$0.001
Par Value
Class B
Convertible
Common Stock
$0.001
Par Value
Class C
Common Stock
$0.001
Par Value
Redeemable
Noncontrolling
Interests
$
Shares
$
Shares
$
Shares
Additional
Paid-in
Capital
Retained
Earnings
(Accumulated
Deficit)
Accumulated
Other
Comprehensive
Income (Loss)
Treasury
Stock
(In thousands)
Balance as of December 31, 2017
$
21,300
$ 63
62,818
$ 415
415,186
$ —
—
$ 1,112,400
$
(121,764) $
2,232
$
Cumulative effect of adoption of ASU No. 2014-09
Net (loss) earnings
Other comprehensive loss
Stock-based compensation expense
Issuance of common stock pursuant to stock-based awards,
—
—
—
—
(146)
—
—
—
(582)
—
—
—
1,138
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
95,940
net of withholding taxes
—
9
9,111
—
—
—
—
(25,100)
Issuance of common stock to IAC pursuant to the employee
matters agreement
—
—
—
1
856
—
—
Issuance of common stock to IAC pursuant to the post-
closing adjustment provision of the Angie’s List
merger agreement
Issuance of common stock to the equity holders of Handy
Technologies, Inc. pursuant to the merger agreement
Distribution to IAC pursuant to the tax sharing agreement
Purchase of noncontrolling interests
Adjustment of redeemable noncontrolling interests to fair
value
Other
(1)
(5)
—
—
—
5
5,076
—
—
—
—
9
8,586
—
—
—
—
(4,825)
—
—
—
1,244
—
—
—
34
—
—
—
—
—
—
—
—
—
—
165,788
—
—
(12,100)
—
—
—
—
—
—
—
(1,244)
(2,581)
Net earnings
Other comprehensive income (loss)
Stock-based compensation expense
Issuance of common stock pursuant to stock-based awards,
net of withholding taxes
Issuance of common stock to IAC pursuant to the employee
matters agreement
Purchase of treasury stock
Adjustment pursuant to the tax sharing agreement
142
39
148
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
65,815
6
6,492
—
—
—
—
(32,963)
—
—
1
452
—
—
(1,766)
—
—
—
—
—
—
Purchase of redeemable noncontrolling interests
(71)
—
—
—
Adjustment of redeemable noncontrolling interests to fair
value
Other
8,242
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1,151
—
—
—
(8,242)
—
—
(17)
25,649
77,318
—
—
—
—
—
—
—
—
—
—
—
—
(4,093)
—
—
—
—
—
—
—
—
—
34,829
—
—
—
—
—
—
—
—
—
—
482
—
—
—
—
—
—
—
—
Balance as of December 31, 2018
$
18,163
$ 81
80,515
$ 421
421,118
$ —
—
$ 1,333,097
$
(18,797) $
(1,861) $
Total
ANGI
Homeservices
Inc.
Shareholders’
Equity
Noncontrolling
Interests
Total
Shareholders’
Equity
$
993,346
$
9,748
$ 1,003,094
25,649
77,318
(4,093)
95,940
(25,091)
—
—
165,797
(12,100)
—
335
(184)
—
—
—
—
—
—
—
(1,236)
(1,244)
(2,581)
—
383
25,649
77,653
(4,277)
95,940
(25,091)
—
—
165,797
(12,100)
(1,236)
(1,244)
(2,198)
$ 1,312,941
$
9,046
$ 1,321,987
34,829
482
65,815
(32,957)
(1,765)
(57,949)
1,151
—
(8,242)
(17)
343
(125)
—
—
—
—
—
—
—
—
35,172
357
65,815
(32,957)
(1,765)
(57,949)
1,151
—
(8,242)
(17)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(57,949)
—
—
—
—
Balance as of December 31, 2019
$
26,663
$ 87
87,007
$ 422
421,570
$ —
—
$ 1,357,075
$
16,032
$
(1,379) $
(57,949) $ 1,314,288
$
9,264
$ 1,323,552
55
ANGI HOMESERVICES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY (Continued)
Years Ended December 31, 2020, 2019 and 2018
ANGI Homeservices Inc. Shareholders’ Equity
Class A
Common Stock
$0.001
Par Value
Class B
Convertible
Common Stock
$0.001
Par Value
Class C
Common Stock
$0.001
Par Value
Redeemable
Noncontrolling
Interests
$
Shares
$
Shares
$
Shares
Additional
Paid-in
Capital
Retained
Earnings
(Accumulated
Deficit)
Accumulated
Other
Comprehensive
Income (Loss)
Treasury
Stock
Total
ANGI
Homeservices
Inc.
Shareholders’
Equity
Noncontrolling
Interests
Total
Shareholders’
Equity
Net earnings
Other comprehensive income
Stock-based compensation expense
Issuance of common stock pursuant to stock-based awards,
net of withholding taxes
Issuance of common stock to IAC pursuant to the employee
matters agreement
Purchase of treasury stock
Adjustment pursuant to the tax sharing agreement
767
439
15
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
85,267
7
7,231
—
—
—
—
(62,704)
—
—
—
292
—
—
(1,445)
—
—
—
—
—
—
Purchase of redeemable noncontrolling interests
(3,165)
—
—
—
Adjustment of redeemable noncontrolling interests to fair
value
Purchase of noncontrolling interests
Other
1,645
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
3,613
—
—
—
(1,645)
—
—
—
—
—
(692)
(In thousands)
(6,283)
—
—
—
—
—
—
—
—
—
—
—
6,016
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(64,132)
—
—
—
—
—
(6,283)
6,016
85,267
(62,697)
(1,445)
(64,132)
3,613
—
(1,645)
—
(692)
1,356
372
—
—
—
—
—
(1,115)
—
—
690
(4,927)
6,388
85,267
(62,697)
(1,445)
(64,132)
3,613
(1,115)
(1,645)
—
(2)
Balance as of December 31, 2020
$
26,364
$ 94
94,238
$ 422
421,862
$ —
—
$ 1,379,469
$
9,749
$
4,637
$ (122,081) $ 1,272,290
$
10,567
$ 1,282,857
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
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ANGI HOMESERVICES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
Years Ended December 31,
2020
2019
(In thousands)
2018
$
(4,160) $
35,314 $
77,507
Cash flows from operating activities:
Net (loss) earnings
Adjustments to reconcile net (loss) earnings to net cash provided by
operating activities:
Stock-based compensation expense
Amortization of intangibles
Provision for credit losses
Depreciation
Deferred income taxes
Loss (gain) from the sale of a business
Revenue reserves
Other adjustments, net
Changes in assets and liabilities, net of effects of acquisitions and
dispositions:
Accounts receivable
Other assets
Accounts payable and other liabilities
Income taxes payable and receivable
Deferred revenue
Net cash provided by operating activities
Cash flows from investing activities:
Acquisitions, net of cash acquired
Capital expenditures
Purchases of marketable debt securities
Proceeds from maturities of marketable debt securities
Net proceeds from the sale of a business
Proceeds from sale of fixed assets
Other, net
Net cash used in investing activities
Cash flows from financing activities:
Proceeds from the issuance of Senior Notes
Principal payments on Term Loan
Debt issuance costs
Principal payments on related party debt
Purchase of treasury stock
Proceeds from the exercise of stock options
Withholding taxes paid on behalf of employees on net settled stock-
based awards
Distribution from (to) IAC pursuant to tax sharing agreement
Purchase of noncontrolling interests
Other, net
Net cash provided (used in) by financing activities
Total cash provided
Effect of exchange rate changes on cash and cash equivalents and
restricted cash
Net increase in cash and cash equivalents and restricted cash
Cash and cash equivalents and restricted cash at beginning of period
Cash and cash equivalents and restricted cash at end of period
$
83,649
42,902
78,229
52,621
(15,278)
273
10,251
1,598
(79,830)
5,987
17,206
(1,243)
(3,786)
188,419
(2,264)
(52,488)
(99,977)
50,000
731
20
24
(103,954)
500,000
(27,500)
(6,484)
—
(63,674)
—
(64,079)
3,071
(4,281)
—
337,053
421,518
68,255
55,482
64,278
39,915
(3,250)
218
5,934
2,053
(78,954)
13,382
13,627
1,650
(3,743)
214,161
(20,341)
(68,804)
—
25,000
23,615
—
(103)
(40,633)
—
(13,750)
—
(1,008)
(56,905)
573
(35,284)
(11,355)
(71)
(3,732)
(121,532)
51,996
565
422,083
391,478
813,561 $
661
52,657
338,821
391,478 $
97,078
62,212
47,242
24,310
(8,368)
(13,237)
221
(740)
(47,686)
(12,959)
(576)
725
(2,029)
223,700
3,669
(46,976)
(59,671)
35,000
—
10,412
(25)
(57,591)
—
(13,750)
(2,168)
(1,904)
—
4,693
(29,844)
—
(6,061)
13
(49,021)
117,088
212
117,300
221,521
338,821
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
57
ANGI HOMESERVICES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1—ORGANIZATION
ANGI Homeservices Inc. connects quality home service professionals across 500 different categories, from repairing and
remodeling to cleaning and landscaping, with consumers. Over 240,000 domestic service professionals actively sought
consumer matches, completed jobs or advertised work through ANGI Homeservices’ platforms and consumers turned to at least
one of our brands to find a professional for approximately 32 million projects during the year ended December 31, 2020. The
Company has established category-transforming products with brands such as HomeAdvisor, Angie’s List, and Handy.
The HomeAdvisor digital marketplace service (“HomeAdvisor”) connects consumers with service professionals
nationwide for home repair, maintenance and improvement projects. HomeAdvisor provides consumers with tools and
resources to help them find local, pre-screened and customer-rated service professionals, as well as instantly book appointments
online or connect them by telephone. Handy Technologies, Inc. (“Handy”), is a leading platform for connecting individuals
looking for household services (primarily cleaning and handyman services) with top-quality, pre-screened independent service
professionals. Together, the Company refers to the HomeAdvisor and Handy businesses in the United States as the
“Marketplace”. The Company also owns and operates Angie’s List, which connects consumers with service professionals for
local services through a nationwide online directory of service professionals in over 700 service categories, as well as provides
consumers with valuable tools, services and content, including verified reviews of local service professionals, to help them
research, shop and hire for local services. In addition to its market-leading U.S. operations, ANGI Homeservices owns leading
home services online marketplaces in France (Travaux), Germany (MyHammer), Netherlands (Werkspot), United Kingdom
(MyBuilder), Canada (HomeStars) and Italy (Instapro), as well as operations in Austria (MyHammer).
The Company has two operating segments: (i) North America (United States and Canada), which includes HomeAdvisor,
Angie’s List, Handy, HomeStars, and Felix, for periods prior to its sale on December 31, 2018, and (ii) Europe, which includes
Travaux, MyHammer, MyBuilder, Werkspot and Instapro.
As used herein, “ANGI Homeservices,” the “Company,” “ANGI,” “we,” “our” or “us” and similar terms refer to ANGI
Homeservices Inc. and its subsidiaries (unless the context requires otherwise).
At December 31, 2020, IAC owned 84.3% and 98.2% of the economic interest and voting interest, respectively, of ANGI
Homeservices.
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ANGI HOMESERVICES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Consolidation
The Company prepares its consolidated financial statements in accordance with U.S. generally accepted accounting
principles (“GAAP”). The consolidated financial statements include the accounts of the Company, all entities that are wholly-
owned by the Company and all entities in which the Company has a controlling financial interest. All intercompany transactions
and balances between and among the Company and its subsidiaries have been eliminated. All intercompany transactions between
(i) ANGI Homeservices and (ii) IAC and its subsidiaries, with the exception of a promissory note payable to a foreign subsidiary
of IAC, are considered to be effectively settled for cash at the time the transaction is recorded. See “Note 15—Related Party
Transactions with IAC” for additional information on transactions between ANGI Homeservices and IAC.
In the opinion of management, the assumptions underlying the historical consolidated financial statements, including the
basis on which the expenses have been allocated from IAC, are reasonable. However, the allocations may not reflect all of the
expenses that ANGI Homeservices may have incurred as a standalone public company for the periods presented.
COVID-19 Update
The impact on the Company from the COVID-19 outbreak, which has been declared a “pandemic” by the World 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.
When COVID-19 first impacted North America and Europe in the early spring of 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). Toward the end of the spring of 2020, the Company experienced a rebound in service requests,
exceeding pre-COVID-19 growth levels, driven by increased demand from homeowners who 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 last half 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 addition, North America, which represents 95% of the Company’s revenue for the year ended December 31, 2020,
experienced a significant resurgence of the COVID-19 virus with record levels of infections being reported during the fourth
quarter of 2020 and continuing into the first quarter of 2021. 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 materially and adversely affect our business, financial condition and results of operations.
Accounting Estimates
Management of the Company is required to make certain estimates, judgments and assumptions during the preparation of
its consolidated financial statements in accordance with GAAP. These estimates, judgments and assumptions impact the reported
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
amounts of assets, liabilities, revenue and expenses and the related disclosure of contingent assets and liabilities. Actual results
could differ from these estimates.
On an ongoing basis, the Company evaluates its estimates and judgments, including those related to: the fair values of cash
equivalents and marketable debt securities; the carrying value of accounts receivable, including the determination of the credit
loss reserve; the determination of revenue reserves; the carrying value of right-of-use assets (“ROU assets”); the useful lives and
recoverability of definite-lived intangible assets and capitalized software, leasehold improvements and equipment; the
recoverability of goodwill and indefinite-lived intangible assets; unrecognized tax benefits; the valuation allowance for deferred
income tax assets; and the fair value of and forfeiture rates for stock-based awards, among others. The Company bases its
estimates and judgments on historical experience, its forecasts and budgets and other factors that the Company considers
relevant.
Revenue Recognition
The Company adopted the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)
No. 2014-09, Revenue from Contracts with Customers, effective January 1, 2018 using the modified retrospective transition
method for open contracts as of the date of initial application. The effect of the adoption of ASU No. 2014-09 was that
commissions paid to employees pursuant to certain sales incentive programs, which represent the incremental direct costs of
obtaining a service professional contract, are now capitalized and amortized over the estimated life of a service professional (also
referred to as the estimated customer relationship period). The cumulative effect of the adoption of ASU No. 2014-09 was the
establishment of a current and non-current asset for capitalized sales commissions of $29.7 million and $4.2 million,
respectively, and a related deferred tax liability of $8.3 million, resulting in a net increase to retained earnings of $25.6 million
on January 1, 2018.
The Company’s disaggregated revenue disclosures are presented in “Note 12—Segment Information.”
The Company accounts for a contract with a customer when it has approval and commitment from all parties, the rights of
the parties and payment terms are identified, the contract has commercial substance and collectability of consideration is
probable. Revenue is recognized when control of the promised services or goods is transferred to our customers and in an
amount that reflects the consideration the Company expects to be entitled to in exchange for those services or goods.
Revenue is primarily derived from 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 revenue from completed jobs sourced through the HomeAdvisor and Handy platforms. Consumer connection revenue varies
based upon several factors, including the service requested, product experience offered and geographic location of service.
Consumer connection revenue is generally billed one week following a consumer match, with payment due upon receipt of
invoice or collected when a consumer schedules a job through the HomeAdvisor and Handy platforms. The Company maintains
revenue reserves for potential credits issued to HomeAdvisor services providers and for services provided by Handy service
professionals to consumers.
Revenue is also derived from (i) sales of time-based website, mobile and call center advertising to service professionals, (ii)
HomeAdvisor service professional membership subscription fees, (iii) membership subscription fees from consumers and (iv)
service warranty subscription and other services. Angie’s List service professionals generally pay for advertisements in advance
on a monthly or annual basis at the option of the service professional, with the average advertising contract term being
approximately one year. Angie’s List website, mobile and call center advertising revenue is recognized ratably over the contract
term. Revenue from the sale of advertising in the Angie’s List Magazine is recognized in the period in which the publication is
distributed. Service professional membership subscription revenue is initially deferred and is recognized using the straight-line
method over the applicable subscription period, which is typically one year. Angie’s List prepaid consumer membership
subscription fees are recognized as revenue using the straight-line method over the term of the applicable subscription period,
which is typically one year.
Prior to January 1, 2020, Handy recorded revenue on a net basis. Effective January 1, 2020, the Company 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
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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 effective
January 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 effective January 1, 2020. The change to gross revenue reporting for Handy and HomeAdvisor’s pre-priced product
offering, effective January 1, 2020, resulted in an increase in revenue of $73.8 million during the year ended December 31, 2020.
Transaction Price
The objective of determining the transaction price is to estimate the amount of consideration the Company is due in
exchange for its services or goods, including amounts that are variable. The Company determines the total transaction price,
including an estimate of any variable consideration, at contract inception and reassesses this estimate each reporting period.
The Company excludes from the measurement of transaction price all taxes assessed by governmental authorities that are
both (i) imposed on and concurrent with a specific revenue-producing transaction and (ii) collected from customers.
Accordingly, such tax amounts are not included as a component of net revenue or cost of revenue.
For contracts that have an original duration of one year or less, the Company uses the practical expedient available under
ASU No. 2014-09, applicable to such contracts and does not consider the time value of money.
Arrangements with Multiple Performance Obligations
The Company’s contracts with customers may include multiple performance obligations. For such arrangements, the
Company allocates revenue to each performance obligation based on its relative standalone selling price. The Company
generally determines standalone selling prices based on the prices charged to customers, which are directly observable or based
on an estimate if not directly observable.
Assets Recognized from the Costs to Obtain a Contract with a Customer
The Company has determined that certain costs, primarily commissions paid to employees pursuant to certain sales
incentive programs, meet the requirements to be capitalized as a cost of obtaining a contract. Capitalized sales commissions are
amortized over the estimated customer relationship period. The Company calculates the estimated customer relationship period
as the average customer life, which is based on historical data. When customer renewals are expected and the renewal
commission is not commensurate with the initial commission, the average customer life includes renewal periods. For sales
incentive programs where the customer relationship period is one year or less, the Company has elected the practical expedient
to expense the costs as incurred.
During the years ended December 31, 2020, 2019 and 2018 the Company recognized expense of $64.8 million, $56.8
million, and $50.0 million, respectively, related to the amortization of these costs. The current contract assets are $49.2 million
and $35.1 million at December 31, 2020, and 2019, respectively. The non-current contract asset balances are $0.4 million and
$4.0 million at December 31, 2020 and 2019, respectively. The current and non-current contract assets are included in “Other
current assets” and “Other non-current assets,” respectively, in the accompanying consolidated balance sheet.
Performance Obligations
As permitted under the practical expedient available under ASU No. 2014-09, the Company does not disclose the value of
unsatisfied performance obligations for (i) contracts with an original expected length of one year or less, (ii) contracts with
variable consideration that is allocated entirely to unsatisfied performance obligations or to a wholly unsatisfied promise
accounted for under the series guidance, and (iii) contracts for which the Company recognizes revenue at the amount which we
have the right to invoice for services performed.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Accounts Receivables, Net of Credit Loss and Revenue Reserves
Accounts receivable include amounts billed and currently due from customers. The credit loss reserve is based upon a
number of factors, including the length of time accounts receivable are past due, the Company’s previous loss history and the
specific customer’s ability to pay its obligation. The time between the Company’s issuance of an invoice and payment due date is
not significant; customer payments that are not collected in advance of the transfer of promised services or goods are generally
due no later than 30 days from invoice date. The Company also maintains reserves for potential credits issued to service
professionals or other revenue adjustments. The amounts of these revenue reserves are based primarily upon historical
experience.
Credit Losses and Revenue Reserve
The following table presents the changes in the credit loss reserve for the year ended December 31, 2020:
Balance at January 1
Current period provision for credit losses
Write-offs charged against the credit loss reserve
Recoveries collected
Balance at December 31
December 31, 2020
(In thousands)
$
$
19,066
78,229
(73,682)
2,433
26,046
The revenue reserve was $1.8 million and $1.2 million at December 31, 2020 and 2019, respectively. The total credit loss and
revenue reserve was $27.8 million and $20.3 million as of December 31, 2020 and 2019.
Deferred Revenue
Deferred revenue consists of advance payments that are received or are contractually due in advance of the Company’s
performance. The Company’s deferred revenue is reported on a contract by contract basis at the end of each reporting period.
The Company classifies deferred revenue as current when the term of the applicable subscription period or expected completion
of its performance obligation is one year or less. During the years ended December 31, 2020 and 2019, the Company recognized
$57.6 million and $61.0 million of revenue that was included in the deferred revenue balance as of December 31, 2019 and 2018,
respectively. The current deferred revenue balances are $54.7 million and $58.2 million at December 31, 2020 and 2019,
respectively. The non-current deferred revenue balances are $0.2 million and $0.2 million at December 31, 2020 and 2019,
respectively. Non-current deferred revenue is included in “Other long-term liabilities” in the accompanying consolidated balance
sheet.
Cash and Cash Equivalents
Cash and cash equivalents include cash and short-term investments, with maturities of less than 91 days from the date of
purchase. Domestically, cash equivalents consist of AAA rated government money market funds, treasury discount notes,
commercial paper, time deposits and certificates of deposit. Internationally, there are no cash equivalents at December 31, 2020
and 2019.
Investments in Marketable Debt Securities
The Company invests in marketable debt securities with active secondary or resale markets to ensure portfolio liquidity to
fund current operations or satisfy other cash requirements as needed. Marketable debt securities are adjusted to fair value each
quarter, and the unrealized gains and losses, net of tax, are included in accumulated other comprehensive income (loss) as a
separate component of shareholders’ equity. The specific-identification method is used to determine the cost of debt securities
sold and the amount of unrealized gains and losses reclassified out of accumulated other comprehensive income (loss) into
earnings. The Company reviews its debt securities for impairment, including from risk of credit loss, each reporting period. The
Company recognizes an unrealized loss on debt securities in net earnings when the impairment is determined to be other-than-
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temporary. Factors the Company considers in making such determination include the duration, severity and reason for the
decline in value and the potential recovery and our intent to sell the debt security. The Company also considers whether it will be
required to sell the security before recovery of its amortized cost basis and whether the amortized cost basis cannot be recovered
because of credit losses. If an impairment is considered to be other-than-temporary, the debt security will be written down to its
fair value and the loss will be recognized within other income (expense), net. The Company held $50.0 million in marketable
debt securities at December 31, 2020. The Company held no marketable debt securities at December 31, 2019.
Capitalized Software, Leasehold Improvements and Equipment
Capitalized software, leasehold improvements and equipment, including significant improvements, are recorded at cost.
Repairs and maintenance costs are expensed as incurred. Depreciation is computed using the straight-line method over the
estimated useful lives of the assets, or, in the case of leasehold improvements, the lease term, if shorter.
Asset Category
Capitalized software and computer equipment
Furniture and other equipment
Leasehold improvements
Estimated
Useful Lives
2 to 3 Years
5 to 7 Years
5 to 25 Years
The Company capitalizes certain internal use software costs including external direct costs utilized in developing or
obtaining the software and compensation for personnel directly associated with the development of the software. Capitalization
of such costs begins when the preliminary project stage is complete and ceases when the project is substantially complete and
ready for its intended purpose. The net book value of capitalized internal use software was $67.9 million and $56.3 million at
December 31, 2020 and 2019, respectively.
Business Combinations
The purchase price of each acquisition is attributed to the assets acquired and liabilities assumed based on their fair values
at the date of acquisition, including identifiable intangible assets that either arise from a contractual or legal right or are separable
from goodwill. The Company usually uses the assistance of outside valuation experts to assist in the allocation of purchase price
to identifiable intangible assets acquired. While outside valuation experts may be used, management has ultimate responsibility
for the valuation methods, models and inputs used and the resulting purchase price allocation. The excess purchase price over the
net tangible and identifiable intangible assets is recorded as goodwill and is assigned to the reporting unit(s) that is expected to
benefit from the combination as of the acquisition date.
Goodwill and Indefinite-Lived Intangible Assets
The Company assesses goodwill and indefinite-lived intangible assets for impairment annually as of October 1, or more
frequently if an event occurs or circumstances change that would indicate that it is more likely than not that the fair value of a
reporting unit or the fair value of an indefinite-lived intangible asset has declined below its carrying value. At October 1, 2020,
the Company has two reporting units: North America and Europe.
When the Company elects to perform a qualitative assessment and concludes it is not more likely than not that the fair
value of the reporting unit is less than its carrying value, no further assessment of that reporting unit’s goodwill is necessary;
otherwise, a quantitative assessment is performed and the fair value of the reporting unit is determined. If the carrying value of
the reporting unit exceeds its fair value an impairment equal to the excess is recorded.
For the Company’s annual goodwill test at October 1, 2020, a qualitative assessment of the North America and Europe
reporting units’ goodwill was performed and it was concluded that it was more likely than not that the fair value of these
reporting units was in excess of their respective carrying values. In the aggregate, ANGI Homeservices’ October 1, 2020 market
capitalization of $5.5 billion exceeded its carrying value by approximately $4.3 billion. The primary factor that the Company
considered in its qualitative assessment for its Europe reporting unit were valuations performed during 2020 that indicated a fair
value in excess of the carrying value. The fair value based on the valuation that was most proximate to, but not as of, October 1,
2020 exceeded the carrying value of the Europe reporting unit by $131.4 million. The primary factor that the Company
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ANGI HOMESERVICES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
considered in its qualitative assessment for its North America reporting unit was the significant excess of the estimated fair value
of the North America reporting unit over its carrying value. The fair value of the North America reporting unit was estimated by
subtracting the fair value of the Europe reporting unit, based on the valuation described above, from the October 1, 2020 market
capitalization of the Company; the estimated fair value of the North America reporting unit exceeded its carrying value by
approximately $4.1 billion.
The fair value of the Company’s Europe reporting unit is determined using both an income approach based on discounted
cash flows (“DCF”) and a market approach when it tests goodwill for impairment, either on an interim basis or annual basis as of
October 1 each year. Determining fair value using a DCF analysis requires the exercise of significant judgment with respect to
several items, including the amount and timing of expected future cash flows and appropriate discount rates. The expected cash
flows used in the DCF analyses are based on the Company’s most recent forecast and budget and, for years beyond the budget,
the Company’s estimates, which are based, in part, on forecasted growth rates. The discount rates used in the DCF analyses are
intended to reflect the risks inherent in the expected future cash flows of the respective reporting units. Assumptions used in the
DCF analyses, including the discount rate, are assessed based on the reporting units’ current results and forecasted future
performance, as well as macroeconomic and industry specific factors. The discount rate used in determining the fair value of the
Company’s Europe reporting unit was 15% in both 2020 and 2019. Determining fair value using a market approach considers
multiples of financial metrics based on both acquisitions and trading multiples of a selected peer group of companies. From the
comparable companies, a representative market multiple is determined which is applied to financial metrics to estimate the fair
value of a reporting unit. To determine a peer group of companies for our respective reporting units, we considered companies
relevant in terms of consumer use, monetization model, margin and growth characteristics, and brand strength operating in their
respective sectors.
While the Company has the option to qualitatively assess whether it is more likely than not that the fair values of its
indefinite-lived intangible assets are less than their carrying values, the Company’s policy is to determine the fair value of each
of its indefinite-lived intangible assets annually as of October 1, in part, because the level of effort required to perform the
quantitative and qualitative assessments is essentially equivalent. The Company determines the fair value of indefinite-lived
intangible assets using an avoided royalty DCF valuation analysis. Significant judgments inherent in this analysis include the
selection of appropriate royalty and discount rates and estimating the amount and timing of expected future cash flows. The
discount rates used in the DCF analyses are intended to reflect the risks inherent in the expected future cash flows generated by
the respective intangible assets. The royalty rates used in the DCF analyses are based upon an estimate of the royalty rates that a
market participant would pay to license the Company’s trade names and trademarks. Assumptions used in the avoided royalty
DCF analyses, including the discount rate and royalty rate, are assessed annually based on the actual and projected cash flows
related to the asset, as well as macroeconomic and industry specific factors. The discount rates used in the Company’s annual
indefinite-lived impairment assessment ranged from 11.5% to 15.0% in 2020 and 11.5% to 27.5% in 2019, and the royalty rates
used ranged from 2.0% to 5.5% in 2020 and 1.5% to 5.5% in 2019.
The 2020, 2019 and 2018 annual assessments of goodwill and indefinite-lived intangible assets identified no impairments.
Long-Lived Assets and Intangible Assets with Definite Lives
Long-lived assets, which consist of ROU assets, capitalized software, leasehold improvements and equipment and
intangible assets with definite lives, are reviewed for impairment whenever events or changes in circumstances indicate that the
carrying value of an asset may not be recoverable. The carrying value of a long-lived asset is not recoverable if it exceeds the
sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. If the carrying value is
deemed not to be recoverable, an impairment loss is recorded equal to the amount by which the carrying value of the long-lived
asset exceeds its fair value. Amortization of definite-lived intangible assets is computed either on a straight-line basis or based on
the pattern in which the economic benefits of the asset will be realized.
Fair Value Measurements
The Company categorizes its financial instruments measured at fair value into a fair value hierarchy that prioritizes the
inputs used in pricing the asset or liability. The three levels of the fair value hierarchy are:
•
Level 1: Observable inputs obtained from independent sources, such as quoted market prices for identical assets and
liabilities in active markets.
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•
•
Level 2: Other inputs, which are observable directly or indirectly, such as quoted market prices for similar assets or
liabilities in active markets, quoted market prices for identical or similar assets or liabilities in markets that are not
active and inputs that are derived principally from or corroborated by observable market data. The fair values of the
Company’s Level 2 financial assets are primarily obtained from observable market prices for identical underlying
securities that may not be actively traded. Certain of these securities may have different market prices from multiple
market data sources, in which case an average market price is used.
Level 3: Unobservable inputs for which there is little or no market data and require the Company to develop its own
assumptions, based on the best information available in the circumstances, about the assumptions market participants
would use in pricing the assets or liabilities.
The Company’s non-financial assets, such as goodwill, intangible assets, ROU assets, capitalized software, leasehold
improvements and equipment are adjusted to fair value only when an impairment is recognized. Such fair value measurements
are based predominantly on Level 3 inputs.
Warranty Costs
As part of certain of our revenue arrangements, we include warranties providing customers with assurance on the quality of
the services provided. Under our warranties, we incur costs to ensure the services performed are up to the customers standard
and/or to reimburse for any claim for damages submitted in accordance with our warranty terms and conditions. These costs are
recorded as a component of cost of revenue in the Consolidated Statement of Operations.
Advertising Costs
Advertising costs are expensed in the period incurred (when the advertisement first runs for production costs that are
initially capitalized) and represent 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 platforms. Advertising expense was $487.6
million, $484.3 million and $334.7 million for the years ended December 31, 2020, 2019 and 2018, respectively.
Legal Costs
Legal costs are expensed as incurred.
Income Taxes
The Company is included within IAC’s tax group for purposes of federal and consolidated state income tax return filings.
In all periods presented, the income tax provision and/or benefit has been computed for the Company on an as if standalone,
separate return basis and payments to and refunds from IAC for the Company’s share of IAC’s consolidated federal and state tax
return liabilities/receivables calculated on this basis have been reflected within cash flows from operating activities in the
accompanying consolidated statement of cash flows.
The Company accounts for income taxes under the liability method, and deferred tax assets and liabilities are recognized
for the future tax consequences attributable to differences between the financial statement carrying values of existing assets and
liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the
year in which those temporary differences are expected to be recovered or settled. A valuation allowance is provided if it is
determined that it is more likely than not that the deferred tax asset will not be realized. The Company records interest, net of any
applicable related income tax benefit, on potential income tax contingencies as a component of income tax expense.
The Company evaluates and accounts for uncertain tax positions using a two-step approach. Recognition (step one) occurs
when the Company concludes that a tax position, based solely on its technical merits, is more-likely-than-not to be sustainable
upon examination. Measurement (step two) determines the amount of benefit that is greater than 50% likely to be realized upon
ultimate settlement with a taxing authority that has full knowledge of all relevant information. De-recognition of a tax position
that was previously recognized would occur when the Company subsequently determines that a tax position no longer meets the
more-likely-than-not threshold of being sustained.
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Earnings Per Share
ANGI HOMESERVICES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Basic earnings per share is computed by dividing net earnings attributable to ANGI Homeservices Inc. shareholders by the
weighted average number of common shares outstanding during the period. Diluted earnings per share reflects the potential
dilution that could occur if stock appreciation rights, stock options and other commitments to issue common stock were
exercised or equity awards vested resulting in the issuance of common stock that could share in the earnings of the Company.
Foreign Currency Translation and Transaction Gains and Losses
The financial position and operating results of foreign entities whose primary economic environment is based on their local
currency are consolidated using the local currency as the functional currency. These local currency assets and liabilities are
translated at the rates of exchange as of the balance sheet date, and local currency revenue and expenses of these operations are
translated at average rates of exchange during the period. Translation gains and losses are included in accumulated other
comprehensive income (loss) as a component of shareholders’ equity. Transaction gains and losses resulting from assets and
liabilities denominated in a currency other than the functional currency are included in the consolidated statement of operations
as a component of other income (expense), net. Translation gains and losses relating to foreign entities that are liquidated or
substantially liquidated are reclassified out of accumulated other comprehensive income (loss) into earnings.
Stock-Based Compensation
Stock-based compensation is measured at the grant date based on the fair value of the award and is expensed over the
requisite service period. See “Note 11—Stock‑based Compensation” for a discussion of the Company’s stock-based
compensation plans.
Redeemable Noncontrolling Interests
Noncontrolling interests in the consolidated subsidiaries of the Company are ordinarily reported on the consolidated
balance sheet within shareholders’ equity, separately from the Company’s equity. However, securities that are redeemable at the
option of the holder and not solely within the control of the issuer must be classified outside of shareholders’ equity.
Accordingly, all noncontrolling interests that are redeemable at the option of the holder are presented outside of shareholders’
equity in the accompanying consolidated balance sheet.
In connection with the acquisition of certain subsidiaries, management of these businesses has retained an ownership
interest. The Company is party to fair value put and call arrangements with respect to these interests. These put and call
arrangements allow management of these businesses to require the Company to purchase their interests or allow the Company to
acquire such interests at fair value, respectively. The put arrangements do not meet the definition of a derivative instrument as
the put agreements do not provide for net settlement. These put and call arrangements become exercisable by the Company and
the counter-party at various dates. During the year ended December 31, 2020, one of these arrangements was exercised. No put
and call arrangements were exercised during the year ended December 31, 2019, and one of these arrangements was exercised
during the year ended December 31, 2018. Because these put arrangements are exercisable by the counter-party outside the
control of the Company, to the extent that the fair value of these interests exceeds the value determined by normal noncontrolling
interest accounting, the value of such interests is adjusted to fair value with a corresponding adjustment to additional paid-in
capital. During the years ended December 31, 2020, 2019 and 2018, the Company recorded adjustments of $1.6 million, $8.2
million and $1.2 million, respectively, to increase these interests to fair value. Fair value determinations require high levels of
judgment and are based on various valuation techniques, including market comparables and discounted cash flow projections.
Certain Risks and Concentrations
The Company’s business is subject to certain risks and concentrations including dependence on third-party technology
providers, exposure to risks associated with online commerce security and credit card fraud.
Financial instruments, which potentially subject the Company to concentration of credit risk, consist primarily of cash and
cash equivalents and marketable debt securities. Cash and cash equivalents are maintained with financial institutions and are in
excess of Federal Deposit Insurance Corporation insurance limits.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Recent Accounting Pronouncements
Accounting Pronouncements Adopted
Adoption of Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments—Credit Losses (Topic 326):
Measurement of Credit Losses on Financial Instruments
The Company adopted ASU No. 2016-13 effective January 1, 2020. ASU No. 2016-13 replaces the “incurred loss”
approach with an “expected loss” model, under which companies will recognize allowances based on expected rather than
incurred losses. The Company adopted ASU No. 2016-13 using the modified retrospective approach and there was no
cumulative effect arising from the adoption. The adoption of ASU No. 2016-13 did not have a material impact on the Company’s
consolidated financial statements.
Adoption of ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes
The Company adopted ASU No. 2019-12 effective January 1, 2020, which simplifies the accounting for income taxes,
eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance to promote
consistency among reporting entities. Most amendments within ASU No. 2019-12 are required to be applied on a prospective
basis, while certain amendments must be applied on a retrospective or modified retrospective basis. The Company adopted ASU
No. 2019-12 on January 1, 2020 using the modified retrospective basis for those amendments that are not applied on a
prospective basis. The adoption of ASU No. 2019-12 did not have a material impact on the Company’s consolidated financial
statements.
Accounting Pronouncements Not Yet Adopted
There are no recently issued accounting pronouncements that have not yet been adopted that are expected to have a
material effect of the financial statement of the Company.
Reclassifications
Certain prior year amounts have been reclassified to conform to the current year presentation.
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ANGI HOMESERVICES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 3—INCOME TAXES
The Company is included within IAC’s tax group for purposes of federal and consolidated state income tax return filings.
In all periods presented, the income tax benefit and/or provision has been computed for the Company on an as if standalone,
separate return basis and payments to and refunds from IAC for the Company’s share of IAC’s consolidated federal and state
tax return liabilities/receivables calculated on this basis have been reflected within cash flows from operating activities in the
accompanying consolidated statement of cash flows. The tax sharing agreement between the Company and IAC governs the
parties’ respective rights, responsibilities and obligations with respect to tax matters, including responsibility for taxes
attributable to the Company, entitlement to refunds, allocation of tax attributes and other matters and, therefore, ultimately
governs the amount payable to or receivable from IAC with respect to income taxes. Any differences between taxes currently
payable or receivable from IAC under the tax sharing agreement and the current tax provision computed on an as if standalone,
separate return basis for GAAP are reflected as adjustments to additional paid-in capital and as financing activities within the
statement of cash flows.
U.S. and foreign (loss) earnings before income taxes and noncontrolling interests are as follows:
U.S.
Foreign
Total
The components of the income tax (benefit) provision are as follows:
Current income tax provision:
Federal
State
Foreign
Current income tax provision
Deferred income tax benefit
Federal
State
Foreign
Deferred income tax benefit
Income tax benefit
Years Ended December 31,
2020
2019
2018
(In thousands)
$
$
(10,913) $
(8,415)
(19,328) $
39,821 $
(6,175)
33,646 $
82,652
(12,628)
70,024
Years Ended December 31,
2020
2019
2018
(In thousands)
$
(306) $
(43) $
1,408
(992)
110
819
806
1,582
(5,163)
(6,249)
(3,866)
(15,278)
(3,416)
517
(351)
(3,250)
$
(15,168) $
(1,668) $
—
(20)
905
885
(5,549)
(1,100)
(1,719)
(8,368)
(7,483)
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The tax effects of cumulative temporary differences that give rise to significant deferred tax assets and deferred tax
liabilities are presented below. The valuation allowance relates to deferred tax assets for which it is more likely than not that the
tax benefit will not be realized.
Deferred tax assets:
Net operating loss (“NOL”) carryforwards
Stock-based compensation
Long-term lease liabilities
Other
Total deferred tax assets
Less valuation allowance
Net deferred tax assets
Deferred tax liabilities:
Intangible assets
Right-of-use assets
Capitalized software, leasehold improvements and equipment
Capitalized costs to obtain a contract with a customer
Other
Total deferred tax liabilities
Net deferred tax assets
December 31,
2020
2019
(In thousands)
$
182,449 $
158,727
18,955
29,314
32,885
33,613
32,642
26,226
263,603
251,208
(77,076)
(71,472)
186,527
179,736
(47,858)
(21,496)
(16,152)
(12,233)
(4,338)
(63,900)
(24,836)
(12,377)
(9,400)
(83)
(102,077)
(110,596)
$
84,450 $
69,140
The portion of the December 31, 2020 deferred tax assets that will be payable to IAC pursuant to the tax sharing
agreement, upon realization, is $88.0 million.
At December 31, 2020, the Company has federal and state NOLs of $431.5 million and $375.9 million, respectively,
available to offset future income. Of these federal NOLs, $59.3 million can be carried forward indefinitely and $372.2 million,
if not utilized, will expire at various times between 2030 and 2037. The state NOLs, if not utilized, will expire at various times
primarily between 2025 and 2040. Federal and state NOLs of $166.1 million and $79.9 million, respectively, can be used
against future taxable income without restriction and the remaining NOLs will be subject to limitations under Section 382 of the
Internal Revenue Code, separate return limitations, and applicable state law. At December 31, 2020, the Company has foreign
NOLs of $413.7 million available to offset future income. Of these foreign NOLs, $374.3 million can be carried forward
indefinitely and $39.4 million, if not utilized, will expire at various times between 2022 and 2039. During 2020, the Company
recognized tax benefits related to NOLs of $12.6 million.
At December 31, 2020, the Company has tax credit carryforwards of $16.6 million relating to federal and state tax credits
for research activities. Of these credit carryforwards, $0.6 million can be carried forward indefinitely and $16.0 million, if not
utilized, will expire between 2024 and 2040.
The Company regularly assesses the realizability of deferred tax assets considering all available evidence including, to the
extent applicable, the nature, frequency and severity of prior cumulative losses, forecasts of future taxable income, tax filing
status, the duration of statutory carryforward periods, available tax planning and historical experience. At December 31, 2020,
the Company has a U.S. gross deferred tax asset of $176.4 million that the Company expects to fully utilize on a more likely
than not basis.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
During 2020, the Company’s valuation allowance increased by $5.6 million primarily due to an increase in foreign NOLs offset
by a decrease in state NOLs. At December 31, 2020, the Company has a valuation allowance of $77.1 million related to the
portion of NOLs and other items for which it is more likely than not that the tax benefit will not be realized.
A reconciliation of the income tax benefit to the amounts computed by applying the statutory federal income tax rate to
earnings before income taxes is shown as follows:
Years Ended December 31,
2020
2019
2018
(In thousands)
Income tax (benefit) provision at the federal statutory rate of 21%
$
(4,058) $
7,066 $
State income taxes, net of effect of federal tax benefit
Deferred tax adjustment for enacted changes in tax law and rates
Change in judgement on beginning of the year valuation allowance
1,641
(5,244) $
(3,544) $
2,693
502 $
— $
14,705
4,702
(1,431)
—
Stock-based compensation
Unbenefited losses
Research credit
Net adjustment related to the reconciliation of income tax provision
accruals to tax returns
Other, net
Income tax benefit
(2,914)
(12,768)
(25,184)
2,899
1,523
(2,494)
(3,308)
(743)
(711)
448
2,176
2,227
(1,169)
(1,669)
336
$
(15,168) $
(1,668) $
(7,483)
A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding interest, is as follows:
December 31,
2020
2019
2018
(In thousands)
Balance at January 1
$
4,025 $
2,356 $
1,548
Additions based on tax positions related to the current year
Additions for tax positions of prior years
Settlements
Balance at December 31
1,676
423
(856)
1,325
344
—
411
397
—
$
5,268 $
4,025 $
2,356
The Company is routinely under audit by federal, state, local and foreign authorities in the area of income tax as a result
of previously filed separate company and consolidated tax returns with IAC. These audits include questioning the timing and
the amount of income and deductions and the allocation of income and deductions among various tax jurisdictions. The Internal
Revenue Service has substantially completed its audit of IAC’s federal income tax returns for the years ended December 31,
2010 through 2016, which includes the operations of the Company. The IRS began its audit of the year ended December 31,
2017 in the second quarter of 2020. The statute of limitations for the years 2010 through 2012 and for the years 2013 through
2017 have been extended to May 31, 2021 and December 31, 2021, respectively. Returns filed in various other jurisdictions are
open to examination for various tax years beginning with 2009. Income taxes payable include unrecognized tax benefits
considered sufficient to pay assessments that may result from examination of prior year tax returns. The Company considers
many factors when evaluating and estimating its tax positions and tax benefits, which may not accurately anticipate actual
outcomes and, therefore, may require periodic adjustment. Although management currently believes changes in unrecognized
tax benefits from period to period and differences between amounts paid, if any, upon resolution of issues raised in audits and
amounts previously provided will not have a material impact on liquidity, results of operations, or financial condition of the
Company, these matters are subject to inherent uncertainties and management’s view of these matters may change in the future.
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ANGI HOMESERVICES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The Company recognizes interest and, if applicable, penalties related to unrecognized tax benefits in the income tax
provision. At December 31, 2020, there are no accruals for interest and penalties. At December 31, 2019, accruals for interest
are not material and there are no accruals for penalties.
At December 31, 2020 and 2019, unrecognized tax benefits, including interest, are $5.3 million and $4.1 million
respectively; all of which are for tax positions included in IAC’s consolidated tax return filings. If unrecognized tax benefits at
December 31, 2020 are subsequently recognized, the income tax provision would be reduced by $5.1 million. The comparable
amount as of December 31, 2019 is $4.0 million. The Company believes that it is reasonably possible that its unrecognized tax
benefits could decrease by $0.5 million by December 31, 2021, due to settlements, all of which would reduce the income tax
provision.
At December 31, 2020, all of the Company’s international cash can be repatriated without any significant tax consequences.
NOTE 4—BUSINESS COMBINATIONS
Handy Acquisition
On October 19, 2018, the Company acquired 100% of Handy, a leading platform for connecting individuals looking for
household services, for total consideration of $168.4 million. This includes the aggregate fair value of 8.6 million shares of
Class A common stock issued by the Company of $165.8 million, which was based on the closing stock price of ANGI on the
NASDAQ on October 19, 2018 of $19.31 and cash consideration paid by the Company.
During 2019, the Company finalized its assessment of net operating losses acquired in the Handy acquisition. As a result,
the Company revised the purchase price allocation for Handy by increasing the fair value of deferred tax assets by $27.2 million
and decreasing goodwill by $27.2 million.
The financial results of Handy are included in the Company’s consolidated financial statements, within the North America
segment, beginning October 19, 2018.
The table below summarizes the fair values of the assets acquired and liabilities assumed at the date of acquisition:
Cash and cash equivalents
Other current assets
Goodwill
Intangible assets
Other non-current assets
Deferred income taxes
Total assets
Current liabilities
Net assets acquired
Handy
(In thousands)
$
5,710
2,050
115,183
38,800
8
20,070
181,821
(13,419)
$
168,402
The purchase price was based on the expected financial performance of Handy, not on the value of the net identifiable
assets at the time of acquisition. This resulted in a significant portion of the purchase price being attributed to goodwill because
Handy is complementary and synergistic to the other North America businesses of ANGI Homeservices.
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ANGI HOMESERVICES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The fair values of the identifiable intangible assets acquired at the date of acquisition are as follows:
Indefinite-lived trade name and trademarks
$
Developed technology
User base
Retail partners
Service professionals
18,800
15,600
3,400
600
400
Handy
(In thousands)
Weighted-
Average
Useful Life
(Years)
Indefinite
4
1
3
1
Total identifiable intangible assets acquired
$
38,800
Other current assets, other non-current assets and current liabilities of Handy were reviewed and adjusted to their fair
values at the date of acquisition, as necessary. The fair values of the trade name and developed technology were determined
using variations of the income approach; specifically, in respective order, the relief from royalty and excess earnings
methodologies. The fair values of user base, retail partners, and service professionals were determined using a cost approach
that utilized the cost to replace methodology. The valuations of the intangible assets incorporate significant unobservable inputs
and require significant judgment and estimates, including the amount and timing of future cash flows and the determination of
royalty and discount rates. The amount attributed to goodwill is not tax deductible.
NOTE 5—GOODWILL AND INTANGIBLE ASSETS
Goodwill and intangible assets, net are as follows:
Goodwill
Intangible assets with indefinite lives
Intangible assets with definite lives, net of accumulated amortization
Total goodwill and intangible assets, net
December 31,
2020
2019
(In thousands)
$
891,797 $
171,888
37,829
883,960
171,599
80,126
$
1,101,514 $
1,135,685
The following table presents the balance of goodwill by reportable segment, including the changes in the carrying value of
goodwill, for the year ended December 31, 2020:
North America
Europe
Total goodwill
Balance at
December 31,
2019
Additions
(Deductions)
(In thousands)
Foreign
Currency
Translation
Balance at
December 31,
2020
$
$
813,417 $
2,665 $
70,543
—
— $
—
225 $
816,307
4,947
75,490
883,960 $
2,665 $
— $
5,172 $
891,797
Additions relate to immaterial acquisition activity during the year (included in the North America segment).
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ANGI HOMESERVICES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following table presents the balance of goodwill by reportable segment, including the changes in the carrying value of
goodwill, for the year ended December 31, 2019:
North America
Europe
Total goodwill
Balance at
December 31,
2018
Additions
(Deductions)
(In thousands)
Foreign
Currency
Translation
Balance at
December 31,
2019
$
$
824,037 $
18,326 $
(29,266) $
320 $
813,417
70,672
—
—
(129)
70,543
894,709 $
18,326 $
(29,266) $
191 $
883,960
Additions relate to the acquisition of Fixd Repair (included in the North America segment). Deductions primarily relate to
tax benefits of acquired attributes related to the acquisition of Handy (included in the North America segment).
Intangible assets with indefinite lives are trade names and trademarks acquired in various acquisitions. At December 31,
2020 and 2019, intangible assets with definite lives are as follows:
Service professional relationships
$
97,160 $
(97,000) $
Technology
Memberships
Customer lists and user base
Trade names
Total
Technology
Memberships
Customer lists and user base
Trade names
Total
Service professional relationships
$
99,651 $
(76,445) $
Weighted-
Average
Useful Life
(Years)
3.0
5.5
3.0
8.0
5.6
4.1
Weighted-
Average
Useful Life
(Years)
2.9
5.3
3.0
1.4
6.8
3.8
December 31, 2020
Gross
Carrying
Amount
Accumulated
Amortization
Net
(Dollars in thousands)
160
36,324
—
608
737
23,206
51,374
3,960
708
878
83,468
15,900
800
3,128
(47,144)
(15,900)
(192)
(2,391)
$
200,456 $
(162,627) $
37,829
December 31, 2019
Gross
Carrying
Amount
Accumulated
Amortization
Net
(Dollars in thousands)
89,095
15,900
14,298
2,390
(37,721)
(11,940)
(13,590)
(1,512)
$
221,334 $
(141,208) $
80,126
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ANGI HOMESERVICES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
At December 31, 2020, amortization of intangible assets with definite lives for each of the next five years and thereafter is
estimated to be as follows:
Years Ending December 31,
2021
2022
2023
2024
2025
Thereafter
Total
(In thousands)
$
14,951
13,964
8,148
190
190
386
$
37,829
NOTE 6—FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS
Marketable Debt Securities
At December 31, 2020, current available-for-sale marketable debt securities were as follows:
Treasury discount notes
Total available-for-sale marketable debt securities
Amortized Cost
Gross Unrealized
Gains
Gross Unrealized
Losses
Fair Value
$
$
49,995 $
49,995 $
(In thousands)
— $
— $
— $
— $
49,995
49,995
The contractual maturities of debt securities classified as current available-for-sale at December 31, 2020 are within one
year. The Company did not hold any available-for-sale marketable debt securities at December 31, 2019.
For the years ended December 31, 2020 and 2019, proceeds from maturities of available-for-sale marketable debt
securities were $50.0 million and $25.0 million, respectively. There were no gross realized gains or losses from the maturities
of available-for-sale marketable debt securities for the years ended December 31, 2020 and 2019.
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ANGI HOMESERVICES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Fair Value Measurements
The following tables present the Company’s financial instruments that are measured at fair value on a recurring basis:
Assets:
Cash equivalents:
Money market funds
Treasury discount notes
Time deposits
Marketable debt securities:
Treasury discount notes
Total
Assets:
Cash equivalents:
Money market funds
Time deposits
Total
December 31, 2020
Quoted Market
Prices in Active
Markets for
Identical Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total
Fair Value
Measurements
(In thousands)
$
374,014 $
— $
—
—
—
324,995
2,721
49,995
$
374,014 $
377,711 $
— $
—
— $
374,014
324,995
2,721
—
49,995
— $
751,725
December 31, 2019
Quoted Market
Prices in Active
Markets for
Identical Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total
Fair Value
Measurements
(In thousands)
$
$
291,810 $
— $
—
23,040
— $
291,810
—
23,040
291,810 $
23,040 $
— $
314,850
Financial instruments measured at fair value only for disclosure purposes
The following table presents the carrying value and the fair value of financial instruments measured at fair value only for
disclosure purposes:
Current portion of long-term debt
Long-term debt, net(a)
_________________
December 31, 2020
December 31, 2019
Carrying Value
Fair Value
Carrying Value
Fair Value
(In thousands)
$
— $
— $
(13,750) $
(13,681)
(712,277)
(725,700)
(231,946)
(232,581)
(a)
At December 31, 2020 and 2019, the carrying value of long-term debt, net includes unamortized debt issuance costs of $7.7 million and $1.8
million, respectively.
The fair value of long-term debt, including the current portion, is estimated using observable market prices or indices for
similar liabilities, which are Level 2 inputs.
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ANGI HOMESERVICES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 7—LONG-TERM DEBT
Long-term debt consists of:
3.875% ANGI Group Senior Notes due August 15, 2028 (“Senior Notes”); interest payable
each February 15 and August 15, commencing February 15, 2021
ANGI Group Term Loan due November 5, 2023
Total long-term debt
Less: current portion of Term Loan
Less: unamortized debt issuance costs
Total long-term debt, net
ANGI Group Senior Notes
December 31,
2020
2019
(In thousands)
$
$
500,000 $
220,000
720,000
—
7,723
712,277 $
—
247,500
247,500
13,750
1,804
231,946
On August 20, 2020, ANGI Group, LLC (“ANGI Group”), a direct, wholly-owned subsidiary of the Company, issued
$500.0 million in aggregate principal amount of the Senior Notes, the proceeds of which are intended for general corporate
purposes, including potential future acquisitions and return of capital. At any time prior to August 15, 2023, these notes may be
redeemed at a redemption price equal to the sum of the principal amount thereof, plus accrued and unpaid interest and a make-
whole premium. Thereafter, these notes may be redeemed at the redemption prices set forth below, plus accrued and unpaid
interest thereon, if any, to the applicable redemption date, if redeemed during the twelve-month period beginning on August 15
of the years indicated below:
Year
2023
2024
2025 and thereafter
Percentage
101.938 %
100.969 %
100.000 %
The indenture governing the Senior Notes contains a covenant that would limit ANGI Group’s ability to incur liens for
borrowed money in the event a default has occurred or ANGI Group’s secured leverage ratio (as defined in the indenture)
exceeds 3.75 to 1.0. At December 31, 2020, there were no limitations pursuant thereto.
ANGI Group Term Loan and ANGI Group Revolving Facility
ANGI was a party to a credit agreement that terminates on November 5, 2021. The credit agreement governs the Term
Loan and revolving credit facility (the “Revolving Facility”). On August 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 which ANGI Group became the successor borrower under the credit agreement
(“ANGI Group Credit Agreement”) and ANGI Homeservices Inc.’s obligations thereunder were terminated. In addition, on
August 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 outstanding balance of the ANGI Group Term Loan was $220 million and $247.5 million at December 31, 2020 and 2019,
respectively. As of December 31, 2020, the Company prepaid its quarterly principal payments totaling of $13.8 million due in
2021. There are quarterly principal payments of $6.9 million for the one-year period ending December 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. At December 31, 2020 and 2019, the Term Loan bore interest at LIBOR plus 2.00%
and LIBOR plus 1.50% respectively. The spread over LIBOR is subject to change in future periods based on ANGI Group’s
consolidated net leverage ratio. The interest rate was 2.16% and 3.25%, at December 31, 2020 and 2019, respectively.
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ANGI HOMESERVICES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The ANGI Group Credit Agreement requires ANGI 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. The ANGI Group Credit Agreement also contains
covenants that would limit ANGI Group’s ability to pay dividends or make distributions in the event a default has occurred or
ANGI Group’s consolidated net leverage ratio exceeds 4.25 to 1.0. At December 31, 2020, there were no limitations pursuant
thereto.
The $250.0 million ANGI Group Revolving Facility expires on November 5, 2023. At December 31, 2020 and 2019,
there were no outstanding borrowings under the ANGI Group Revolving Facility. The annual commitment fee on undrawn
funds is based on ANGI Group’s consolidated net leverage ratio most recently reported and was 35 basis points and 25 basis
points at December 31, 2020 and 2019, respectively. Any future borrowings under the ANGI Group Revolving Facility would
bear interest, at ANGI Group’s option, at either a base rate or LIBOR, in each case plus an applicable margin, which is based on
ANGI Group’s consolidated net leverage ratio. The financial and other covenants are the same as those for the ANGI Group
Term Loan.
The ANGI Group Senior Notes and ANGI Group Credit Agreement are guaranteed by certain of ANGI Group’s wholly-
owned material domestic subsidiaries and ANGI Group’s obligations under the ANGI Group Credit Agreement are secured by
substantially all assets of ANGI Group and the guarantors, subject to certain exceptions. The ANGI Group Term Loan and
outstanding borrowings, if any, under the ANGI Group Revolving Facility rank equally with each other, and have priority over
the ANGI Group Senior Notes to the extent of the value of the assets securing the borrowings under the ANGI Group Credit
Agreement.
Long-term debt maturities:
Long-term debt maturities as of December 31, 2020 are summarized in the table below:
Years Ending December 31,
2022
2023
2028
Total
Less: unamortized debt issuance costs
Total long-term debt, net
(In thousands)
27,500
192,500
500,000
720,000
7,723
$
712,277
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ANGI HOMESERVICES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 8—SHAREHOLDERS’ EQUITY
Description of Class A Common Stock, Class B Convertible Common Stock and Class C Common Stock
Except as described herein, shares of ANGI Homeservices Class A common stock, Class B common stock and Class C
common stock are identical.
Holders of Class A common stock are entitled to one vote per share on all matters to be voted upon by the stockholders.
Holders of Class B common stock are entitled to ten votes per share on all matters to be voted upon by stockholders. Holders of
Class C common stock have no voting rights, except as otherwise required by the laws of the State of Delaware, in which case
holders of Class C common stock are entitled to one one-hundredth (1/100) of a vote per share. Holders of the Company’s Class
A common stock, Class B common stock and Class C common stock do not have cumulative voting rights in the election of
directors.
Shares of ANGI Homeservices Class B common stock are convertible into shares of our Class A common stock at the
option of the holder at any time on a share for share basis. Such conversion ratio will in all events be equitably preserved in the
event of any recapitalization of ANGI Homeservices by means of a stock dividend on, or a stock split or combination of, our
outstanding Class A common stock or Class B common stock, or in the event of any merger, consolidation or other
reorganization of ANGI Homeservices with another corporation. Upon the conversion of a share of our Class B common stock
into a share of our Class A common stock, the applicable share of Class B common stock will be retired and will not be subject
to reissue. Shares of Class A common stock and Class C common stock have no conversion rights.
The holders of shares of ANGI Homeservices Class A common stock, Class B common stock and Class C common stock
are entitled to receive, share for share, such cash dividends as may be declared by ANGI Homeservices Board of Directors out
of funds legally available therefor. In the event of a liquidation, dissolution or winding up, holders of the Company’s Class A
common stock, Class B common stock and Class C common stock are entitled to receive ratably the assets available for
distribution to the stockholders after payment of all liabilities and accrued but unpaid dividends and liquidation preferences on
any outstanding preferred stock.
At December 31, 2020, IAC holds all 421.9 million outstanding shares of the Company’s Class B common stock, which
represents an 84.3% economic interest and 98.2% voting interest in the Company.
In the event that ANGI Homeservices issues or proposes to issue any shares of ANGI Homeservices Class A common
stock, Class B common stock or Class C common stock (with certain limited exceptions), including shares issued upon the
exercise, conversion or exchange of options, warrants and convertible securities, IAC will generally have a purchase right that
permits it to purchase for fair market value, as defined in the agreement, up to such number of shares of the same class as the
issued shares as would (i) enable IAC to maintain the same ownership interest in the Company that it had immediately prior to
such issuance or proposed issuance, with respect to issuances of our voting capital stock, or (ii) enable IAC to maintain
ownership of at least 80.1% of each class of the Company’s non-voting capital stock, with respect to issuances of our non-
voting capital stock.
Reserved Common Shares
In connection with equity compensation plans, 40.2 million shares of ANGI Homeservices common stock are reserved at
December 31, 2020.
Common Stock Repurchases
On March 9, 2020 and February 6, 2019, the Board of Directors of ANGI Homeservices authorized the Company to
repurchase up to 20 million and 15 million shares of its common stock, respectively. During the year ended December 31, 2020,
the Company repurchased 8.4 million shares of ANGI common stock for aggregate consideration, on a trade date basis, of
$62.6 million. At December 31, 2020, the Company has approximately 19.3 million shares remaining in its share repurchase
authorization.
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ANGI HOMESERVICES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 9—ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
The following tables present the components of accumulated other comprehensive income (loss) income and items
reclassified out of accumulated other comprehensive income (loss) income into earnings:
Balance at January 1
Other comprehensive income
Net current period other comprehensive income
Balance at December 31
Balance at January 1
Other comprehensive income (loss) before reclassifications
Net current period other comprehensive income (loss)
Balance at December 31
Year Ended December 31, 2020
Foreign
Currency
Translation
Adjustment
Unrealized Gains
On Available-
For-Sale Debt
Securities
Accumulated
Other
Comprehensive
(Loss) Income
(In thousands)
$
(1,379) $
— $
(1,379)
6,016
6,016
—
—
$
4,637 $
— $
6,016
6,016
4,637
Year Ended December 31, 2019
Foreign
Currency
Translation
Adjustment
Unrealized Gains
On Available-
For-Sale Debt
Securities
Accumulated
Other
Comprehensive
(Loss) Income
(In thousands)
$
(1,864) $
3 $
(1,861)
485
485
(3)
(3)
482
482
$
(1,379) $
— $
(1,379)
Foreign
Currency
Translation
Adjustment
Year Ended December 31, 2018
Unrealized Gains
On Available-
For-Sale Debt
Securities
Accumulated
Other
Comprehensive
Income (Loss)
Balance at January 1
Other comprehensive (loss) income before reclassifications
Amounts reclassified to earnings
Net current period other comprehensive loss
Balance at December 31
(In thousands)
$
2,232 $
(4,044)
(52)
(4,096)
— $
3
—
3
$
(1,864) $
3 $
2,232
(4,041)
(52)
(4,093)
(1,861)
The amounts reclassified out of foreign currency translation adjustment into earnings for the year ended December 31,
2018 relate to the liquidation of an international subsidiary.
At December 31, 2020, 2019 and 2018, there was no tax benefit or provision on the accumulated other comprehensive
income (loss).
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ANGI HOMESERVICES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 10—EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted (loss) earnings per share attributable to
ANGI Homeservices shareholders:
Numerator:
Net (loss) earnings
Net earnings attributable to
noncontrolling interests
Net (loss) earnings attributable to
ANGI Homeservices Inc. shareholders $
$
Denominator:
Weighted average basic shares
outstanding
Dilutive securities (a)(b)(c)
Denominator for earnings per share—
weighted average shares
Years Ended December 31,
2020
2019
2018
Basic
Diluted
Basic
Diluted
Basic
Diluted
(In thousands, except per share data)
(4,160) $
(4,160) $
35,314 $
35,314 $
77,507 $
77,507
(2,123)
(2,123)
(485)
(485)
(189)
(189)
(6,283) $
(6,283) $
34,829 $
34,829 $
77,318
77,318
498,159
498,159
504,875
—
—
—
504,875
13,044
484,232
—
484,232
29,365
498,159
498,159
504,875
517,919
484,232
513,597
(Loss) earnings per share attributable to ANGI Homeservices Inc. shareholders:
(Loss) earnings per share
$
(0.01) $
(0.01) $
0.07 $
0.07 $
0.16 $
0.15
________________________
(a)
(b)
For the year ended December 31, 2020, the Company had a loss from operations and as a result, approximately 24.9 million potentially dilutive
securities were excluded from computing dilutive earnings per share because the impact would have been anti-dilutive. Accordingly, the weighted
average basic shares outstanding were used to compute all earnings per share amounts.
If the effect is dilutive, weighted average common shares outstanding include the incremental shares that would be issued upon the assumed exercise
of stock appreciation rights, stock options and subsidiary denominated equity and vesting of restricted stock units (“RSUs”). For the years ended
December 31, 2019 and 2018, 5.5 million, and 3.1 million potentially dilutive securities, respectively, are excluded from the calculation of diluted
earnings per share because their inclusion would have been anti-dilutive.
(c) Market-based awards and performance-based stock units are considered contingently issuable shares. Shares issuable upon exercise or vesting of
market-based awards and performance-based stock units are included in the denominator for earnings per share if (i) the applicable performance or
market condition(s) has been met and (ii) the inclusion of the market-based award and performance-based stock units is dilutive for the respective
reporting periods. For the years ended December 31, 2019 and 2018, 0.9 million, and 1.3 million shares underlying market-based awards and
performance-based stock units, respectively, were excluded from the calculation of diluted earnings per share because the performance or market
condition(s) had not been met.
NOTE 11—STOCK-BASED COMPENSATION
The Company currently has one active stock plan, which became effective in 2017 upon the completion of the
combination of IAC’s HomeAdvisor business and Angie’s List, Inc. on September 29, 2017 (the “Combination”). The 2017
plan covers stock options, stock appreciation rights and RSU awards, including those that are linked to the achievement of the
Company’s stock price, known as market-based awards (“MSUs”) and those that are linked to the achievement of a
performance target, known as performance-based awards (“PSUs”), denominated in shares of ANGI Homeservices common
stock, as well as provides for the future grant of these and other equity awards. The 2017 plan authorizes the Company to grant
awards to its employees, officers, directors and consultants. At December 31, 2020, there are 15.2 million shares available for
grant under the 2017 plan.
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The 2017 plan has a stated term of ten years, and provides that the exercise price of stock options and stock appreciation
rights granted will not be less than the market price of the Company’s common stock on the grant date. The plan does not
specify grant dates or vesting schedules for awards, as those determinations have been delegated to the Compensation
Committee of ANGI Homeservices Board of Directors (the “Committee”). Each grant agreement reflects the grant date and
vesting schedule for that particular grant as determined by the Committee. Stock options and stock appreciation rights granted
subsequent to the Combination through December 31, 2018 generally vest in equal annual installments over a four-year period
from the grant date. RSU awards granted subsequent to the Combination through December 31, 2020 generally vest either in
two 50% installments over a three and four-year period or in equal annual installments over a four-year period, in each case,
from the grant date. MSU awards granted subsequent to the Combination generally vest in five installments over a two-year
period from the grant date. PSU awards granted subsequent to the Combination generally cliff vest in a two to five-year period
from the grant date.
Stock-based compensation expense recognized in the consolidated statement of operations includes expense related to: (i)
the Company’s stock options, stock appreciation rights and RSUs; (ii) equity instruments denominated in shares of its
subsidiaries; and (iii) IAC denominated stock options and PSUs held by ANGI Homeservices employees. The amount of stock-
based compensation expense recognized is net of estimated forfeitures. The forfeiture rate is estimated at the grant date based
on historical experience and revised, if necessary, in subsequent periods if actual forfeitures differ from the estimated rate. The
expense ultimately recorded is for the awards that vest. At December 31, 2020, there was $77.2 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 2.2 years.
The total income tax benefit recognized in the accompanying consolidated statement of operations for the years ended
December 31, 2020, 2019 and 2018 related to all stock-based compensation is $24.3 million, $28.8 million and $49.5 million,
respectively.
The aggregate income tax benefit recognized related to the exercise of stock options and stock appreciation rights for the
years ended December 31, 2020, 2019 and 2018 is $11.4 million, $27.9 million and $40.2 million, respectively. There may be
some delay in the timing of the realization of the cash benefit of the income tax deductions related to stock-based compensation
because it will be dependent upon the amount and timing of future taxable income and the timing of estimated income tax
payments.
Stock Options and Stock Appreciation Rights
Stock options and stock appreciation rights outstanding at December 31, 2020 and changes during the year ended
December 31, 2020 were as follows:
Outstanding at January 1, 2020
Granted
Exercised
Forfeited
Expired
Outstanding at December 31, 2020
Exercisable
December 31, 2020
Shares
Weighted
Average
Exercise Price
Weighted
Average
Remaining
Contractual
Term (In Years)
Aggregate
Intrinsic Value
(Shares and intrinsic value in thousands)
23,984 $
—
(12,931)
(352)
(12)
10,689 $
8,944 $
3.89
—
3.18
6.16
15.03
4.67
4.59
5.68 $
5.59 $
92.08
77.97
The aggregate intrinsic value in the table above represents the difference between ANGI Homeservices closing stock price
on the last trading day of 2020 and the exercise price, multiplied by the number of in-the-money awards that would have been
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
exercised had all award holders exercised their awards on December 31, 2020. The total intrinsic value of awards exercised
during the years ended December 31, 2020, 2019 and 2018 is $120.9 million, $107.5 million and $151.2 million, respectively.
The following table summarizes the information about stock options and stock appreciation rights outstanding and
exercisable at December 31, 2020:
Range of Exercise Prices
$0.01 to $3.00
$3.01 to $6.00
$6.01 to $9.00
$9.01 to $12.00
$12.01 to $15.00
$15.01 to $18.00
$18.01 to$21.00
$21.01 to $24.00
Awards Outstanding
Awards Exercisable
Outstanding
at
December 31,
2020
Weighted
average
remaining
contractual
life in years
Weighted
average
exercise
price
Exercisable
at
December 31,
2020
(Shares in thousands)
Weighted
average
remaining
contractual
life in years
Weighted
average
exercise
price
2,864
6,814
106
405
369
—
115
16
10,689
4.9 $
6.1
4.0
6.0
5.5
—
2.2
2.6
5.7 $
2.29
4.53
8.04
10.54
12.94
—
19.88
22.02
4.67
2,864
5,213
106
324
306
—
115
16
8,944
4.9 $
6.1
4
5.7
5.3
—
2.2
2.6
5.6 $
2.29
4.53
8.04
10.47
12.98
—
19.88
22.02
4.59
There were no stock options or stock appreciation rights granted by the Company for the years ended December 31, 2020,
2019 or 2018.
In connection with the Combination, the previously issued HomeAdvisor (US) stock appreciation rights were converted
into ANGI Homeservices’ equity awards resulting in a modification charge. Included in stock-based compensation expense in
the years ended December 31, 2020, 2019 and 2018 were charges of $21.1 million, $29.0 million and $56.9 million,
respectively, related to these modified awards, and the remaining charge of $0.9 million will be recognized over the remaining
vesting period of the modified awards.
In connection with the departure of the president and chief operating officer in the fourth quarter of 2020, the Company
recognized a modification charge of $6.8 million related to the acceleration of vesting of his unvested stock appreciation rights
and the extension of the post-termination exercise period for his vested and exercisable stock appreciation rights.
In connection with the chief executive officer transition during the fourth quarter of 2018, the Company accelerated $3.9
million of expense into 2018 from 2019.
No cash was received from stock option exercises during the year ended December 31, 2020 because they were net settled
in shares of ANGI Homeservices’ common stock. Cash received from stock option exercises was $0.6 million and $4.7 million
for the years ended December 31, 2019 and 2018, respectively.
The Company currently settles all equity awards on a net basis. In connection with the Combination, previously issued
stock appreciation rights related to the common stock of HomeAdvisor (US) were converted into ANGI stock appreciation
rights that are settleable, at the Company’s option, on a net basis with the Company remitting withholding taxes on behalf of the
employee or on a gross basis with the Company issuing a sufficient number of Class A shares to cover the withholding taxes. In
addition, at IAC’s option, these awards can be settled in either Class A shares of ANGI or shares of IAC common stock. If
settled in IAC common stock, ANGI reimburses IAC in either cash or through the issuance of Class A shares to IAC. Assuming
all of the stock appreciation rights outstanding on December 31, 2020 were net settled on that date, ANGI would have issued
3.4 million Class A shares (either to award holders or to IAC as reimbursement) and ANGI would have remitted $45.2 million
in cash for withholding taxes (assuming a 50% withholding rate). Assuming all other ANGI equity awards outstanding on
December 31, 2020, were net settled on that date, including stock options, RSUs and subsidiary denominated equity described
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below, ANGI would have issued 6.0 million shares and would have remitted $76.8 million in cash for withholding taxes
(assuming a 50% withholding rate).
Restricted Stock Units, Market-based Stock Units and Performance-based Stock Units
RSUs, MSUs and PSUs are awards in the form of phantom shares or units denominated in a hypothetical equivalent
number of shares of ANGI Homeservices common stock and with the value of each RSU and PSU equal to the fair value of
ANGI Homeservices common stock at the date of grant. The value of each MSU is estimated using a lattice model that
incorporates a Monte Carlo simulation of ANGI’s stock price. Each RSU, MSU and PSU grant is subject to service-based
vesting, where a specific period of continued employment must pass before an award vests. MSUs also include market-based
vesting, tied to the stock price of ANGI before an award vests and PSUs include performance-based vesting, where certain
performance targets set at the time of grant must be achieved before an award vests. For RSU grants, the expense is measured at
the grant date as the fair value of ANGI Homeservices common stock and expensed as stock-based compensation over the
vesting term. For MSU grants, the expense is measured using a lattice model and expensed as stock-based compensation over
the requisite service period. For PSU grants, the expense is measured at the grant date as the fair value of ANGI Homeservices
common stock and expensed as stock-based compensation over the vesting term if the performance targets are considered
probable of being achieved.
Unvested RSUs, MSUs and PSUs outstanding at December 31, 2020 and changes during the year ended December 31,
2020 are as follows:
RSUs
MSUs
PSUs
Number of
Shares
Weighted
Average
Grant Date
Fair Value
Number of
Shares (a)
Weighted
Average
Grant Date
Fair Value
Number of
Shares (a)
Weighted
Average
Grant Date
Fair Value
(Shares in thousands)
5,660 $
6,962
(2,128)
(934)
9,560 $
15.29
7.37
13.78
11.93
10.19
3,503 $
3.62
881 $
15.89
—
(738)
(269)
—
6.8
6.8
1,844
—
(767)
2,496 $
7.82
1,958 $
6.92
—
16.4
5.11
Unvested at January 1, 2020
Granted
Vested
Forfeited
Unvested at December 31, 2020
___________________________
(a)
Included in the table are MSUs and PSUs which vests in varying amounts depending upon certain market or performance conditions. The MSUs and
PSUs in the table above includes these awards at their maximum potential payout.
In 2019, the Company granted certain MSUs that are liability-classified stock-settled awards with a market condition. The
fair value of these awards is subject to remeasurement each reporting period until settlement of the award. The total expense
related to these awards will ultimately be equal to the number of shares vested based on the fair value of ANGI Homeservices’
common stock on the settlement date.
The weighted average fair value of RSUs granted during the years ended December 31, 2020, 2019 and 2018 based on
market prices of ANGI Homeservices’ common stock on the grant date was $7.37, $13.16 and $18.08, respectively. There were
no MSUs granted during the year ended December 31, 2020. The weighted average fair value of MSUs granted during the year
ended December 31, 2019 based on the lattice model was $3.67. The weighted average fair value of PSUs granted during the
years ended December 31, 2020 and 2019 based on market prices of ANGI Homeservices’ common stock on the grant date was
$6.92 and $15.93, respectively. There were no MSUs or PSUs granted or outstanding during the year ended December 31,
2018. The total fair value of RSUs that vested during the years ended December 31, 2020, 2019 and 2018 was $23.4 million,
$16.1 million and $19.5 million, respectively. The total fair value of MSUs that vested during the years ended December 31,
2020 and 2019, was $5.2 million and $3.2 million, respectively. There were no PSUs that vested during the years ended
December 31, 2020, 2019 and 2018.
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In connection with the departure of the president and chief operating officer in the fourth quarter of 2020, the Company
recognized a modification charge of $7.3 million related to the acceleration of vesting of his unvested RSUs.
Equity Instruments Denominated in the Shares of Certain Subsidiaries
ANGI Homeservices has granted stock appreciation rights denominated in the equity of certain non-publicly traded
subsidiaries to employees and management of those subsidiaries. These equity awards vest over a period of years, which is
typically four years. The value of the stock appreciation rights is tied to the value of the common stock of these subsidiaries,
which is determined by the Company using a variety of valuation techniques including a combination of market based and
discounted cash flow valuation methodologies. Accordingly, these interests only have value to the extent the relevant business
appreciates in value above the initial value utilized to determine the exercise price. These interests can have significant value in
the event of significant appreciation. The fair value of these interests is generally determined by negotiation or arbitration when
settled, which will occur at various dates through 2026 and are ultimately settled in IAC common stock or ANGI Homeservices
Class A common stock, at IAC’s election. These equity awards are settled on a net basis, with the award holder entitled to
receive a payment in shares equal to the intrinsic value of the award at exercise less an amount equal to the required cash tax
withholding payment. The expense associated with these equity awards is initially measured at fair value, using the Black-
Scholes option pricing model, at the grant date and is expensed as stock-based compensation over the vesting term.
The plans under which these awards are granted establish specific settlement dates or liquidity events for which the
valuation of the relevant subsidiary is determined for purposes of settlement of the awards.
NOTE 12—SEGMENT INFORMATION
The overall concept that ANGI employs in determining its operating segments is to present the financial information in a
manner consistent with: how the chief operating decision maker views the businesses; how the businesses are organized as to
segment management; and the focus of the businesses with regards to the types of services or products offered or the target
market.
The following table presents revenue by reportable segment:
Revenue:
North America
Europe
Total
Years Ended December 31,
2020
2019
2018
(In thousands)
$
1,395,428 $
72,497
1,249,892 $
76,313
1,062,171
70,070
$
1,467,925 $
1,326,205 $
1,132,241
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following table presents the revenue of the Company’s segments disaggregated by type of service:
North America
Marketplace:
Consumer connection revenue(a)
Service professional membership subscription revenue
Other revenue
Total Marketplace revenue
Advertising and other revenue(b)
Total North America revenue
Europe
Consumer connection revenue(c)
Service professional membership subscription revenue
Advertising and other revenue
Total Europe revenue
Total revenue
___________________________
Years Ended December 31,
2020
2019
2018
(In thousands)
$
1,054,660 $
913,533 $
704,341
50,975
25,685
1,131,320
264,108
63,872
15,263
992,668
257,224
66,214
3,940
774,495
287,676
1,395,428
1,249,892
1,062,171
57,692
13,091
1,714
72,497
59,611
14,231
2,471
76,313
50,913
17,362
1,795
70,070
$
1,467,925 $
1,326,205 $
1,132,241
(a)
(b)
(c)
Includes fees paid by service professionals for consumer matches and revenue from pre-priced jobs sourced through the HomeAdvisor and Handy
platforms.
Includes Angie’s List revenue from service professionals under contract for advertising and Angie’s List membership subscription fees from
consumers, as well as revenue from mHelpDesk, HomeStars and Felix. Felix was sold on December 31, 2018 and its revenue for the year ended
December 31, 2018 was $36.9 million.
Includes fees paid by service professionals for consumer matches.
Revenue by geography is based on where the customer is located. Geographic information about revenue and long-lived
assets is presented below:
Revenue:
United States
All other countries
Total
Years Ended December 31,
2020
2019
2018
(In thousands)
$
1,379,236 $
1,234,755 $
1,050,641
88,689
91,450
81,600
$
1,467,925 $
1,326,205 $
1,132,241
The United States is the only country whose revenue is greater than 10% of total revenue of the Company for the years
ended December 31, 2020, 2019 and 2018.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Long-lived assets (excluding goodwill and intangible assets):
United States
All other countries
Total
December 31,
2020
2019
(In thousands)
$
$
97,841 $
11,001
95,822
7,539
108,842 $
103,361
The following tables present operating income (loss) and Adjusted EBITDA by reportable segment:
Operating income (loss):
North America
Europe
Total
Adjusted EBITDA(d):
North America
Europe
___________________________
Years Ended December 31,
2020
2019
2018
(In thousands)
$
$
$
$
4,811 $
48,967 $
78,102
(11,179)
(10,322)
(14,196)
(6,368) $
38,645 $
63,906
Years Ended December 31,
2020
2019
2018
(In thousands)
178,854 $
208,192 $
253,963
(6,050) $
(5,895) $
(6,457)
(d)
The Company’s primary financial measure is Adjusted EBITDA, which 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. The Company believes 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.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following tables reconcile operating income (loss) for the Company’s reportable segments and net (loss) earnings
attributable to ANGI Homeservices Inc. shareholders to Adjusted EBITDA:
North America
Europe
Operating (loss)
Interest expense
Other income, net
Earnings before income taxes
Income tax benefit
Net loss
Net earnings attributable to
noncontrolling interests
Net loss attributable to ANGI
Homeservices Inc. shareholders
North America
Europe
Operating income
Interest expense
Other income, net
Earnings before income taxes
Income tax benefit
Net earnings
Net earnings attributable to
noncontrolling interests
Net earnings attributable to ANGI
Homeservices Inc. shareholders
Year Ended December 31, 2020
Operating
Income (Loss)
Stock-Based
Compensation
Expense
Depreciation
(In thousands)
Amortization of
Intangibles
Adjusted
EBITDA
$
4,811 $
82,933 $
48,515 $
42,595 $
178,854
(11,179) $
716 $
4,106 $
307 $
(6,050)
(6,368)
(14,178)
1,218
(19,328)
15,168
(4,160)
(2,123)
$
(6,283)
Year Ended December 31, 2019
Operating
Income (Loss)
Stock-Based
Compensation
Expense
Depreciation
(In thousands)
Amortization of
Intangibles
Adjusted
EBITDA
$
48,967 $
67,646 $
37,481 $
54,098 $
208,192
(10,322) $
609 $
2,434 $
1,384 $
(5,895)
38,645
(11,493)
6,494
33,646
1,668
35,314
(485)
$
34,829
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
North America
Europe
Operating income
Interest expense
Other income, net
Earnings before income taxes
Income tax benefit
Net earnings
Net earnings attributable to
noncontrolling interests
Net earnings attributable to ANGI
Homeservices Inc. shareholders
Year Ended December 31, 2018
Operating
Income (Loss)
Stock-Based
Compensation
Expense
Depreciation
(In thousands)
Amortization of
Intangibles
Adjusted
EBITDA
$
78,102 $
96,078 $
21,888 $
57,895 $
253,963
(14,196) $
1,000 $
2,422 $
4,317 $
(6,457)
63,906
(11,623)
17,741
70,024
7,483
77,507
(189)
$
77,318
The following table presents capital expenditures by reportable segment:
Capital expenditures:
North America
Europe
Total
NOTE 13—LEASES
Years Ended December 31,
2020
2019
2018
(In thousands)
$
$
50,462 $
64,215 $
2,026
4,589
52,488 $
68,804 $
42,976
4,000
46,976
The Company leases office space, data center facilities and equipment in connection with its operations under various
operating leases, the majority of which contain escalation clauses.
ROU assets represent the Company’s right to use the underlying assets for the lease term and lease liabilities represent the
present value of the Company’s obligation to make payments arising from these leases. ROU assets and related lease liabilities
are based on the present value of fixed lease payments over the lease term using the Company’s incremental borrowing rate on
the lease commencement date or January 1, 2019 for leases that commenced prior to that date. The Company combines the
lease and non-lease components of lease payments in determining ROU assets and related lease liabilities. If the lease includes
one or more options to extend the term of the lease, the renewal option is considered in the lease term if it is reasonably certain
the Company will exercise the option(s). Lease expense is recognized on a straight-line basis over the term of the lease. As
permitted by ASC 842, leases with an initial term of twelve months or less (“short-term leases”) are not recorded on the
accompanying consolidated balance sheet.
Variable lease payments consist primarily of common area maintenance, utilities and taxes, which are not included in the
recognition of ROU assets and related lease liabilities. The Company’s lease agreements do not contain any material residual
value guarantees or material restrictive covenants.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Leases
Assets:
Balance Sheet Classification
December 31,
2020
2019
(In thousands)
Right-of-use assets
Other non-current assets
$
87,559
$
101,243
Liabilities:
Current lease liabilities
Accrued expenses and other current liabilities
Long-term lease liabilities
Other long-term liabilities
Total lease liabilities
15,700
103,575
$
119,275
$
13,234
119,375
132,609
Lease Cost
Income Statement Classification
2020
2019
December 31,
Fixed lease cost
Fixed lease cost
Fixed lease cost
Fixed lease cost
Total fixed lease cost(a)
Variable lease cost
Variable lease cost
Variable lease cost
Variable lease cost
Total variable lease cost
Net lease cost
________________________________
Cost of revenue
$
Selling and marketing expense
General and administrative expense
Product development expense
Cost of revenue
Selling and marketing expense
General and administrative expense
Product development expense
(In thousands)
321
$
9,913
7,545
1,848
19,627
—
2,314
1,567
867
4,748
$
24,375
$
207
9,277
7,617
1,456
18,557
—
1,572
1,021
308
2,901
21,458
(a)
Includes $0.04 million and $0.6 million of short-term lease cost and $1.8 million and $1.4 million of sublease income for the years ended December 31,
2020 and 2019, respectively.
Maturities of lease liabilities as of December 31, 2020(b):
For Years Ending December 31:
(In thousands)
2021
2022
2023
2024
2025
Thereafter
Total
Less: Interest
Present value of lease liabilities
________________________________
$
$
22,321
21,514
20,512
19,994
19,193
43,376
146,910
27,635
119,275
(b) Lease payments exclude $0.1 million of legally binding minimum lease payments for leases signed but not yet commenced.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following are the weighted average assumptions used for lease terms and discount rates as of December 31, 2020 and
2019:
Remaining lease term
Discount rate
Other information:
December 31,
2020
2019
6.9 years
5.91 %
7.7 years
5.99 %
December 31,
2020
2019
(In thousands)
Right-of-use assets obtained in exchange for lease liabilities
Cash paid for amounts included in the measurement of lease liabilities
$
$
326
20,939
$
$
58,701
18,363
NOTE 14—COMMITMENTS AND CONTINGENCIES
Commitments
The Company has entered into certain off-balance sheet commitments that require the future purchase of services
(“purchase obligations”). Future payments under non-cancelable unconditional purchase obligations as of December 31, 2020
are as follows:
Amount of Commitment Expiration Per Period
Less Than
1 Year
1–3
Years
3–5
Years
More Than
5 Years
Total
(In thousands)
Purchase obligations
$
12,916 $
22 $
— $
— $
12,938
Purchase obligations include (i) a remaining minimum payment of $5.6 million that is due in 2021 under the Company’s
allocable share of a three-year cloud computing arrangement, and (ii) payments of $7.3 million related to advertising
commitments to be made in 2021. The Company has an allocable share of a three-year cloud computing arrangement between
IAC and a third party provider of $15.6 million, of which $3.2 million and $5.6 million was paid in 2020 and 2019,
respectively, and the Company had a related prepaid asset of $4.2 million and $4.3 million at December 31, 2020 and 2019,
respectively, which is included in “Other current assets” on the consolidated balance sheet.
In the ordinary course of business, the Company is a party to various lawsuits. The Company establishes reserves for
specific legal matters when it determines that the likelihood of an unfavorable outcome is probable and the loss is reasonably
estimable. Management has also identified certain other legal matters where we believe an unfavorable outcome is not probable
and, therefore, no reserve is established. Although management currently believes that resolving claims against us, including
claims where an unfavorable outcome is reasonably possible, will not have a material impact on the liquidity, results of
operations, or financial condition of the Company, these matters are subject to inherent uncertainties and management’s view of
these matters may change in the future. The Company also evaluates other contingent matters, including income and non-
income tax contingencies, to assess the likelihood of an unfavorable outcome and estimated extent of potential loss. It is
possible that an unfavorable outcome of one or more of these lawsuits or other contingencies could have a material impact on
the liquidity, results of operations, or financial condition of the Company. See “Note 3—Income Taxes” for additional
information related to income tax contingencies.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 15—RELATED PARTY TRANSACTIONS WITH IAC
Relationship with IAC
ANGI Homeservices and IAC have entered into certain agreements to govern their relationship. These agreements
include: a contribution agreement; an investor rights agreement; a services agreement; a tax sharing agreement; and an
employee matters agreement.
On October 10, 2018, ANGI issued 5.1 million shares of its Class B common stock to IAC pursuant to the post-closing
adjustment provision of the Angie's List merger agreement.
Contribution Agreement
The contribution agreement sets forth the agreements between the Company and IAC regarding the principal transactions
necessary for IAC to separate the HomeAdvisor business from IAC's other businesses and to cause the HomeAdvisor business
to be transferred to ANGI Homeservices prior to the Combination, as well as governs certain aspects of our relationship
following the Combination. Under the contribution agreement, the Company agreed to assume all of the assets and liabilities
related to the HomeAdvisor business and agreed to indemnify IAC against any losses arising out of any breach by the Company
of the contribution agreement or the other transaction related agreements described below. IAC also agreed to indemnify the
Company against losses arising out of any breach by IAC of the contribution agreement or any of the other transaction related
agreements described below.
Investor Rights Agreement
The investor rights agreement provides IAC with certain registration, preemptive and governance rights related to the
Company and the shares of its capital stock it holds, as well as certain governance rights for the benefit of stockholders other
than IAC.
Services Agreement
The services agreement governs services that IAC provides to the Company including, among others: (i) assistance with
certain legal, M&A, human resources, finance, risk management, internal audit and treasury functions, health and welfare
benefits, information security services and insurance and tax affairs, including assistance with certain public company and
unclaimed property reporting obligations; (ii) accounting, controllership and payroll processing services; (iii) investor relations
services; (iv) tax compliance services; and (v) such other services as to which IAC and the Company may agree. The services
agreement automatically renews annually for an additional one-year period for so long as IAC continues to own a majority of
the outstanding shares of the Company’s common stock.
For the years ended December 31, 2020, 2019 and 2018, the Company was charged $4.8 million, $4.8 million and $5.7
million, respectively, by IAC for services rendered pursuant to the services agreement. There were no outstanding receivables
or payables pursuant to the services agreement as of December 31, 2020 and 2019, respectively. At December 31, 2018, the
Company had an outstanding receivable due from IAC of $0.1 million pursuant to the services agreement. This amount was
deducted from the charges due to IAC pursuant to the services agreement discussed above during the first quarter of 2019.
Separately, the Company subleases office space to IAC and charged rent of $1.8 million and $1.4 million for the years
ended December 31, 2020 and 2019, respectively. There were no amounts charged pursuant to subleases for office space to IAC
for the year ended December 31, 2018. At both December 31, 2020 and 2019, there were outstanding receivables of less than
$0.1 million due from IAC pursuant to sublease agreements, which were subsequently paid in full in the first quarter of 2021
and 2020, respectively.
Tax Sharing Agreement
The tax sharing agreement governs the rights, responsibilities, and obligations of the Company and IAC with respect to
tax liabilities and benefits, entitlements to refunds, preparation of tax returns, tax contests and other tax matters regarding U.S.
federal, state, local and foreign income taxes. Under the tax sharing agreement, the Company is generally responsible and
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ANGI HOMESERVICES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
required to indemnify IAC for: (i) all taxes imposed with respect to any consolidated, combined or unitary tax return of IAC or
its subsidiaries that includes the Company or any of its subsidiaries to the extent attributable to the Company or any of its
subsidiaries, as determined under the tax sharing agreement, and (ii) all taxes imposed with respect to any of the Company's or
its subsidiaries’ consolidated, combined, unitary or separate tax returns.
At December 31, 2020 and 2019, the Company had outstanding payables of $0.9 million and $0.2 million, respectively,
due to IAC pursuant to the tax sharing agreement, which is included in “Accrued expenses and other current liabilities” in the
accompanying consolidated balance sheet. There were $3.1 million of refunds received from IAC pursuant to this agreement
during the twelve months ended December 31, 2020. During the first quarter of 2019, $11.4 million was paid to IAC, pursuant
to this agreement.
Employee Matters Agreement
The employee matters agreement addresses certain compensation (including stock-based compensation) and benefit issues
related to the allocation of liabilities associated with: (i) employment or termination of employment, (ii) employee benefit plans
and (iii) equity awards. Under the employee matters agreement, the Company's employees participate in IAC’s U.S. health and
welfare plans, 401(k) plan and flexible benefits plan and the Company reimburses IAC for the costs of such participation. In the
event IAC no longer retains shares representing at least 80% of the aggregate voting power of shares entitled to vote in the
election of the Company’s Board of Directors, ANGI Homeservices will no longer participate in IAC’s employee benefit plans,
but will establish its own employee benefit plans that will be substantially similar to the plans sponsored by IAC prior to the
Combination.
In addition, the employee matters agreement requires the Company to reimburse IAC for the cost of any IAC equity
awards held by ANGI Homeservices current and former employees, with IAC electing to receive payment in cash or shares of
our Class B common stock. This agreement also provides that IAC may require stock appreciation rights granted prior to the
closing of the Combination and equity awards in our subsidiaries to be settled in either shares of our Class A common stock or
IAC common stock. To the extent shares of IAC common stock are issued in settlement of these awards, the Company is
obligated to reimburse IAC for the cost of those shares by issuing shares of our Class A common stock in the case of stock
appreciation rights granted prior to the closing of the Combination and shares of our Class B common stock in the case of
equity awards in our subsidiaries.
Lastly, 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, which ANGI would be obligated to
assume and which would be dilutive to ANGI's stockholders.
For the years ended December 31, 2020, 2019 and 2018, 0.3 million, 0.5 million and 0.9 million shares of ANGI
Homeservices Class B common stock were issued to IAC, respectively, pursuant to the employee matters agreement as
reimbursement for shares of IAC common stock issued in connection with the exercise and vesting of IAC equity awards held
by ANGI Homeservices employees.
NOTE 16—BENEFIT PLANS
The Company’s employees in the United States are eligible to participate in a retirement savings program offered by IAC,
which is qualified under Section 401(k) of the Internal Revenue Code. Under the IAC/InterActiveCorp Retirement Savings Plan
(the “IAC Plan”), participating employees may contribute up to 50% of their pre-tax earnings, but not more than statutory
limits. The current employer match under the IAC Plan is fifty cents for each dollar a participant contributes in the IAC Plan,
with a maximum contribution of 3% of a participant’s eligible earnings. Matching contributions under the IAC Plan for the
years ended December 31, 2020, 2019 and 2018 were $7.7 million, $6.3 million and $5.6 million, respectively. Matching
contributions are invested in the same manner as each participant’s voluntary contributions in the investment options provided
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ANGI HOMESERVICES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
under the IAC Plan. An investment option in the IAC Plan is IAC common stock, but neither participant nor matching
contributions are required to be invested in IAC common stock.
Internationally, the Company also has or participates in various benefit plans, primarily defined contribution plans. The
Company’s contributions for these plans for the years ended December 31, 2020, 2019 and 2018 were $0.6 million, $0.5
million, and $0.4 million, respectively.
NOTE 17—CONSOLIDATED FINANCIAL STATEMENT DETAILS
Cash and Cash Equivalents and Restricted Cash:
The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the
consolidated balance sheet to the total amounts shown in the consolidated statement of cash flows:
Cash and cash equivalents
Restricted cash included in other current assets
Restricted cash included in other non-current assets
Total cash and cash equivalents and restricted cash as shown on the consolidated
statement of cash flows
December 31,
2020
December 31,
2019
(In thousands)
$
812,705 $
390,565
407
449
504
409
$
813,561 $
391,478
Restricted cash included in other current assets at December 31, 2020 primarily consists of cash received from customers
at ANGI through the Handy platform, representing funds collected for payment to service providers, which were not settled as
of the period end. Restricted cash included in other current assets at December 31, 2019 primarily consists of a deposit related
to corporate credit cards.
Restricted cash included in other non-current assets at December 31, 2020 and 2019 consists of deposits related to leases.
Other current assets:
Capitalized costs to obtain a contract with a customer
Prepaid expenses
Other
Other current assets
December 31,
2020
2019
(In thousands)
$
49,194 $
17,742
5,022
$
71,958 $
35,103
21,790
10,866
67,759
December 31,
2020
2019
(In thousands)
Capitalized software, leasehold improvements and equipment, net:
Capitalized software and computer equipment
$
132,026 $
105,956
Leasehold improvements
Furniture and other equipment
Projects in progress
Capitalized software, leasehold improvements and equipment
Accumulated depreciation and amortization
31,864
13,252
27,138
204,280
(95,438)
32,559
13,435
19,638
171,588
(68,227)
Capitalized software, leasehold improvements and equipment, net
$
108,842 $
103,361
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ANGI HOMESERVICES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Accrued expenses and other current liabilities:
Accrued advertising expense
Accrued employee compensation and benefits
Current lease liabilities
Other
Accrued expenses and other current liabilities
Other income, net
December 31,
2020
2019
(In thousands)
$
30,033 $
47,310
15,700
55,176
29,682
28,630
13,234
45,451
$
148,219 $
116,997
Years Ended December 31,
2020
2019
(In thousands)
2018
$
1,218 $
6,494 $
17,741
Other income, net in 2020 principally includes interest income of $1.7 million, offset by other expense of $0.5 million.
Other income, net in 2019 includes interest income of $8.0 million and net foreign currency exchange gains of
$0.6 million, partially offset by a $1.8 million mark-to-market charge for an indemnification claim related to the Handy
acquisition that will be settled in ANGI shares held in escrow.
Other income, net in 2018 includes a gain of $13.2 million related to the sale of Felix and interest income of $4.8 million.
Supplemental Disclosure of Non-Cash Transactions:
On October 19, 2018, ANGI issued 8.6 million shares of its Class A common stock valued at $165.8 million in connection
with the acquisition of Handy.
On October 10, 2018, ANGI issued 5.1 million shares of its Class B common stock to IAC pursuant to the post-closing
adjustment provision of the Angie’s List merger agreement.
Supplemental Disclosure of Cash Flow Information:
Years Ended December 31,
2020
2019
2018
(In thousands)
Cash paid (received) during the year for:
Interest expense—third-party
Interest expense—related party
Income tax payments, including amounts paid to IAC for ANGI
Homeservices' share of IAC's consolidated tax liability
Income tax refunds, including amounts received from IAC for ANGI
Homeservices' share of IAC's consolidated tax liability
$
5,367 $
10,290 $
12,148
—
54
1,789
12,224
155
332
(3,506)
(957)
(172)
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ANGI HOMESERVICES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 18—QUARTERLY RESULTS (UNAUDITED)
Year Ended December 31, 2020
Revenue
Cost of revenue
Operating (loss) income
Net (loss) earnings
Net (loss) earnings attributable to ANGI Homeservices
Inc. shareholders
Quarter Ended
March 31 (a)
Quarter Ended
June 30 (a)
Quarter Ended
September 30 (a)
(In thousands, except per share data)
Quarter Ended
December 31(a)
$
343,650 $
375,061 $
389,913 $
359,301
33,229
(16,296)
(9,184)
41,042
17,644
13,211
48,253
(3,019)
5,203
50,757
(4,697)
(13,390)
(8,958)
12,667
4,472
(14,464)
Per share information attributable to ANGI Homeservices Inc. shareholders:
Basic (loss) earnings per share(c)
Diluted (loss) earnings per share(c)
$
$
(0.02) $
(0.02) $
0.03 $
0.02 $
0.01 $
0.01 $
(0.03)
(0.03)
Year Ended December 31, 2019
Revenue
Cost of revenue
Operating (loss) income
Net earnings (loss)
Net earnings (loss) attributable to ANGI Homeservices
Inc. shareholders
Quarter Ended
March 31 (b)
Quarter Ended
June 30 (b)
Quarter Ended
September 30 (b)
(In thousands, except per share data)
Quarter Ended
December 31 (b)
$
303,443 $
343,896 $
357,358 $
321,508
10,011
(3,641)
9,851
10,722
11,403
7,234
13,312
24,726
18,324
12,448
6,157
(95)
9,969
6,968
17,999
(107)
Per share information attributable to ANGI Homeservices Inc. shareholders:
Basic earnings (loss) per share(c)
Diluted earnings (loss) per share(c)
0.02 $
0.02 $
$
$
0.01 $
0.01 $
0.04 $
0.04 $
(0.00)
(0.00)
_________________________________________________________________________
(a)
(b)
The first, second, third and fourth quarters of 2020 include after-tax stock-based compensation expense of $8.8 million, $2.6 million, $4.0 million,
and $1.5 million, respectively, related to the modification of previously issued HomeAdvisor equity awards and previously issued Angie’s List
equity awards, both of which were converted into ANGI Homeservices’ equity awards in the Combination.
The first, second, third and fourth quarters of 2019 include after-tax stock-based compensation expense of $7.3 million, $6.2 million, $5.7 million,
and $5.6 million, respectively, related to the modification of previously issued HomeAdvisor equity awards and previously issued Angie’s List
equity awards, both of which were converted into ANGI Homeservices’ equity awards in the Combination.
(c) Quarterly per share amounts may not add to the related annual per share amount because of differences in the average common shares outstanding
during each period.
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Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
Not applicable.
Item 9A. Controls and Procedures
Conclusion Regarding the Effectiveness of the Company's Disclosure Controls and Procedures
The Company monitors and evaluates on an ongoing basis its disclosure controls and procedures and internal control over
financial reporting in order to improve their overall effectiveness. In the course of these evaluations, the Company modifies and
refines its internal processes as conditions warrant.
As required by Rule 13a-15(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), our
management, including our Chief Executive Officer (“CEO”) and our Chief Financial Officer (“CFO”), conducted an
evaluation, as of the end of the period covered by this report, of the effectiveness of the Company's disclosure controls and
procedures as defined in Exchange Act Rule 13a-15(e). Based on this evaluation, our CEO and our CFO concluded that the
Company's disclosure controls and procedures were effective as of the end of the period covered by this report.
Management's Report on Internal Control Over Financial Reporting
Management of the Company is responsible for establishing and maintaining adequate internal control over financial
reporting (as defined in Rule 13a-15(f) under the Exchange Act) for the Company. The Company’s internal control over
financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the
United States. Management assessed the effectiveness of the Company’s internal control over financial reporting as of
December 31, 2020. In making this assessment, our management used the criteria for effective internal control over financial
reporting described in “Internal Control—Integrated Framework” issued by the Committee of Sponsoring Organizations of the
Treadway Commission in 2013. Based on this assessment, management has determined that, as of December 31, 2020, the
Company’s internal control over financial reporting is effective. The effectiveness of our internal control over financial
reporting as of December 31, 2020 has been audited by Ernst & Young LLP, an independent registered public accounting firm,
as stated in their attestation report, included herein.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Changes in Internal Control Over Financial Reporting
The Company monitors and evaluates on an ongoing basis its internal control over financial reporting in order to improve
its overall effectiveness. In the course of these evaluations, the Company modifies and refines its internal processes as
conditions warrant. As required by Rule 13a-15(d), our management, including our CEO and our CFO, also conducted an
evaluation of the Company's internal control over financial reporting to determine whether any changes occurred during the
quarter ended December 31, 2020 that have materially affected, or are reasonably likely to materially affect, the Company's
internal control over financial reporting. Based on that evaluation, there has been no such change during the quarter ended
December 31, 2020.
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Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of ANGI Homeservices Inc.
Opinion on Internal Control Over Financial Reporting
We have audited ANGI Homeservices Inc. and subsidiaries’ internal control over financial reporting as of December 31, 2020,
based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations
of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, ANGI Homeservices Inc. and subsidiaries
(the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020,
based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated balance sheet of the Company as of December 31, 2020 and 2019, and the related consolidated
statements of operations, comprehensive operations, shareholders' equity, and cash flows for each of the three years in the
period ended December 31, 2020, and the related notes and the financial statement schedule listed in the Index at Item 15(a),
and our report dated February 16, 2021 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report
on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control
over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and
performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a
reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
New York, New York
February 16, 2021
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Item 9B. Other Information
Not applicable.
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PART III
The information required by Part III (Items 10, 11, 12, 13 and 14) has been incorporated herein by reference to the
definitive Proxy Statement to be used in connection with the ANGI Homeservices 2021 Annual Meeting of Stockholders (the
“2021 Proxy Statement”), as set forth below in accordance with General Instruction G(3) of Form 10-K.
Item 10. Directors, Executive Officers and Corporate Governance
The information required by Items 401 and 405 of Regulation S-K relating to directors and executive officers of ANGI
Homeservices and their compliance with Section 16(a) of the Exchange Act is set forth in the sections entitled “Information
Concerning Director Nominees” and “Information Concerning ANGI Executive Officers Who Are Not Directors,” and
“Delinquent Section 16(a) Reports,” respectively, in the 2021 Proxy Statement and is incorporated herein by reference. The
information required by Item 406 of Regulation S-K relating to the ANGI Homeservices Code of Ethics is set forth under the
caption “Part I-Item 1-Business-Description of Our Businesses-Additional Information-Code of Ethics” of this annual report
and is incorporated herein by reference. The information required by subsections (c)(3), (d)(4) and (d)(5) of Item 407 of
Regulation S-K is set forth in the sections entitled “Corporate Governance” and “The Board and Board Committees” in the
2021 Proxy Statement and is incorporated herein by reference.
Item 11. Executive Compensation
The information required by Item 402 of Regulation S-K relating to executive and director compensation and pay ratio
disclosure is set forth in the sections entitled “Executive Compensation,” “Director Compensation” and “Pay Ratio Disclosure,”
respectively, in the 2021 Proxy Statement and is incorporated herein by reference. The information required by
subsections (e)(4) and (e)(5) of Item 407 of Regulation S-K relating to certain compensation committee matters is set forth in
the sections entitled “The Board and Board Committees,” “Compensation Committee Report” and “Compensation Committee
Interlocks and Insider Participation” in the 2021 Proxy Statement and is incorporated herein by reference; provided, that the
information set forth in the section entitled “Compensation Committee Report” shall be deemed furnished herein and shall not
be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information regarding ownership of the Company’s Class A common stock and Class B common stock required by
Item 403 of Regulation S-K and securities authorized for issuance under our equity compensation plans required by Item 201(d)
of Regulation S-K is set forth in the sections entitled “Security Ownership of Certain Beneficial Owners and Management” and
“Equity Compensation Plan Information,” respectively, in the 2021 Proxy Statement and is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence
Information regarding certain relationships and related transactions involving ANGI Homeservices required by Item 404
of Regulation S-K and director independence determinations required by Item 407(a) of Regulation S-K is set forth in the
sections entitled “Certain Relationships and Related Person Transactions” and “Corporate Governance,” respectively, in the
2021 Proxy Statement and is incorporated herein by reference.
Item 14. Principal Accounting Fees and Services
Information required by Item 9(e) of Schedule 14A regarding the fees and services of the Company’s independent
registered public accounting firm and the pre-approval policies and procedures applicable to services provided to the Company
by such firm is set forth in the sections entitled “Fees Paid to Our Independent Registered Public Accounting Firm” and “Audit
and Non-Audit Services Pre-Approval Policy,” respectively, in the 2021 Proxy Statement and is incorporated herein by
reference.
Item 15. Exhibits, Financial Statement Schedules
(a) List of documents filed as part of this Report:
PART IV
(1) Consolidated Financial Statements of ANGI Homeservices
Report of Independent Registered Public Accounting Firm: Ernst & Young LLP.
Consolidated Balance Sheet as of December 31, 2020 and 2019.
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Consolidated Statement of Operations for the Years Ended December 31, 2020, 2019 and 2018.
Consolidated Statement of Comprehensive Operations for the Years Ended December 31, 2020, 2019 and 2018.
Consolidated Statement of Shareholders’ Equity for the Years Ended December 31, 2020, 2019 and 2018.
Consolidated Statement of Cash Flows for the Years Ended December 31, 2020, 2019 and 2018.
Notes to Consolidated Financial Statements.
(2) Consolidated Financial Statement Schedule of ANGI Homeservices
Schedule
Number
II
Valuation and Qualifying Accounts.
All other financial statements and schedules not listed have been omitted since the required information is either included
in the Consolidated Financial Statements or the notes thereto, is not applicable or is not required.
(3) Exhibits
The documents set forth below, numbered in accordance with Item 601 of Regulation S-K, are filed herewith,
incorporated by reference herein by reference to the location indicated or furnished herewith.
Exhibit
Number
Description
Location
2.1 Agreement and Plan of Merger, dated as of May 1, 2017, as
amended by Amendment No. 1 to the Agreement and Plan
of Merger, dated as of August 26, 2017, by and among
Angie's List, Inc., IAC/InterActiveCorp, ANGI
Homeservices Inc. and Casa Merger Sub, Inc.
3.1 Amended and Restated Certificate of Incorporation of
ANGI Homeservices Inc.
Annex B to the Proxy Statement/Prospectus of
Angie's List, Inc. and ANGI Homeservices Inc.,
filed on August 30, 2017 pursuant to Rule
424(b)(3).
Exhibit 3.1 to the Registrant's Current Report on
Form 8-K, filed on October 2, 2017.
3.2 Amended and Restated Bylaws of ANGI Homeservices Inc. Exhibit 3.2 to the Registrant's Current Report on
Form 8-K, filed on October 2, 2017.
4.1 Description of Securities(1).
4.2
Investor Rights Agreement, dated as of September 29,
2017, by and between ANGI Homeservices Inc. and
IAC/InterActiveCorp.
Exhibit 2.2 to the Registrant's Current Report on
Form 8-K, filed on October 2, 2017.
4.3 Registration Rights Agreement, dated October 19, 2018, by
and among ANGI Homeservices Inc. and the holders
signatory thereto.
Exhibit 4.2 to the Registration Statement on Form
S-3ASR (SEC File No. 333-227932), filed on
October 22, 2018.
4.4
Indenture, dated as of August 20, 2020, among ANGI
Group, LLC, the guarantors party thereto and
Computershare Trust Company, N.A., as trustee.
Exhibit 4.1 to the Registrant's Current Report on
Form 8-K, filed on August 20, 2020.
10.1 Contribution Agreement, dated as of September 29, 2017,
by and between ANGI Homeservices Inc. and IAC/
InterActiveCorp.(2)
Services Agreement, dated as of September 29, 2017, by
and between ANGI Homeservices Inc. and IAC/
InterActiveCorp.(2)
10.2
10.3 Tax Sharing Agreement, dated as of September 29, 2017,
by and between ANGI Homeservices Inc. and IAC/
InterActiveCorp.(2)
10.4 Employee Matters Agreement, dated as of September 29,
2017, by and between ANGI Homeservices Inc. and IAC/
InterActiveCorp.(2)
Exhibit 2.1 to the Registrant's Current Report on
Form 8-K, filed on October 2, 2017.
Exhibit 2.3 to the Registrant's Current Report on
Form 8-K, filed on October 2, 2017.
Exhibit 2.4 to the Registrant's Current Report on
Form 8-K, filed on October 2, 2017.
Exhibit 2.5 to the Registrant's Current Report on
Form 8-K, filed on October 2, 2017.
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10.5 ANGI Homeservices Inc. 2017 Stock and Annual Incentive
Plan.(3)
Exhibit 10.1 to the Registrant's Current Report on
Form 8-K, filed on October 2, 2017.
10.6
10.7
10.8
Form of Notice and Terms and Conditions for Restricted
Stock Units granted under the ANGI Homeservices Inc.
2017 Stock and Annual Incentive Plan.(3)
Exhibit 10.8 to the Registrant's Quarterly Report
on Form 10-Q for the fiscal quarter ended
September 30, 2017.
Form of Notice and Terms and Conditions for Stock
Options granted under the ANGI Homeservices Inc. 2017
Stock and Annual Incentive Plan.(3)
Exhibit 10.9 to the Registrant's Quarterly Report
on Form 10-Q for the fiscal quarter ended
September 30, 2017.
Form of Terms and Conditions for Stock Appreciation
Rights granted under the ANGI Homeservices Inc. 2017
Stock and Annual Incentive Plan.(3)
Exhibit 10.2 to the Registration Statement on Form
S-4, as amended (SEC File No. 333-219064), filed
on August 28, 2017.
10.9 Employment Agreement between William B. Ridenour and
ANGI Homeservices Inc., dated as of November 18, 2018.
(3)
Exhibit 10-9 to the Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31,
2018.
10.1 Employment Agreement between Jamie Cohen and ANGI
Homeservices Inc., dated as of March 12, 2019.(3)
10.11 Employment Agreement between Craig Smith and ANGI
Homeservices Inc., dated as of August 24, 2017.(3)
10.12 Employment Agreement between Allison Lowrie and
ANGI Homeservices Inc., dated as of August 24, 2017.(3)
10.13 Employment Agreement between Shannon Shaw and ANGI
Homeservices Inc., dated as of February 22, 2019.(3)
10.14 Employment Agreement between Oisin Hanrahan and
ANGI Homeservices Inc., dated as of June 26, 2019.(3)
10.15 Employment Agreement between Angela R. Hicks
Bowman and ANGI Homeservices Inc., dated as of June 29,
2017.(3)
10.16 Amended and Restated Credit Agreement, dated as of
November 5, 2018, by and among ANGI Homeservices
Inc., the Lenders from time to time party thereto and
JPMorgan Chase Bank, N.A., as Administrative Agent.
10.17 Amendment No. 1, dated as of August 12, 2020, among
ANGI Homeservices Inc., the lenders party thereto and
JPMorgan Chase Bank, N.A., as administrative agent and
collateral agent.
10.18
Joinder and Reaffirmation Agreement, dated as of August
12, 2020, among ANGI Homeservices Inc., ANGI Group,
LLC, each of the parties listed on Schedule 1 thereto and
JPMorgan Chase Bank, N.A., as administrative agent and
collateral agent.
Exhibit 10.1 to Registrant's Quarterly Report on
Form 10-Q for the fiscal quarter ended March 31,
2019.
Exhibit 10.7 to the Registration Statement on Form
S-4, as amended (SEC File No. 333-219064), filed
on August 28, 2017.
Exhibit 10.8 to the Registration Statement on Form
S-4, as amended (SEC File No. 333-219064), filed
on August 28, 2017.
Exhibit 10.2 to the Registrant's Quarterly Report
on Form 10-Q for the fiscal quarter ended March
31, 2019.
Exhibit 10.1 to the Registrant's Quarterly Report
on Form 10-Q for the fiscal quarter ended June 30,
2019.
Exhibit 10.4 to the Registration Statement on Form
S-4 (SEC File No. 333-219064), filed on June 30,
2018.
Exhibit 10.1 to the Registrant's Current Report on
Form 8-K, filed on November 9, 2018.
Exhibit 10.1 to the Registrant's Current Report on
Form 8-K, filed on August 12, 2020.
Exhibit 10.2 to the Registrant's Current Report on
Form 8-K, filed on August 12, 2020.
10.19 Advisory Agreement, dated September 8, 2020, between
ANGI Homeservices Inc. and Craig Smith.(3)
Exhibit 10.1 to the Registrant's Current Report on
Form 8-K, filed on September 11, 2020.
Subsidiaries of the Registrant as of December 31, 2020.(1)
21.1
23.1 Consent of Ernst & Young LLP.(1)
101
Table of Contents
31.1 Certification of the Chief Executive Officer pursuant to
Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act
of 1934, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.(1)
31.2 Certification of the Chief Financial Officer pursuant to
Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act
of 1934, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.(1)
32.1 Certification of the Chief Executive Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.(4)
32.2 Certification of the Chief Financial Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.(4)
101.INS
Inline XBRL Instance (the instance document
does not appear in the Interactive Data File because
its XBRL tags are embedded within the Inline XBRL
document)
101.SCH Inline XBRL Taxonomy Extension Schema(1)
101.CAL
Inline XBRL Taxonomy Extension Calculation(1)
101.DEF
Inline XBRL Taxonomy Extension Definition(1)
101.LAB Inline XBRL Taxonomy Extension Labels(1)
101.PRE
Inline XBRL Taxonomy Extension Presentation(1)
104 Cover Page Interactive Data File (formatted as Inline
XBRL and contained in Exhibit 101)
_________________________________________
(1)
(2)
(3)
(4)
Filed herewith.
Annexes, schedules and/or exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Registrant agrees to furnish supplementally a copy of any omitted attachment
to the SEC on a confidential basis upon request.
Reflects management contracts and management and director compensatory plans.
Furnished herewith.
Item 16. Form 10-K Summary
None.
102
Table of Contents
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
February 16, 2021
ANGI Homeservices Inc.
By:
/s/ GLENN H. SCHIFFMAN
Glenn H. Schiffman
Interim Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities indicated on February 16, 2021:
Signature
Title
/s/ WILLIAM B. RIDENOUR
William B. Ridenour
Chief Executive Officer and Director
/s/ GLENN H. SCHIFFMAN
Interim Chief Financial Officer and Director
Glenn H. Schiffman
/s/ CHRISTOPHER W. BOHNERT
Christopher W. Bohnert
/s/ JOSEPH LEVIN
Joseph Levin
/s/ THOMAS R. EVANS
Thomas R. Evans
/s/ ALESIA J. HAAS
Alesia J. Haas
/s/ KENDALL HANDLER
Kendall Handler
/s/ ANGELA R. HICKS BOWMAN
Angela R. Hicks Bowman
/s/ MARK STEIN
Mark Stein
/s/ SUZY WELCH
Suzy Welch
/s/ GREGG WINIARSKI
Gregg Winiarski
/s/ YILU ZHAO
Yilu Zhao
Senior Vice President, Principal Accounting Officer
Chairman of the Board and Director
Director
Director
Director
Director
Director
Director
Director
Director
103
Table of Contents
Description
2020
Credit loss reserves
Revenue reserves
Deferred tax valuation allowance
Other reserves
2019
Credit loss reserves
Revenue reserves
Deferred tax valuation allowance
Other reserves
2018
Credit loss reserves
Revenue reserves
Deferred tax valuation allowance
Other reserves
ANGI HOMESERVICES INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
Schedule II
Balance at
Beginning
of Period
Charges to
Earnings
Charges to
Other
Accounts
(In thousands)
Deductions
Balance at
End of
Period
$ 19,066
1,227
71,472
5,057
$ 15,622
981
58,903
3,919
$
8,375
888
61,563
—
$ 78,229 (a) $
103,627 (b)
(235) (e)
(152)
—
5,839 (f)
$ (71,097) (c) $ 26,046
(103,061) (d)
1,793
—
77,076
7,495
$ 64,278 (a) $
111,069 (b)
14,083 (g)
(46)
(2)
(1,514) (f)
$ (60,788) (c) $ 19,066
(110,821) (d)
1,227
—
71,472
5,057
$ 47,242 (a) $
86,901 (b)
(599) (h)
(501)
(5)
(2,061) (f)
$ (39,494) (c) $ 15,622
981
(86,803) (d)
—
58,903
3,919
_________________________________________________________
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
Additions to the credit loss reserve are charged to expense.
Additions to the revenue reserves are charged against revenue.
Write-off of fully reserved accounts receivable balance, which occurs when they are deemed uncollectible.
Write-off of revenue reserve as credits are granted to service professionals
Amount is primarily related to an increase in foreign NOLs largely offset by a decrease in state NOLs.
Amount is primarily related to currency translation adjustments on foreign NOLs.
Amount is primarily related to foreign and state NOLs.
Amount is primarily related to state NOLs.
104