Home services online marketplace ANGI (NASDAQ: ANGI) reported Q1 CY2024 results exceeding Wall Street analysts' expectations, with revenue down 22.2% year on year to $305.4 million. It made a GAAP loss of $0 per share, improving from its loss of $0.03 per share in the same quarter last year.
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Angi (ANGI) Q1 CY2024 Highlights:
- Revenue: $305.4 million vs analyst estimates of $297.8 million (2.5% beat)
- EPS: $0 vs analyst expectations of -$0.01 (in line)
- Gross Margin (GAAP): 95.9%, up from 89.3% in the same quarter last year
- Free Cash Flow of $9.5 million is up from -$6.29 million in the previous quarter
- Domestic Customer Service Requests: 4.13 million, down 1.88 million year on year
- Market Capitalization: $1.28 billion
Gig EconomyThe iPhone changed the world, ushering in the era of the “always-on” internet and “on-demand” services - anything someone could want is just a few taps away. Likewise, the gig economy sprang up in a similar fashion, with a proliferation of tech-enabled freelance labor marketplaces, which work hand and hand with many on demand services. Individuals can now work on demand too. What began with tech enabled platforms that aggregated riders and drivers has expanded over the past decade to include food delivery, groceries, and now even a plumber or graphic designer are all just a few taps away.
Sales GrowthAngi's revenue has been declining over the last three years, dropping on average by 1.9% annually. This quarter, Angi beat analysts' estimates but reported a year on year revenue decline of 22.2%.
Before the earnings results were announced, analysts were projecting revenue to decline -7% over the next 12 months.
Usage Growth As a gig economy marketplace, Angi generates revenue growth by expanding the number of services on its platform (e.g. rides, deliveries, freelance jobs) and raising the commission fee from each service provided.
Angi has been struggling to grow its service requests, a key performance metric for the company. Over the last two years, its requests have declined 18% annually to 4.13 million. This is one of the lowest rates of growth in the consumer internet sector.
In Q1, Angi's service requests decreased by 1.88 million, a 31.3% drop since last year.
Revenue Per RequestAverage revenue per request (ARPR) is a critical metric to track for consumer internet businesses like Angi because it measures how much the company earns in transaction fees from each request. This number also informs us about Angi's take rate, which represents its pricing leverage over the ecosystem, or "cut" from each transaction.
Angi's ARPR growth has been strong over the last two years, averaging 8.9%. Although its service requests have shrunk during this time, the company's ability to successfully increase prices demonstrates its platform's enduring value for existing requests. This quarter, ARPR grew 13.2% year on year to $74.02 per request.
Key Takeaways from Angi's Q1 Results It was great to see Angi beat analysts' revenue expectations this quarter as its Ads and Leads segment outperformed. On the other hand, its number of service requests declined and missed Wall Street's estimates. Looking ahead, the company's full-year adjusted EBITDA guidance of $135 million fell just short of analysts' forecasts. Overall, this was a mediocre quarter for Angi. The stock is up 1.1% after reporting and currently trades at $2.65 per share.