Angi Spinoff From IAC
IAC(IAC) had high hopes when it acquired what was then Angie’s List in 2017 and merged it with its HomeAdvisor unit. The new company, then named ANGI Homeservices, remained publicly traded under the ANGI ticker, though controlled fully by IAC. There were high hopes then, but they haven’t panned out. With the stock down nearly 80% over the last 5 years, it has vastly underperformed. The business has similarly underperformed at the time of the merger, the company had the following to say about its financial performance.
ANGI Homeservices combines Angie’s List’s well-known brand and large audience with IAC’s home services category leader HomeAdvisor, creating a pro forma entity that exceeded $890 million in combined revenue over the last twelve months, as of the second quarter of 2017. The combined company expects to generate $270 million in Adjusted EBITDA in 2018 (excluding deferred revenue write-offs and transaction related one-time costs of up to $100 million) and is targeting a five-year compound annual growth rate of revenue of 20 to 25 percent, with Adjusted EBITDA margins ramping to approximately 35 percent.
While revenue did indeed grow, peaking at $1.764 billion in 2022, it plunged to $1.358 in 2023 and 2024 is tracking lower still. Meanwhile, adjusted EBITDA in 2024 is expected to be $140-$145 million, barely half of 2018 levels.
Following years of miserable results, IAC’s executive chairman, 82 year old Barry Diller has decided to spin off ANGI completely from IAC. As of September 30, 2024, IAC’s economic interest in Angi Inc. was 85.3% and IAC’s voting interest in Angi Inc. was 98.3%. While the company had $395 million in cash and equivalents, it also has $500 million of 3.875% Senior Notes due August 15, 2028. IAC CEO Joey Levin, who will be stepping down to become Executive Chairman of Angi and Angi CEO Jeff Kip certainly have their work cut out for them. Angi is the 10th fully independent company to be spun out of IAC.
Mr. Diller and Mr. Levin had the requisite nice things to say about each other and about the glorious future of each comapny.
“Joey Levin has wanted a store of his own for some time and the spin-off of Angi affords him this opportunity. Although IAC will relinquish his services as CEO, we expect that he will continue to advise us for many years. As we approach yet another milestone, IAC does what it does best: evolves. Joey Levin has been an exemplary leader of IAC, creating significant value during his nearly decade-long tenure as IAC CEO,” said Mr. Diller. “Over the last few years Joey has been deeply and personally invested in the transformation of Angi, and with its full independence can drive the company to expand any which way he, Jeff Kip and Angi’s Board desire.”
“I consider myself among the luckiest in the world to have spent the past two decades working with and learning from Barry Diller and the many brilliant minds he has always attracted to his orbit,” said Mr. Levin. “Together we’ve accomplished remarkable things, and we start 2025 with each of our businesses executing winning growth plans, led by exceptionally talented teams. Each of IAC and Angi has a vigorous future, and I expect to remain an active participant in both. I am energized to partner with Jeff Kip and the leadership team he has organized at Angi to win a large, captivating category that has yet to be tamed.”
The Angi spinoff, which is expected to be tax free, will eliminate Angi’s dual class structure and is projected to take place in the second quarter of this year. There is no reason yet to believe that Angi has turned the corner, and there will likely be significant selling pressure from IAC shareholders who receive this stock.
Disclosure: The author owns some IAC shares.