ANGI Homeservices (NASDAQ:ANGI) is making some big changes.
The owner of HomeAdvisor, Angie's List, and Handy named a new CEO Wednesday, tapping Oisin Hanrahan, who is replacing Brandon Ridenour. Hanrahan was the company's Chief Product Officer and previously the CEO and co-founder of Handy, prior to its acquisition in 2018.
Investors cheered the move, sending the stock up as much as 11% following the announcement. The transition comes after ANGI had been one of the few home-focused businesses unable to capitalize on the boom in home improvement spending during the pandemic as demand on its platform often went unmonetized due to a lack of supply from home-service providers.
In the announcement, ANGI Chairman Joey Levin said: "As we continue to build an amazing experience for homeowners and service professionals, we're grateful to have an exceptional product visionary in the organization to step into the role of CEO. I'm thrilled to see Oisin and his winning entrepreneurial spirit take the reins from here."
The company also created two new positions. Bryan Ellis will become Chief Revenue Officer -- Marketplace, overseeing "leads and advertising products." Umang Dua, the other co-founder of Handy, was named Chief Revenue Officer -- ANGI Services, with a focus on leading the company's fixed-price offerings.
Doubling down on fixed price
ANGI Homeservices acquired Handy in 2018 primarily for its fixed-price platform. Handy's business is built on low-cost services like cleaning and furniture assembly with an easy-to-use, pre-priced platform that eliminates the hassle of negotiating that's common on ANGI's other platforms. It also streamlines the booking process for both the buyer and service provider.
Former CEO Ridenour said in a previous interview that ANGI had been trying to build its own fixed-price platform for several years, but it found a better model in Handy.
ANGI has spent the last two years adapting its own business to the fixed-price model, starting with lower-priced jobs and working its way up from there. In the fourth quarter of 2020, the company said 11% of revenue came from fixed-price jobs, the first time it had reported that metric. Still, the percentage of its overall business is much smaller than that as ANGI only collects commissions and advertising fees for other jobs, which are much less than the gross sales facilitated by the platform.
Levin, who is also the CEO of ANGI's majority owner IAC (NASDAQ:IAC), said the fixed-price tools double customer frequency on the site, so he sees it as a significant driver of growth, adding: "Our biggest objective in realizing our vision for ANGI is to increase the frequency a homeowner
uses our product." Ridenour had previously said he expected fixed-price jobs to be half of the business within five to seven years.
The company's decision to make Hanrahan the new CEO is the clearest sign yet that fixed-price is its biggest priority, and ANGI is planning to accelerate the rate of change. Hanrahan is a three-time founder, so he's used to operating with a start-up mentality. In response to the announcement, Hanrahan said: "I'm really excited for the opportunity to lead ANGI at this inflection point. As we've all spent extra time at home over the last year it's clearer than ever how important our physical space is in our daily lives, and ANGI's mission to help people love where they live is more relevant than ever."
ANGI Homeservices stock has mostly floundered since the 2017 merger of Angie's List with HomeAdvisor, which was orchestrated by IAC, and the company hasn't lived up to its potential as the leading home-services marketplace. Given the challenges during the pandemic, the company saw revenue growth slow to 11% in 2020 despite roaring demand from homeowners. A change in leadership is understandable.
IAC has a long record of shepherding online marketplaces like Match Group and Expedia to success, and it intends to do the same with ANGI. Expect a greater emphasis on and faster rollout of the fixed-price platform under Hanrahan's leadership. And investors should hope to see the company attempt to solve its consistent supply shortage problem, which flared up last year, though the company has long had more demand than supply on its marketplaces.
Hanrahan has seemingly received a warm welcome from investors, but there's plenty of work to be done to maximize this growth stock's potential.