Shares of Angi (ANGI 3.14%), the nation's largest home services marketplace, were soaring today after the company said it expected growth to accelerate over the rest of the year and that it had passed the peak of its investment in Angi Services, its white-glove, pre-priced offering.
As of 2:44 p.m. ET, the stock was up 24.5%.
Angi's results in the first quarter weren't particularly spectacular. The company said revenue increased 13% to $436.2 million as it was up against a difficult comparison in the quarter when stimulus checks were issued and it faced challenges with the omicron variant of the coronavirus early in the first quarter of 2022. That figure still beat estimates of $433.4 million, however.
Key metrics like service requests and monetized transactions were down year over year as demand softened from the heady days of the pandemic, and the company shifted some of its priorities away from getting service requests. On the bottom line, it reported an adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) loss of $3.2 million, down from an EBITDA profit of $23.2 million last year. On a generally accepted accounting principles (GAAP) basis, the company lost $0.07 per share, compared to a break-even profit a year ago and expectations of a $0.06 loss per share.
What seemed to encourage the market was the company's forecast of full-year revenue growth of 15% to 20% and that management said it profits would improve over the duration of the year.
Angi's business has changed a lot over the past year as it's grown the services business rapidly with the acquisition of Total Home Roofing and launched its rebrand under Angi last March.
Meanwhile, the macro environment has been difficult as demand for home-improvement services has outstripped supply during the pandemic, and the economy remains volatile. The company seems to have the investments in place to grow Angi Services, and its traditional ads and leads business would actually benefit from a slowdown in consumer demand since that would persuade more service professionals to look to Angi for demand.
With the stock down 70% over the past year, investors seemed to see the news about profits improving as a buying opportunity. If Angi Services does deliver demonstrable profits, the stock could have considerable room to run.