Shares of Angi (ANGI 2.49%) were taking a dive today after the market didn't like what it saw in its second-quarter earnings report. Despite better-than-expected revenue from this home services marketplace, there were signs that the company's turnaround wasn't progressing as hoped.
As a result, the stock was down 16.8% as of 10:59 a.m. ET on Wednesday.
Overall, Angi actually delivered strong results in the quarter. Revenue grew 23% to $515.8 million, ahead of estimates at $496.5 million, and marking its highest quarterly growth since 2018.
Meanwhile, the company also posted positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for the first time in three quarters at $9.4 million, compared to a loss of $4.4 million in the quarter a year ago. On the basis of generally accepted accounting principles (GAAP), its per-share loss narrowed from $0.06 to $0.05, which beat expectations by a penny.
Angi's Ads and Leads business returned in the growth in the quarter with revenue rising 5% to $344.9 million as that business actually benefits from moderating demand since more home-service providers come back to Angi to get leads for finding customers as the housing boom cools off.
Meanwhile, Angi Services, its business selling pre-priced home services to homeowners, posted 107% revenue growth to $150.9 million, though much of that growth came from its acquisition of Angi Roofing last July.
What seemed to spark the sell-off were weak numbers for July as revenue growth slowed to just 10% that month as it lapped the roofing acquisition. On the earnings call, CEO Oisin Hanrahan explained that Services growth excluding roofing was still strong in July, up 34%, but the market seemed more concerned about the top-line number and the challenges that have led to a decline in revenue in the roofing business.
Angi did not give specific guidance, but said it expected EBITDA to improve in the second half of the year due to growth in the Ads and Leads business and slimming losses in Services. It's also targeting a return to a 15%-to-20% revenue growth range within the next few quarters.
Still, despite its leading position as a home services marketplace, Angi isn't growing particularly fast organically, and it's not profitable on a GAAP basis. Investors aren't usually interested in a stock like that, and that seems to explain today's sell-off.