What happened
Shares of home-services marketplace Angi (ANGI 2.49%) were climbing today as the company posted better-than-expected results in its first-quarter earnings report, beating revenue estimates and reporting a solid improvement in earnings before interest, taxes, depreciation, and amortization (EBITDA).
Shares of Angi were up 22.8% as of 2:27 p.m. ET.
So what
Revenue was down 10% to $392.4 million due to a change in the way it recognizes revenues in its services business, but that topped the consensus at $384.5 million. On a comparable basis, revenue was up 1% in the quarter.
Revenue from services, which is the direct-booking marketplace Angi started a few years ago, rose 14%, while revenue in its roofing business, which came from its 2021 acquisition of Total Home Roofing, rose 5%.
Ads and leads, the core segment that helps home service providers find jobs, saw flat revenue at $294 million.
Even as the company saw a decline in service requests, monetized transactions, and transacting service professionals, it improved adjusted EBITDA from a loss of $3.2 million in the quarter a year to a $30.5 million profit as the company cut costs in sales and marketing and general and administrative expenses, and cost of revenue fell sharply due to the change in the way it measures revenue from the services business.
Free cash flow also improved from a loss of $27.6 million to a profit of $7.2 million.
Now what
Angi didn't offer guidance in the press release, but the results provide some encouragement that the company is bringing costs in line with revenue. While a return to revenue growth may require an improvement in the housing and home-improvement markets, it's a good sign that profitability can improve, even with a decline in revenue.
The services business still has potential, but the earlier sell-off in the stock reflects the company's challenges in making it work. The business is still in turnaround mode, as it's been for several years.
