Business
Angi : Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)
Angi : Quarterly Report for Quarter Ending March 31, 2026 (Form
About this update from Angi Inc.
Management's Discussion and Analysis of Financial Condition and Results of Operations GENERAL Management Overview Angi Inc. (with its subsidiaries, "Angi," the "Company," "we," "our," or "us") connects quality home professionals ("Pros") with consumers across more than 500 different categories, from repairing and remodeling homes to cleaning and landscaping. There were approximately 105,000 Average Monthly Active Pros (as defined below) in the U.S. during the three months ended March 31, 2026. Additionally, consumers turned to at least one of our businesses to find a Pro for approximately 16 million projects during the twelve months ended March 31, 2026. During the first quarter of 2025, the Company updated its segment reporting structure from "Ads and Leads", "Services", and "International" to "Domestic" and "International" to better reflect how it manages its business and how management evaluates performance and allocates resources. During the fourth quarter of 2025, the Company changed the name of its "Domestic" segment to "U.S." segment. The change reflects an updated naming convention and did not result in any change to the composition of the segment or how the Company evaluates its performance in the current year as well as prior periods. The naming convention for prior periods has been conformed to the current period. The change had no impact on the Company's consolidated financial statements. As a result of these updates, the Company now has the following two operating segments: (i) U.S. and (ii) International (consisting of businesses in Europe and Canada). The Company continues to operate under multiple brands including Angi, Angie's List, HomeAdvisor, and Handy. In the United States, the Company provides Pros the capability to engage with potential customers, including quoting and invoicing services, and provides consumers with tools and resources to help them find local, pre-screened, and customer-rated Pros nationwide for home repair, maintenance, and improvement projects. Consumers can also request household services directly through the Angi platform, and such requests are fulfilled by independently established Pros engaged in a trade, occupation, and/or business that customarily provides such services. Matching service, booking of pre-priced services, and related tools and directories are provided to consumers free of charge upon registration. The Company also owns marketplaces in Austria, Canada, France, Germany, Italy, the Netherlands, and the UK, which provide Pros the ability to engage with potential customers and consumers the ability to engage with the Pros they need. For a more detailed description of the Company's operating businesses, see "Description of Our Businesses" included in "Item 1-Business" to the Company's Annual Report on Form 10-K for the year ended December 31, 2025 (the "Annual Report"). Distribution On March 31, 2025, IAC Inc. ("IAC") completed the spin-off of its ownership in the Company through a special dividend of the common stock of the Company owned by IAC to the holders of IAC common stock and IAC Class B common stock (the "Distribution"). Prior to the effective time of the Distribution, IAC voluntarily converted all of the shares of our Class B Common Stock that it owned to shares of Class A Common Stock. As a result of this conversion, there are no longer any shares of our Class B Common Stock outstanding. After completion of the Distribution, IAC has no ownership in the Company, there are no shares of Class B Common Stock outstanding, and the only class of Angi capital stock with shares outstanding is Class A Common Stock. Defined Terms and Operating Metrics: Unless otherwise indicated or as the context otherwise requires, certain terms used in this quarterly report on Form 10-Q (this "Quarterly Report"), which include the principal operating metrics we use in managing our business, are defined below: • U.S. Revenue - primarily comprised of revenue generated within the U.S. segment, including Lead revenue for consumer matches, revenue from Pros under contract for advertising, membership subscription revenue from Pros and consumers, and revenue from pre-priced offerings by which the consumer requests services through a Company platform and the Company connects them with a Pro to perform the service. • International Revenue - comprised of revenue generated within the International segment (consisting of businesses in Europe and Canada), including Lead revenue for consumer matches and membership subscription revenue from Pros. • Proprietary Revenue - the portion of U.S. Revenue allocated to Proprietary channels, calculated based on the proportionate share of Leads originating from Proprietary channels in the period. • Network Revenue - the portion of U.S. Revenue allocated to Network channels, calculated based on the proportionate share of Leads originating from Network channels in the period. • Service Requests - requests for connections with Pros in the period, which include pre-priced offerings and indications of interest expressed on a Pro profile. • Leads - connections between consumers and Pros resulting from a Service Request in the period, including the completion of a job related to a pre-priced offering; a single Service Request can result in multiple Leads. • Proprietary - refers to sources of Service Requests in which consumers go through an Angi proprietary user experience or a retail partner experience. • Network - refers to sources of Service Requests in which consumers are presented with Angi Pros through a third party website experience. • Acquired Pros - new Pros onboarded onto the Angi platform and eligible to receive Leads in the period. • Average Monthly Active Pros - the average number of Pros per month that (i) received Leads, (ii) were presented on a Service Request where they agreed to receive a Lead if selected, (iii) requested to be connected to a consumer on a Service Request, or (iv) accepted an offer to complete a pre-priced Service Request. • ANGI Group Senior Notes - on August 20, 2020, ANGI Group, LLC ("ANGI Group"), a direct wholly-owned subsidiary of the Company, issued $500.0 million of its 3.875% Senior Notes due August 15, 2028, with interest payable February 15 and August 15 of each year. • Revolving Facility - a senior secured revolving facility of ANGI Group in an aggregate principal amount of $175.0 million, including a letter of credit sublimit of up to $25.0 million. Components of Results of Operations Cost of Revenue and Gross Profit • Cost of revenue - excludes depreciation, consists primarily of (i) credit card processing fees, (ii) hosting fees, (iii) payments made to independent third-party Pros who perform work, and (iv) sales tax. • Gross profit - revenue less cost of revenue. Gross margin is gross profit expressed as a percentage of revenue. Operating Costs and Expenses: • Selling and marketing expense - consists primarily of (i) advertising expenditures, which include marketing fees to promote the brand to consumers and Pros with (a) online marketing, including fees paid to search engines and other online marketing platforms, partners who direct traffic to our brands, and app platforms, and (b) offline marketing, which is primarily television and radio advertising, (ii) compensation expense (including stock-based compensation expense) and other employee-related costs for our sales and marketing personnel, (iii) service guarantee expense, (iv) software license and maintenance costs, and (v) outsourced personnel costs. • General and administrative expense - consists primarily of (i) compensation expense (including stock-based compensation expense) and other employee-related costs for personnel engaged in executive management, finance, legal, tax, human resources, and customer service functions, (ii) provision for credit losses, (iii) software license and maintenance costs, (iv) outsourced personnel costs for personnel engaged in assisting in customer service functions, (v) fees for professional services, and (vi) rent expense and facilities costs (including impairments of right-of-use assets). Our customer service function includes personnel who provide support to our Pros and consumers. • Product development expense - consists primarily of (i) compensation expense (including stock-based compensation expense) and other employee-related costs that are not capitalized for personnel engaged in the design, development, testing, and enhancement of product offerings and related technology, (ii) software license and maintenance costs, and (iii) outsourced personnel costs for personnel engaged in product development. • Restructuring - consists primarily of charges associated with a formal restructuring plan that are related to workforce reductions. Non-GAAP financial measure Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") is a non-GAAP financial measure. See " Principles of Financial Reporting " for the definition of Adjusted EBITDA and required non-GAAP reconciliations. Results of Operations for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 The following discussion should be read in conjunction with " Item 1-Consolidated Financial Statements ." Included below are year-over-year comparisons between the three months ended March 31, 2026 and the three months ended March 31, 2025 reflecting our updated segment structure. See " Note 1-The Company and Summary of Significant Accounting Policies " for details regarding our segment change. Revenue Three Months Ended March 31, 2026 2025 $ Change % Change (Dollars in thousands) U.S. Lead revenue $ 184,432 $ 115,389 $ 69,043 60% Advertising revenue (46) 71,646 (71,692) NM Services revenue 12,782 16,911 (4,129) (24)% Membership subscription revenue 5,302 8,562 (3,260) (38)% Other revenue 28 47 (19) (40)% Total U.S. Revenue 202,498 212,555 (10,057) (5)% International Revenue 35,652 33,358 2,294 7% Total revenue $ 238,150 $ 245,913 $ (7,763) (3)% Percentage of Total Revenue: U.S. 85 % 86 % International 15 % 14 % Total revenue 100 % 100 % Three Months Ended March 31, 2026 2025 Change % Change (In thousands, rounding differences may occur) U.S. Operating metrics: Service Requests Proprietary 3,254 2,773 481 17% Network 267 588 (321) (55)% Total 3,521 3,361 160 5% Leads Proprietary 4,048 3,590 458 13% Network 374 812 (438) (54)% Total 4,423 4,402 21 -% Proprietary Revenue $ 185,355 $ 173,351 $ 12,004 7% Network Revenue $ 17,143 $ 39,204 $ (22,061) (56)% Three Months Ended March 31, 2026 2025 Change % Change (In thousands) U.S. Pro metrics: Acquired Pros 23 24 (1) (2)% Average Monthly Active Pros 105 134 (29) (22)% For the three months ended March 31, 2026 compared to the three months ended March 31, 2025 U.S. Revenue decreased 5%, due primarily to a 56% decrease in Network Revenue, reflecting the continued shift in consumer traffic following the homeowner choice transition implemented in January 2025, partially offset by a 7% increase in Proprietary Revenue driven by increased advertising investment in paid Proprietary marketing channels. International Revenue increased 7%, driven primarily by stronger Euro and British Pound foreign exchange rates relative to the U.S. Dollar. Cost of revenue Three Months Ended March 31, 2026 2025 $ Change % Change (Dollars in thousands) Cost of revenue (exclusive of depreciation shown separately below) $ 9,693 $ 13,015 $ (3,322) (26)% As a percentage of revenue 4% 5% For the three months ended March 31, 2026 compared to the three months ended March 31, 2025 U.S. cost of revenue decreased $3.8 million, or 31%, and decreased as a percentage of revenue by 2%, due primarily to decreases of $1.6 million in hosting fees and $1.4 million in sales tax expense. Gross profit Three Months Ended March 31, 2026 2025 $ Change % Change (Dollars in thousands) Revenue $ 238,150 $ 245,913 $ (7,763) (3)% Cost of revenue (exclusive of depreciation shown separately below) 9,693 13,015 (3,322) (26)% Gross profit $ 228,457 $ 232,898 $ (4,441) (2)% Gross margin 96% 95% 1% For the three months ended March 31, 2026 compared to the three months ended March 31, 2025 Gross profit decreased $4.4 million, or 2%, due primarily to the decrease in revenue partially offset by the decrease in cost of revenue as described above. Selling and marketing expense Three Months Ended March 31, 2026 2025 $ Change % Change (Dollars in thousands) Selling and marketing expense $ 139,933 $ 118,541 $ 21,392 18% As a percentage of revenue 59% 48% For the three months ended March 31, 2026 compared to the three months ended March 31, 2025 U.S. selling and marketing expense increased $16.1 million, or 15%, due primarily to an increase in advertising expense of $30.4 million, partially offset by decreases in compensation expense of $12.2 million, service guarantee expense of $1.6 million, and software maintenance costs of $0.4 million . The increase in advertising expense reflects higher investment in television and online advertising to drive Proprietary channel service request volume. The decrease in compensation expense reflects headcount reductions. The decrease in service guarantee expense reflects lower revenue from guaranteed service jobs, and the decrease in software maintenance costs reflects the rationalization of software vendor contracts following the January 2026 restructuring. International selling and marketing expense increased $5.3 million, or 54%, due primarily to an increase in advertising expense of $4.5 million due to higher television advertising spend. General and administrative expense Three Months Ended March 31, 2026 2025 $ Change % Change (Dollars in thousands) General and administrative expense $ 57,931 $ 57,319 $ 612 1% As a percentage of revenue 24% 23% For the three months ended March 31, 2026 compared to the three months ended March 31, 2025 U.S. general and administrative expense increased $0.6 million, or 1%, due primarily to an increase of $5.4 million in compensation expense, partially offset by decreases in the provision for credit losses of $1.6 million, third-party wages of $1.3 million, legal settlement expense of $0.9 million, corporate shared service expense of $0.6 million, and lease expense of $0.4 million. The increase in compensation expense was primarily due to a reversal of previously recognized stock-based compensation expense related to IAC restricted stock forfeited by Joseph Levin, former CEO of IAC and current Executive Chairman of Angi, in the first quarter of 2025. The decrease in the provision for credit losses was primarily due to lower revenue and improved collection rates. The decrease in third-party wages was primarily due to reduced costs related to customer support services. The decrease in legal settlement expense was primarily due to decreases in settlement accruals. The decrease in shared service allocation expense was due to the spin-off of the Company from IAC on March 31, 2025. The decrease in lease expense was primarily due to the Company's reduction of its real estate footprint. Product development expense Three Months Ended March 31, 2026 2025 $ Change % Change (Dollars in thousands) Product development expense $ 10,440 $ 27,087 $ (16,647) (61)% As a percentage of revenue 4% 11% For the three months ended March 31, 2026 compared to the three months ended March 31, 2025 Product development expense decreased $16.6 million, or 61%, due primarily to the reduction of the Company's global workforce by approximately 350 employees in order to reduce operating expenses and optimize the organizational structure in support of long-term growth. Refer to " Note 3-Restructuring " for a summary of the activities related to restructuring for the three months ended March 31, 2026. Depreciation Three Months Ended March 31, 2026 2025 $ Change % Change (Dollars in thousands) Depreciation $ 14,694 $ 9,948 $ 4,746 48% As a percentage of revenue 6% 4% For the three months ended March 31, 2026 compared to the three months ended March 31, 2025 Depreciation increased $4.7 million, or 48%, due primarily to the increase in the Company's capitalized software spend over the prior fiscal year. Restructuring Three Months Ended March 31, 2026 2025 $ Change % Change (Dollars in thousands) Restructuring $ 14,923 $ - $ 14,923 NM As a percentage of revenue 6% -% __________________ NM = Not meaningful Restructuring increased $14.9 million, due to a reduction of the Company's global workforce by approximately 350 employees in order to reduce operating expenses and optimize the organizational structure in support of long-term growth. Refer to " Note 3-Restructuring " for a summary of the activities related to restructuring for the three months ended March 31, 2026. Operating income Three Months Ended March 31, 2026 2025 $ Change % Change U.S. $ (11,227) $ 13,957 $ (25,184) NM International 1,763 6,046 (4,283) (71)% Total $ (9,464) $ 20,003 $ (29,467) NM As a percentage of revenue (4)% 8% For the three months ended March 31, 2026 compared to the three months ended March 31, 2025 Operating income decreased for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, due primarily to the factors described above in the cost of revenue, selling and marketing, general and administrative, product development, depreciation, and restructuring expense discussions. At March 31, 2026, there was $29.9 million of unrecognized compensation cost, net of estimated forfeitures, related to all equity-based awards, which is expected to be recognized over a weighted average period of approximately 2.0 years. Adjusted EBITDA Three Months Ended March 31, 2026 2025 $ Change % Change (Dollars in thousands) U.S. $ 15,116 $ 21,566 $ (6,450) (30)% International 7,789 6,098 1,691 28% Total $ 22,905 $ 27,664 $ (4,759) (17)% As a percentage of revenue 10% 11% See " Principles of Financial Reporting " for the definition of Adjusted EBITDA and required non-GAAP reconciliations. For the three months ended March 31, 2026 compared to the three months ended March 31, 2025 U.S. Adjusted EBITDA decreased $6.5 million, or 30%, to $15.1 million, and decreased as a percentage of revenue. The decrease was primarily driven by an increase in advertising spend as the Company prioritized investment in Proprietary channels, along with a decline in legacy Network Revenue. These factors were partially offset by lower product development expense resulting from the reduction of the Company's global workforce. International Adjusted EBITDA increased $1.7 million, or 28%, to $7.8 million, and increased as a percentage of revenue. The increase was primarily driven by an increase in revenue and lower product development expense due to the reduction of the Company's global workforce, partially offset by higher selling and marketing expense due to an increase in advertising expense. Interest expense Interest expense relates to interest on the ANGI Group Senior Notes. For a detailed description of long-term debt, net, see " Note 4-Long-term Debt " to the financial statements included in " Item 1-Consolidated Financial Statements ." Three Months Ended March 31, 2026 2025 $ Change % Change (In thousands) Interest expense $ (5,330) $ (5,044) $ 286 6% For the three months ended March 31, 2026 compared to the three months ended March 31, 2025 Interest expense in the three months ended March 31, 2026, increased by $0.3 million, or 6% , compared to the three months ended March 31, 2025. Other income, net Three Months Ended March 31, 2026 2025 $ Change % Change (In thousands) Other income, net $ 5,099 $ 4,828 $ 271 6% For the three months ended March 31, 2026 compared to the three months ended March 31, 2025 Other income, net, increased for the three months ended March 31, 2026 by $0.3 million or 6% due primarily to a gain on extinguishment of debt of $2.7 million, partially offset by a decrease of $1.8 million in interest income and an increase of $0.7 million in foreign exchange losses. Income tax provision Three Months Ended March 31, 2026 2025 $ Change % Change (Dollars in thousands) Income tax benefit (provision) $ 717 $ (4,681) $ 5,398 NM Effective income tax rate 7% 24% For further details of income tax matters, see " Note 7-Income Taxes " to the financial statements included in " Item 1. Consolidated Financial Statements ." For the three months ended March 31, 2026 compared to the three months ended March 31, 2025 For the three months ended March 31, 2026, the Company recorded an income tax benefit of $0.7 million. The effective income tax rate is lower than the statutory rate of 21% primarily due to $2.9 million of discrete restructuring tax benefit incurred in Q1 2026. In 2025, the effective income tax rate is higher than the statutory rate of 21% due primarily to tax shortfalls generated by the vesting of stock-based awards, unbenefited losses, and foreign income taxed at different rates, partially offset by nontaxable cumulative previously recognized stock-based compensation expense related to the IAC restricted stock forfeited by Joseph Levin, former CEO of IAC and current Executive Chairman of Angi, and research credits. PRINCIPLES OF FINANCIAL REPORTING We report Adjusted EBITDA as a supplemental measure to U.S. generally accepted accounting principles ("GAAP"). This measure is considered a primary segment measure of profitability and one of the metrics by which we evaluate the performance of our businesses, and on which our internal budgets are based and may also impact management compensation. We believe that investors should have access to, and we are obligated to provide, the same set of tools that we use in analyzing our results. This non-GAAP measure should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP results. We endeavor to compensate for the limitations of the non-GAAP measure presented by providing the comparable GAAP measure with equal or greater prominence and descriptions of the reconciling items, including quantifying such items, to derive the non-GAAP measure. We encourage investors to examine the reconciling adjustments between the GAAP and non-GAAP measure, which we discuss below. Definition of Non-GAAP Measure Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") is defined as operating income excluding: (1) stock-based compensation expense; (2) depreciation; (3) acquisition-related items consisting of amortization of intangible assets and impairments of goodwill and intangible assets, if applicable; and (4) restructuring. The Company believes this measure is useful for analysts and investors as this measure allows a more meaningful comparison between its performance and that of its competitors. Adjusted EBITDA has certain limitations because it excludes the impact of these expenses. Non-Cash Expenses That Are Excluded from Our Non-GAAP Measure Stock-based compensation expense consists of expense associated with the grants, including unvested grants assumed in acquisitions, of stock appreciation rights, restricted stock units ("RSUs"), stock options, performance-based RSUs ("PSUs"), and market-based awards. These expenses are not paid in cash and we view the economic costs of stock-based awards to be the dilution to our share base; we also include the related shares in our fully diluted shares outstanding for GAAP earnings per share using the treasury stock method. PSUs and market-based awards are included only to the extent the applicable performance or market condition(s) have been met (assuming the end of the reporting period is the end of the contingency period). The Company is currently settling all stock-based awards on a net basis and remits the required tax-withholding amounts from its current funds. Depreciation is a non-cash expense relating to our capitalized software, leasehold improvements, and equipment and is computed using the straight-line method to allocate the cost of depreciable assets to operations over their estimated useful lives, or, in the case of leasehold improvements, the lease term, if shorter. Amortization of intangible assets and impairments of goodwill and intangible assets are non-cash expenses related primarily to acquisitions. At the time of an acquisition, the identifiable definite-lived intangible assets of the acquired company, such as professional relationships, technology, and trade names, are valued and amortized over their estimated lives. Value is also assigned to acquired indefinite-lived intangible assets, which comprise trade names and trademarks, and goodwill that are not subject to amortization. An impairment is recorded when the carrying value of an intangible asset or goodwill exceeds its fair value. We believe that intangible assets represent costs incurred by the acquired company to build value prior to acquisition and the related amortization and impairments of intangible assets or goodwill, if applicable, are not ongoing costs of doing business. Restructuring are costs associated with a formal restructuring plan that are primarily related to workforce reductions. The Company excludes these expenses because they are not reflective of ordinary course ongoing business and operating results. The following tables reconcile net earnings attributable to Angi shareholders to Adjusted EBITDA for the Company's reportable segments and net earnings (loss) attributable to Angi shareholders: Three Months Ended March 31, 2026 Operating Income Stock-Based Compensation Expense Depreciation Restructuring Adjusted EBITDA (In thousands) U.S. $ (11,227) $ 2,208 $ 14,312 $ 9,823 $ 15,116 International 1,763 544 382 5,100 7,789 Total $ (9,464) $ 2,752 $ 14,694 $ 14,923 $ 22,905 Interest expense (5,330) Other income, net 5,099 Earnings before income taxes (9,695) Income tax provision 717 Net earnings attributable to Angi Inc. shareholders $ (8,978) Three Months Ended March 31, 2025 Operating Income Stock-Based Compensation Expense Depreciation Restructuring Adjusted EBITDA (In thousands) U.S. $ 13,957 $ (2,295) $ 9,904 $ - $ 21,566 International 6,046 8 44 - 6,098 Total $ 20,003 $ (2,287) $ 9,948 $ - $ 27,664 Interest expense (5,044) Other income, net 4,828 Earnings before income taxes 19,787 Income tax provision (4,681) Net earnings attributable to Angi Inc. shareholders $ 15,106 FINANCIAL POSITION, LIQUIDITY, AND CAPITAL RESOURCES Financial Position March 31, 2026 December 31, 2025 (In thousands) Cash and cash equivalents: United States $ 239,026 $ 296,283 All other countries 5,554 7,418 Total cash and cash equivalents $ 244,580 $ 303,701 Long-term debt: ANGI Group Senior Notes $ 473,400 $ 500,000 Less: unamortized debt issuance costs 2,011 2,333 Total long-term debt, net $ 471,389 $ 497,667 At March 31, 2026, all of the Company's international cash can be repatriated without significant consequences. For a detailed description of long-term debt, see " Note 4-Long-term Debt " to the financial statements included in " Item 1-Consolidated Financial Statements ." Cash Flow Information In summary, the Company's cash flows are as follows: Three Months Ended March 31, 2026 2025 (In thousands) Net cash provided by (used in): Operating activities $ (17,903) $ (3,113) Investing activities $ (15,693) $ (12,499) Financing activities $ (25,542) $ (14,343) Net cash provided by operating activities consists of earnings adjusted for non-cash items and the effect of changes in working capital. Non-cash adjustments include depreciation, provision for credit losses, stock-based compensation expense, non-cash lease expense (including impairment of right-of-use assets), deferred income taxes, and amortization of intangibles. 2026 Adjustments to net earnings consist primarily of $14.7 million of depreciation, $10.3 million of provision for credit losses, $2.8 million of stock-based compensation expense, and $1.9 million of non-cash lease expense, partially offset by a $2.7 million net gain of extinguishment of debt. The decrease in cash from changes in working capital consists primarily of a decrease of $16.3 million in accounts payable and other liabilities, an increase in accounts receivable, net, of $4.5 million which includes the the non-cash impact from the provision for credit losses and excludes foreign currency impact of $0.1 million, a decrease of $3.5 million in operating lease liabilities, a decrease of $2.0 million in income taxes payable and receivable, a decrease of $1.1 million in deferred revenue, partially offset by a decrease of $0.9 million in other assets. The decrease in accounts payable and other liabilities was due primarily to payments of compensation previously accrued and interest. The increase in accounts receivable was due primarily to timing of cash receipts. The decrease in operating lease liabilities was due to cash payments on leases net of interest accretion. The decrease in deferred revenue was due primarily to lower memberships. The decrease in other assets was due primarily to the amortization of prepaid balances in excess of new prepayments made during the period. Net cash used in investing activities includes capital expenditures of $15.7 million primarily related to investments in capitalized software to support the Company's products and services. Net cash used in financing activities includes $23.7 million for the repurchase of ANGI Group Senior Notes and $1.8 million for the payment of withholding taxes on behalf of employees for stock-based awards that were net settled. 2025 Adjustments to net earnings consist primarily of $11.3 million of provision for credit losses, $9.9 million of depreciation, $2.7 million of deferred income taxes, $1.8 million of non-cash lease expense, and $(2.3) million of stock-based compensation expense. The decrease from changes in working capital consists primarily of a decrease of $20.4 million in accounts payable and other liabilities, an increase of $14.8 million in accounts receivable, a decrease of $6.7 million in deferred revenue, and a decrease of $3.3 million in operating lease liabilities, partially offset by a decrease of $2.5 million in other assets. The decrease in accounts payable and other liabilities is due primarily to payments for accrued compensation, partially offset by the timing of payments. The increase in accounts receivable is due primarily to timing of cash receipts. The decrease in deferred revenue is due primarily to a decrease in advertising sales and lower memberships. The decrease in operating lease liabilities is due to cash payments on leases net of interest accretion. The decrease in other assets is due to lower capitalized sales commissions which were impacted by a reduction in the size of the sales force, a larger portion of sales commissions being expensed rather than capitalized in the period, and a shift to annual bonuses for roles that previously received commissions, partially offset by an increase in prepaid assets due to the timing of invoices. Net cash used in investing activities includes capital expenditures of $12.6 million primarily related to investments in capitalized software to support the Company's products and services. Net cash used in financing activities includes $9.8 million for the repurchase of 0.6 million shares of the Company's Class A Common Stock, on a settlement date basis, at an average price of $16.53 per share and $4.5 million for the payment of withholding taxes on behalf of employees for stock-based awards that were net settled. Liquidity and Capital Resources Debt As of December 31, 2025, we had $500.0 million aggregate principal amount of 3.875% senior notes due August 15, 2028 (the "ANGI Group Senior Notes"). During the first quarter of 2026, ANGI Group repurchased a portion of the outstanding principal amount of ANGI Group Senior Notes as further described below. Interest on the ANGI Group Senior Notes is paid semi-annually in arrears on February 15 and August 15 of each year. In December 2025, ANGI Group amended the indenture governing the ANGI Group Senior Notes to add certain U.S. subsidiaries of ANGI Group that are guarantors under the Credit Agreement (defined below) as additional guarantors under such indenture. In November 2025, ANGI Group entered into a credit agreement (the "Credit Agreement"), with the lenders and issuing lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, providing for a senior secured revolving facility in an aggregate principal amount of $175.0 million, including a letter of credit sublimit of up to $25.0 million (the "Revolving Facility"). The Revolving Facility matures on November 6, 2030, provided that the maturity date shall at all times be no later than the 91st day prior to the maturity date of the ANGI Group Senior Notes. As of March 31, 2026, there were no outstanding borrowings under the Revolving Facility. For additional details, see " Note 4-Long-term Debt " to the consolidated financial statements included in " Item 1. Consolidated Financial Statements ." Debt Repurchase Activity During the first quarter of 2026, ANGI Group repurchased a total of $26.6 million aggregate principal amount of the ANGI Group Senior Notes for total cash consideration, including $0.1 million of accrued and unpaid interest, of $23.9 million . The repurchases of the ANGI Group Senior Notes in the first quarter of 2026 resulted in an aggregate net gain of extinguishment of debt of $2.7 million, which is included in other income, net in the consolidated statement of operations for the three months ended March 31, 2026. Contractual Obligations As of March 31, 2026, there were no material changes outside the ordinary course of business to the Company's contractual obligations disclosures as of December 31, 2025, included in the Company's Annual Report on Form 10-K for the year ended December 31, 2025. Capital Expenditures The Company's 2026 capital expenditures are expected to be consistent with 2025 capital expenditures of $59.6 million. Liquidity Assessment The Company's liquidity could be negatively affected by a decrease in demand for its products and services due to economic or other factors. The Company believes its existing cash, cash equivalents, expected positive cash flows generated from operations, and if necessary, our borrowing capacity under the Revolving Facility, will be sufficient to fund its normal operating requirements, including capital expenditures, debt service, the payment of withholding taxes paid on behalf of employees for net-settled stock-based awards, and investing and other commitments, for the next twelve months. The Company may consider additional forms of liquidity. These forms of liquidity could subject us to operating and financial covenants that may restrict our business activities, including the incurrence of additional indebtedness, investments and certain payments. From time to time, we may also elect to raise additional capital through the sale of additional equity or debt financing to fund business activities such as strategic acquisitions, share repurchases, or other purposes. Additional financing may not be available on terms favorable to the Company or at all, and may also be impacted by any disruptions in the financial markets. In addition, the Company's existing indebtedness could limit its ability to obtain additional financing. CRITICAL ACCOUNTING POLICIES AND ESTIMATES Management of the Company is required to make certain estimates, judgments, and assumptions during the preparation of its consolidated financial statements in accordance with GAAP. These estimates, judgments, and assumptions impact the reported amount of assets, liabilities, revenue and expenses and the related disclosure of assets and liabilities. Actual results could differ from these estimates. Because of the size of the financial statement elements to which they relate, some of our accounting policies and estimates have a more significant impact on our financial statements than others. Our significant accounting policies are described in Note 1-The Company and Summary of Significant Accounting Policies to our unaudited consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q and in the notes to the consolidated financial statements included in Part II, Item 8 of the Annual Report. There have been no material changes to our critical accounting estimates since our Annual Report.