As of 30th July, 2020

Baseball Stats

Founded: 1995

Employees: 4500

Share Price: $16

MarketCap: $7.8B

3yr Return: +10%

Rev: $1.3B (+20%)

EBITDA: $202M (15%)

Key Investors

IAC group owns majority in ANGI's list

Company description

1. Leading home services marketplace in US and 7 intl countries

2. $20B+ worth annual projects booked via HomeAdvisor, Angie’s List, and Handy (3 brands it owns, acq Handy/Homeadvisor).

3. Network of 250k service professionals and 23M+ service requests from 13M+ households across 500+ service categories

Brands

HomeAdvisor

1. Largest and fasted growing brand (2/3rd total rev), acq in 2017
2. Rev : $770M ('18), 4x since '14

Handy

1. Acq in 2018 for $166M (Total raised by Handy - $111M)

Angie's list

1. Rev: $250M ('18), 22% total rev

Intl

1. Mainly EU marketplaces with total Rev of $70M ('18), 6% total rev

Market / Competition

TAM

1. Home-services TAM of $400-$600B. 10-15% rev being spent on marketing by service providers = $50-75B revenue opportunity

2. Early phase of migration from offline to online still. 10% online penetration = $40B (Benchmarks of travel at 50% online penetration, E-com at 15%)

   1. Slow migration due to 2/3rd home owners are 50+ (millennials slowly becoming homeowners)

3. Early migration has given steady double-digit growth and margin improvement with scale

   1. Global growth est from 20-50% for next 5 yr
   2. Primary growth drivers - aging population; technological improvements; greater commoditization of services; inc number of new services in highly fragmented market; inc idea of wanting these earlier considered luxury activities by millennial as necessities (e..g home cleaning)

4. More services/aspects of our daily life will move online, its a given because

   1. Smartphone penetration = easy access to booking services online
   2. Aggregators coming up in all fragmented markets that enable customer to search on one site vs many
   3. Aggregators also solve for better service via full stack experience via own brands
   4. Prices come down for customers with consolidation & economies of scale
   5. Aggregators work to make Cx better - booking faster, efficient delivery and more intuitive. Customer friendly

   

Competition

1. Highly fragmented space with co as clear leader with 50% share, i.e. $20B worth of services annually booked
2. Mega tech competition hasn't materialized despite trying (lack of focus, difficult to execute due to on-ground ops necessary)
   1. Google tried direct listings, but hasn't gone beyond local ads and google maps listings
   2. Amazon launched HomeServices but hasnt ramped up

Investment thesis

• #1 market share in secular growth category with expected 20%+ topline growth, ~30-35% EBITDA % in long term
• Move from lead-gen to fixed price offerings will inc stickiness by improving Cx, inc monetization with more full stack approach and controlling more aspects of experience
• Economies of scale will lead to margin improvement and enhanced take rate

Detailed Notes

1. Heavy dependence on Google Adwords for customer acquisition
   1. SEO pressure recently when Google changed traffic from free to paid, led to refining of SEO-SEM practices and stress for a few quarters