Angi's (NASDAQ:ANGI) Profits Appear To Have Quality Issues

As an investor, I've been keeping a close eye on Angi Inc. (ANGI), the home services marketplace that connects consumers with pre-screened professionals. However, recent financial results have raised some red flags, suggesting that there might be quality issues with the company's profits. Let's dive into the data and explore the potential concerns.

First, let's examine Angi's revenue trends. In the past year, the company's revenue has been on a downward trajectory, with a year-over-year (YoY) decline of 12.78% in 2023 and a projected decline of 22.99% in 2024. This decline can be attributed to various factors, including market disruptions, regulatory changes, and a transition to a single product and platform. Additionally, Angi has faced challenges in proprietary traffic growth, with some channels still down year-over-year.



Now, let's look at Angi's cost structure. The company's cost of revenue has been increasing, with a YoY increase of 57.58% in 2023 and a projected increase of 62.16% in 2024. This increase in costs can be attributed to various factors, such as increased marketing expenses, higher salaries, or other operational costs. The rising costs, coupled with the declining revenue, have led to a significant drop in Angi's profits, with a net income of $36 million in 2023, down from $1.3 billion in 2022.

To address these issues, Angi can consider several strategies:

1. Diversify revenue streams: Angi can explore new revenue streams or expand existing ones to mitigate the impact of revenue declines in specific areas.
2. Cost optimization: Angi can review and optimize its costs, focusing on reducing non-essential expenses and improving operational efficiency.
3. Product enhancements: Angi can invest in product enhancements and strategic changes to improve customer experience and drive growth.
4. Regulatory compliance: Angi can ensure it is in compliance with regulatory requirements and adapt its business model as needed to address regulatory changes.
5. Mergers and acquisitions: Angi can consider strategic mergers and acquisitions to expand its market reach, enter new markets, or acquire complementary businesses.

In conclusion, Angi's recent financial performance raises concerns about the quality of the company's profits. To address these issues, Angi must take proactive steps to diversify its revenue streams, optimize costs, and adapt to regulatory changes. As an investor, I would closely monitor Angi's progress in implementing these strategies and reassess my position in the company accordingly.