Angi's Q3 2025 Earnings Call: Contradictions Emerge on Proprietary Leads, AI Impact, and 2026 Outlook

Business Commentary:

* Proprietary Service Request Growth: - Angi Inc.'s proprietary service request growth accelerated to positive 11% in Q3, while proprietary lead growth was 16% and revenue per lead growth was 11%. - This growth was driven by the shift from network to proprietary channels, improved customer experience, and effective execution in the proprietary paid channel.

• Customer Experience and Metrics Improvement:
• Angi's estimated hire rate is up double digits, while the estimated win rate is up nearly 30%.
• The homeowner Net Promoter Score improved by nearly 10 points year-over-year and 30 points over the last two years.

• The improvement in these metrics is attributed to investments in customer experience, leading to higher pro retention and more jobs done well for homeowners.

• AI-Driven Initiatives:

• Angi's AI helper converts at a 2.7x higher level than the traditional flow, demonstrating its potential in improving user interactions.
• The company is moving towards an AI-first approach, integrating AI across customer workflows and team workflows.

• These initiatives aim to enhance customer experience, increase conversion rates, and leverage proprietary data to differentiate from existing solutions.

• Revenue and EBITDA Outlook:

• Angi anticipates mid-single-digit revenue growth for 2026, with expectations of modest service request growth and revenue per service request growth.
• The company aims to achieve leverage from Fixed Cost Discipline, maintaining strong fixed cost control while investing in branded areas and AI initiatives.
• The outlook is based on the success of recent platform migrations and the rollout of new AI-first technologies.
  

Contradiction Point 1

Proprietary Leads and Growth Strategy

It involves a shift in the company's growth strategy and the role of proprietary leads, which directly impacts revenue projections and investor expectations.

With increased proprietary leads and decreased network leads, has the 2026 outlook changed? - Daniel Kurnos (The Benchmark Company, LLC, Research Division)

2025Q3: Proprietary growth is expected to more than offset the decline in network comps, driving the mid-single-digit revenue growth target. - Jeffrey Kip(CEO & Director)

Can you discuss the leads and service request trends expected for the second half of the year? - Sergio Roberto Segura (KeyBanc Capital Markets)

2025Q2: Service requests and leads are expected to grow at the same rate as in the second quarter. - Jeffrey W. Kip(CEO & Director)

Contradiction Point 2

AI and LLMs Impact on Traffic and Conversions

It discusses the impact of AI and LLMs on traffic patterns and customer conversions, which are crucial for business growth and customer engagement.

How should we model the impact of AI helper's 2.7x higher conversion rate on 2026 marketing investments? - Sergio Segura (KeyBanc Capital Markets Inc., Research Division)

2025Q3: AI is a first application using an LLM and proprietary knowledge. It improves customer conversion due to personalized interactions. - Jeffrey Kip(CEO & Director)

What are the top product initiatives and how are you enhancing the match quality between homeowners and pros? - Eric James Sheridan (Goldman Sachs Group)

2025Q2: LLMs offer opportunities for Angi to engage in chat, leveraging proprietary knowledge and data. - Jeffrey W. Kip(CEO & Director)

Contradiction Point 3

2026 Growth Outlook and Strategic Priorities

It involves differing statements regarding the outlook for growth in 2026 and the strategic focus of the company, which are crucial for investor expectations and decision-making.

Has the 2026 outlook been revised due to stronger proprietary leads and weaker network leads? How should we consider Q3 and Q4 EBITDA, including CapEx and potential slippage into 2026? - Daniel Kurnos (The Benchmark Company, LLC, Research Division)

2025Q3: Our total revenue growth target of mid-single digits for 2026 remains unchanged... Proprietary growth is offsetting network comparisons, with TV ad spend expected to nearly double due to strong branded traffic performance. - Jeffrey Kip(CEO & Director)

What motivated the transition to Angi via a spin? Why are you confident about annual improvement despite Q1 guidance below prior expectations? - Cory Carpenter (JPMorgan)

2024Q4: We now expect proprietary revenue growth of 12% to 17% and network lead revenue growth of minus 15% to plus 5%, resulting in total revenue growth for the year of 3% to 6%. - Christopher Halpin(CFO of IAC)

Contradiction Point 4

Capital Allocation and Shareholder Returns

It involves differing statements regarding the company's capital allocation strategy and shareholder returns, which are important for investors assessing investment opportunities.

How should the company approach capital allocation toward shareholder returns with the increased buyback authorization? - Eric Sheridan (Goldman Sachs Group, Inc., Research Division)

2025Q3: Since Q2, we repurchased $111 million shares, representing nearly 15% of the company. An additional authorization for $3.2 million shares was granted in September. - Andrew Russakoff(CFO)

What are the key drivers of DDM's Q4 revenue and EBITDA? How should we approach capital allocation with IAC's strong balance sheet? - John Blackledge (TD Cowen)

2024Q4: IAC is now focused on investing in DDM and seeking new opportunities. No plans to return capital to shareholders immediately; focus on strategic M&A and buybacks. - Barry Diller(Senior Executive and Chairman of IAC)

Contradiction Point 5

AI and Platform Integration Impact

It relates to the company's strategic focus and expectations from AI and platform integration, which can influence future growth and operational efficiency.

How should we model the impact of the AI assistant's 2.7x higher conversion rate, and will it inform 2026 marketing investments? - Sergio Segura (KeyBanc Capital Markets Inc., Research Division)

2025Q3: AI is a first application using an LLM and proprietary knowledge. It improves customer conversion due to personalized interactions. - Jeffrey Kip(CEO & Director)

What product initiatives will enhance consumer and pro experiences in 2025 and beyond? How will AI integrate into these plans? - Justin Patterson (KeyBanc)

2025Q1: We're moving to a single pro platform that will help us match better and improve customer experience by matching better. - Jeffrey Kip(CEO & Director)