UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  February 7, 2019

ANGI Homeservices Inc.

(Exact name of registrant as specified in charter)

Registrant’s telephone number, including area code:  (303) 963-7200

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).  Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Item 2.02              Results of Operations and Financial Condition.
Item 7.01              Regulation FD Disclosure.

On February 7, 2019, the Registrant announced that it had released its results for the quarter and full year ended December 31, 2018. The full text of the related press release, which is posted on the “Investor Relations” section of the Registrant’s website at http://ir.angihomeservices.com/quarterly-earnings and appears in Exhibit 99.1 hereto, is incorporated herein by reference.

Exhibit 99.1 is being furnished under both Item 2.02 “Results of Operations and Financial Condition” and Item 7.01 “Regulation FD Disclosure.”

Item 9.01              Financial Statements and Exhibits.

2

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

3

Exhibit 99.1

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ANGI REPORTS Q4 2018 - FULL YEAR REVENUE OVER $1.1 BILLION

GOLDEN, Colo. — February 7, 2019—ANGI Homeservices (NASDAQ: ANGI) released its fourth quarter and full year 2018 results today.  Financial results consist of HomeAdvisor financial results for all periods and Angie’s List results following the completion of the combination of HomeAdvisor and Angie’s List on September 29, 2017.  For periods prior to September 29, 2017, ANGI Homeservices financial results are those of HomeAdvisor.  A letter to IAC shareholders from IAC’s CEO Joey Levin, which includes a discussion of ANGI Homeservices, was posted on the Investor Relations section of IAC’s website at www.iac.com/Investors.

ANGI HOMESERVICES SUMMARY RESULTS

($ in millions except per share amounts)

See reconciliations of GAAP to non-GAAP measures beginning on page 10.

Q4 2018 HIGHLIGHTS

·                  Pro forma revenue (excluding deferred revenue write-offs in connection with the Angie’s List transaction and Handy acquisition) increased 21% year-over-year to $279.5 million, driven by 37% Marketplace growth.

·                  Marketplace service requests increased 24% year-over-year to 5.3 million with full year 2018 service requests of over 23 million, from over 13 million households.

·                  Marketplace paying service professionals increased 18% to 214,000 and revenue per paying service professional increased 16% year-over-year (compared to 14% growth in Q3 2018).

·                  Excluding Angie’s List and Handy transaction-related items, operating income was $41.1 million and Adjusted EBITDA was $68.7 million, which represents a 25% Adjusted EBITDA margin.

·                  Excluding Angie’s List and Handy transaction-related items, full year 2018 operating income was $149.2 million and full year 2018 Adjusted EBITDA was $260.3 million.

·                  Full year 2018 net cash provided by operations increased $181.9 million to $223.7 million and Free Cash Flow increased $161.7 million to $176.7 million.

·                  On February 6, 2019, the Board of Directors authorized the Company to repurchase up to 15 million shares of its common stock.

·                  M&A Update:

·                  Completed the acquisition of Fixd Repair, a home warranty and service company, in January 2019

·                  Completed the sale of Felix on December 31, 2018 (see Felix 2018 revenue on page 4)

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Revenue

(a)         Pro forma results exclude deferred revenue write-offs of $0.5 million in Q4 2018 in connection with the Angie’s List transaction and Handy acquisition and $7.6 million in Q4 2017 in connection with the Angie’s List transaction.

(b)         Reflects the HomeAdvisor and Handy domestic marketplace service, including consumer connection revenue for consumer matches, membership subscription revenue from service professionals and revenue from completed jobs sourced through the Handy platform.  It excludes revenue from Angie’s List, mHelpDesk, HomeStars and Felix.

(c)          Includes Angie’s List revenue (revenue from service professionals under contract for advertising and membership subscription fees from consumers) as well as revenue from mHelpDesk, HomeStars and Felix.

·                  Revenue increased 25% to $279.0 million driven by:

·                  37% Marketplace growth driven by a 24% increase in service requests to 5.3 million, an 18% increase in paying service professionals to 214,000 and a 16% increase in revenue per paying service professional (compared to 14% growth in Q3 2018)

·                  13% growth in Europe

·                  Pro forma revenue (excluding deferred revenue write-offs in connection with the Angie’s List transaction and Handy acquisition) increased 21% to $279.5 million.

Operating income (loss) and Adjusted EBITDA

·                  Operating income was $17.9 million in Q4 2018 compared to an operating loss of $33.9 million in Q4 2017 reflecting:

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·                  Adjusted EBITDA of $66.2 million in Q4 2018 compared to $16.2 million in Q4 2017.

·                  Items impacting Q4 2018

·                  Lower selling and marketing expense as a percentage of revenue

·                  $1.7 million in CEO-transition compensation-related expenses

·                  $0.4 million deferred revenue write-offs and $2.0 million in transaction-related costs in connection with the Handy acquisition

·                  Items impacting Q4 2017

·                  $7.6 million deferred revenue write-offs in connection with the Angie’s List transaction

·                  $14.4 million of severance, retention, transaction and integration-related costs in connection with the Angie’s List transaction

·                  A decrease in stock-based compensation expense of $1.3 million reflecting:

·                  $6.4 million lower expense to $18.8 million in connection with the Angie’s List transaction which includes:

·                  $15.8 million related to the modification of previously issued HomeAdvisor unvested equity awards, which were converted into ANGI Homeservices equity awards in the transaction

·                  $2.9 million related to previously issued Angie’s List equity awards, which were converted into ANGI Homeservices equity awards in the transaction

·                  Acceleration of $3.9 million in expense in Q4 2018 related to the CEO transition

·                  $1.9 million expense in Q4 2018 related to Handy

·                  A decrease in amortization of intangibles of $1.9 million driven by lower expense related to the Angie’s List transaction, partially offset by increased expense from the acquisition of Handy

Income Taxes

The Q4 2018 income tax benefit of $6.9 million, despite pre-tax income, was due primarily to the excess tax benefits generated by the exercise and vesting of stock-based awards.

In Q4 2017, the Company recorded an income tax provision of $22.0 million, despite a pre-tax loss.  The provision was due primarily to the reduction of $33.0 million in the Company’s net deferred tax assets because of the lower tax rate enacted by the US Tax Cuts and Jobs Act.

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Operating Metrics

(d)         Fully completed and submitted domestic customer service requests to HomeAdvisor and completed jobs sourced through the Handy platform.

(e)          The number of HomeAdvisor and Handy domestic service professionals that had an active subscription and/or paid for consumer matches or completed a job sourced through the Handy platform in the last month of the period.  An active HomeAdvisor subscription is a subscription for which HomeAdvisor was recognizing revenue on the last day of the relevant period.

(f)            Pro forma Marketplace quarterly revenue divided by Marketplace Paying Service Professionals.

(g)         Reflects the total number of Angie’s List service professionals under contract for advertising at the end of the period.

Free Cash Flow

For the twelve months ended December 31, 2018, Free Cash Flow increased $161.7 million to $176.7 million due to higher Adjusted EBITDA, partially offset by higher capital expenditures and higher cash interest payments.

Other

ANGI Homeservices completed the sale of Felix on December 31, 2018 (originally acquired in August 2012).  Felix operated a pay-per-call advertising service and no longer fit with ANGI Homeservices strategic priorities.  2018 revenue for Felix is below and the business has been slightly profitable.

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LIQUIDITY AND CAPITAL RESOURCES

As of December 31, 2018:

·                  ANGI Homeservices had 501.6 million Class A and Class B common shares outstanding.

·                  IAC’s economic interest in ANGI Homeservices was 83.9% and IAC’s voting interest in ANGI Homeservices was 98.1%.

·                  ANGI Homeservices held $361.9 million in cash and cash equivalents and marketable securities and owed $262.3 million of debt, including a current portion of $13.8 million and $1.0 million owed to a foreign subsidiary of IAC.

·                  ANGI Homeservices has a $250 million revolving credit facility, which was undrawn as of December 31, 2018 and currently remains undrawn.

On February 6, 2019, the Board of Directors of ANGI Homeservices authorized the Company to repurchase up to 15 million shares of its common stock. ANGI Homeservices may purchase shares over an indefinite period on the open market and in privately negotiated transactions, depending on those factors management deems relevant at any particular time, including, without limitation, market conditions, share price and future outlook.

CONFERENCE CALL

ANGI Homeservices will audiocast a conference call to answer questions regarding its fourth quarter and full year 2018 results on Friday, February 8, 2019, at 8:30 a.m. Eastern Time.  This call will include the disclosure of certain information, including forward-looking information, which may be material to an investor’s understanding of ANGI Homeservices’ business.  The live audiocast will be open to the public at ir.angihomeservices.com or www.iac.com/Investors.

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DILUTIVE SECURITIES

ANGI Homeservices has various dilutive securities.  The table below details these securities as well as potential dilution at various stock prices (shares in millions; rounding differences may occur).

The dilutive securities calculation in the above table is different from GAAP dilution, which is calculated using the treasury stock method, and is based on the following assumptions:

Stock settled stock appreciation rights (“SARS”) — These awards are settled on a net basis; therefore, the dilutive effect is presented as the net number of shares expected to be issued upon exercise, assuming a withholding tax rate of 50%.  Withholding taxes paid by the Company on behalf of the employees upon exercise would have been $219.6 million, assuming a stock price of $16.94 and a 50% withholding rate.  In addition, the estimated income tax benefit from the tax deduction that will be realized by the Company upon the exercise of these awards is assumed to be used to repurchase ANGI Homeservices shares.

Upon exercise, if the Company decided to issue a sufficient number of shares to cover the $219.6 million employee withholding tax obligation above, 13.0 million additional shares would be issued.

Options — The cash generated from the exercise of all vested and unvested options, consisting of (a) the option exercise price and (b) the estimated income tax benefit from the tax deduction received upon the exercise of options, is assumed to be used to repurchase ANGI Homeservices shares.

Subsidiary denominated equity awards and RSUs — These awards are settled on a net basis; therefore, the dilutive effect is presented as the net number of shares expected to be issued upon vesting or exercise, in each case assuming a withholding tax rate of 50%.  Withholding taxes paid by the Company on behalf of the employees upon vesting or exercise would have been $38.5 million, assuming a stock price of $16.94 and a 50% withholding rate.  In addition, the estimated income tax benefit from the tax deduction received upon the vesting or exercise of these awards is assumed to be used to repurchase ANGI Homeservices shares.

IAC denominated equity awards — IAC denominated equity awards represent options and performance-based restricted stock units denominated in the shares of IAC that have been issued to employees of ANGI Homeservices.  Upon the exercise or vesting of IAC equity awards, IAC will settle the awards with shares of IAC, and ANGI Homeservices will issue additional shares of ANGI Homeservices to IAC as reimbursement.  The estimated income tax benefit from the tax deduction received upon the exercise or vesting of IAC denominated equity awards is assumed to be used to repurchase ANGI Homeservices shares.

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GAAP FINANCIAL STATEMENTS

ANGI HOMESERVICES CONSOLIDATED AND COMBINED STATEMENT OF OPERATIONS

($ in thousands except per share data)

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ANGI HOMESERVICES CONSOLIDATED BALANCE SHEET

($ in thousands)

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ANGI HOMESERVICES CONSOLIDATED AND COMBINED STATEMENT OF CASH FLOWS

($ in thousands)

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RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES

($ in millions; rounding differences may occur)

ANGI HOMESERVICES RECONCILIATION OF OPERATING INCOME (LOSS) TO ADJUSTED EBITDA

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OPERATING INCOME MARGIN AND ADJUSTED EBITDA MARGIN RECONCILIATION