ANGI Homeservices Inc — Earnings Call Q3 2026

Operator: Good morning, everyone, and welcome to the ANGI Inc. Third Quarter 26 Earnings Call. After today's prepared remarks, we will host a Q&A session. All participants will be in listen only mode. As a reminder, this conference is being recorded. Before we begin, the company would like to remind you that during this presentation, the company may make certain statements that are considered forward looking under the federal securities law. These statements may relate to the company's outlook, strategy and future performance. And are based on current expectations and information currently available to the company. Actual outcomes and results may differ materially from the future results expressed or implied in these statements due to a number of risks and uncertainties. Including those contained in the company's most recent quarterly report on Form 10 Q, its most recent annual report on Form 10 ks and any subsequent SEC filings. The information provided on this conference call should be considered in light of such lists. The company will also discuss certain non GAAP measures. Including adjusted EBITDA, which they will refer to today as EBITDA for simplicity during the call. The company would also like to refer you to its earnings release filings with the SEC and the Investor Relations section of its website for all comparable GAAP measures and full reconciliations for all non GAAP measures. Now it is my pleasure to turn the floor to ANGI's CEO, Mike Steib, and its CFO, Julie Hoarau. Mr. Steib, will begin with some introductory remarks. Please go ahead. Michael F. Steib: Alan, and good morning, everybody. I am excited to be here. Before I begin, I want to thank Jeffrey for the work he is done at ANGI and for his support during this transition. I also want to thank our board and our leadership team for embracing a lot of change in a very short period of time. I thought to get started, I would share a little bit about my background. Why I came to Angi and what I have learned about the business in my first few weeks. And what we see as the path to victory. I have spent much of my career building marketplaces and transforming businesses. Especially in my last 3 roles as CEO. At The Knot, we built America's most used and highest rated wedding planning app, and we delivered annualized shareholder returns of more than 30%. At Artsy, we built a global transactional marketplace for ART We grew revenue aggressively. And we made an unprofitable business sustainably profitable. At TEGNA, we use technology and AI to improve productivity, to build better digital products, and deliver approximately 40% annualized shareholder returns and a $6.2 billion exit. We did that by building strong teams, great products, and operating companies that move fast and invested shareholders money wisely. that is the playbook I am excited to bring to ANGI. Angi is 1 of the most recognized brands in home services, a network of almost 200 thousand pros around the world. And a leading position a nearly $2 trillion global home services market. These are advantages that would be difficult to replicate. But today, we are not getting enough out of them. Too many homeowners come to Angie looking for help, and do not end up hiring a pro. And too many pros miss opportunities to turn these leads we deliver into jobs. We can make Angie work better for both, and we can run this company far more profitably while we do so. Let me start with how I think about the business. Because we have reported a lot of different metrics in the past. But we have not always made it clear how they connect to revenue and profit. I want to change that, and I want to walk you through how this business makes money in simple terms. That will also let us tie what we are working on directly to revenue and profit in the future. Homeowners come to ANGI looking for help with a project. And they tell us what they need That is a service request. We match that request with 1 or more qualified PROs and each match is a lead. Pros pay us for those leads, we set the price of each lead based on its expected value to the pro. Pros can pay per lead within a monthly budget they set or they can pay a subscription for an estimated number of leads each month. We call that budget or that subscription capacity. As we deliver leads, pros spend against that capacity, and thus we generate revenue. So the business comes down to 3 things. 1, generating service requests, 2, turning those service requests into valuable leads through matching and pricing that we sell to the pros. And then 3, building the right amount of pro capacity to purchase those leads. We generate service requests in 4 ways. About a third come to us directly, These are homeowners who search for ANGI by name, visit our website or app or respond to our emails, our calls, and texts. Others come from unbranded search where Google sends us free traffic from people looking for say, a plumber or a roofer. We also buy clicks through paid marketing. And we buy service requests from third party affiliates. Finally, we win homeowners through LLM integrations and LLM advertising. A nascent but an exciting growth channel. We drive the number of leads and the value of leads through matching, connecting each service request to the right pros, and by setting the price of each lead fairly in order to balance pro retention and spend. We built capacity in 3 ways. Pro sign up online, our sales team signs up new pros, and we work with existing PROs to increase their budgets. Now here's what is been happening. Over the last few years, ANGI has seen declines in service requests and leads. Some of that has come from changes in organic search traffic. As unbranded search has fallen by about 2/3 since 2023, because of changes to the Google search experience. Which have reduced traffic across the whole industry. Unbranded search now contributes only about 5% of our service requests. So that pain is largely behind us. Some of the decline has been self imposed as 80% since 2023, narrowing the number of partners we work with and focusing on channels that deliver good outcomes for pros. Affiliates now represent about 6% of service requests. So we are much less reliant on that channel than we used to be. Finally, Angie has reduced paid marketing over time. Where spending was not earning an acceptable return. Paid marketing remains an important and sustainable source of homeowner demand. These changes put significant pressure on revenue. But they mean that as we roll into 2027, we do so on a much steadier base of service requests and leads with myriad opportunities to improve. On capacity, fewer service requests and leads have reduced the amount of pro capacity that we can serve. Most of our capacity now comes from more tenured pros a much stickier client base. We retain around 80% of that capacity annually, and that means we need less new sales activity to replace capacity churn and grow the marketplace. This allows us to shift some resources from our small and medium sized PRO efforts to our large pro sales efforts. While smaller pros are an essential foundation of the marketplace these large PROs generally have much bigger marketing budgets and they have more resources to respond to homeowner inquiries which is good for both capacity and lead value. So we have reduced our smaller pro new business sales team by about 70% since 2023. Our sales team is now sized appropriately for the business that we have today. And once leads return to growth, we can easily dial up our investment in sales and online enrollment to grow capacity. In short, the team has been managing declining search traffic, reducing affiliate and paid marketing activity, where the economics were not attractive, and adjusting the size of our sales organization. That has hurt revenue, but it was the right work to do to sustainably grow cash flow. We have a healthier business to build on now, and I see clear opportunities to improve our products, run the company more profitably, and return to growth. Which brings me to our near term priorities. First, we are going to maximize cash flow. We can run this company at much better margins, and at higher velocity. I have seen companies like Angi become too layered and expensive to operate. Unnecessary bureaucracy erodes focus. It adds complexity. And it frustrates talented people who are trying to build great things. Angie had become too layered, and we have already acted to address it. Yesterday, we made the sad decision to reduce our headcount by approximately 300 roles primarily in middle management and support functions. These changes are expected to generate approximately $40 million to $50 million in annualized operating expense savings, and reduce capital expenditures by approximately $10 million. Some of these savings will be reinvested, but the majority will go right to the bottom line. These actions improve efficiency More importantly, they make Angi a more nimble and fast moving place where talented people can do their best work. Second, we will bring greater focus and speed to how we operate. Simplifying how we look at the business, as we have done on today's call is part of that. Removing unnecessary layers and support functions also puts our leaders closer to the work. Gives talented people more responsibility, and it minimizes wasted time. We will also be putting in place a high velocity operating system with clear objectives and key results and fast data driven decision making. My teams at prior companies have implemented this successfully several times, and it can really speed our return to growth. Third, we will turn a good product into a great product. We are already making progress against 2 clear opportunities here, and AI is foundational to both. On the homeowner side of the marketplace, many homeowners visit Angie needing to get a job done, they do not get the right pro for the job. To address this, we are building AI powered experiences that help homeowners find and book the right pro. And encourage them to return to ANGI every time they need a job done. On the pro side, too often, pros miss opportunities to turn leads into completed jobs. We are building AI powered tools that help pros respond to homeowners, follow-up and book appointments, at much higher success rates, And I can tell you the early tests here have been very promising. The better we convert homeowners' needs into service requests, the happier users will be the more business we will bring our pros, and the more profitable revenue we will book for Angi. And the more jobs we help our crows win, the more valuable our leads become. This should support better retention, more capacity, and pricing that maximizes the value for PROS and for ANGI. These improvements can have compounding benefits for our marketplace, and unlock tons of profitable revenue. The work you have heard about previously including our replatforming, Pro CRO, the homeowner agent work continues to make exciting progress. Fourth, we will supercharge the enterprise with AI. When I was recently CEO of TEGNA, we introduced AI and automation across our largest departments, and identified approximately 2 million hours of annual productivity improvement opportunities. That unlocked cash flow, and productivity. It freed up people to focus on delivering better work and expanding our offering. AI capabilities have only multiplied in the months since. I am excited to build a team here of elite AI enabled talent that can multiply their impact. By managing teams of agents. Fifth, as a leader in our space, we will ensure we are plugged into the LLMs that will provide new sources of both free and paid traffic. Are already making big strides here, In AIANSERS, our internal data show that our share of voice is the highest in the category, Our apps are live in ChatGPT and Gemini, and we are building out ChatGPT ads as a growing and promising marketing channel. You will see another big announcement, on this front later today. Now with all that, let me talk about the financial outlook. I am not ready to give you a detailed financial forecast for 2027. But I expect EBITDA less CapEx to grow meaningfully in 2027. And I believe we can run ANGI at structurally higher margins from now on. My first priority is going to be maximizing and growing cash flow. Our third quarter performance demonstrates what is possible We delivered our highest quarterly adjusted EBITDA margin since 2018. Reflecting the cost actions already taken, and more disciplined marketing spending compared with earlier this year. And that was before the savings from our latest organizational changes. Due to efforts the team has been making to remove unprofitable or lower quality marketing and sales, Revenue comps remain challenging for the next few quarters. And the year over year impact will continue into 2027 even as those decisions improve the fundamental economics of our business. That said, everything I have seen so far suggests the team's outlook for return to growth in the back half of 2027 makes sense. In the meantime, profitability will be greater than expected. Most of the savings from our recent reorganization will flow to the bottom line, I expect EBITDA less CapEx for 2027 to be substantially better than the $50 million floor my predecessor previously provided for this year. Going forward, I plan to provide you with regular updates on the priorities I shared today, along with clear and consistent KPIs, that demonstrate the impact of our work on ANGI's marketplace and financial future. And I will be back on our next earnings call with greater fidelity on the 2027 outlook. So let me close with this. I am excited to be working with all of you and the team here at ANGI. ANGI is a great brand, a large network of pros, and enormous opportunities ahead. I am proud of how our team has responded to the changes we are making and I am excited about what we can accomplish together. We are going to build better products that delight homeowners and pros, We are going to run this company at better margins. We are going to return to growth. As a much stronger, more valuable company. Thank you. And I will turn it over now to Julie to discuss our financial results in more detail. Julie Gosal Hoarau: Thanks, Mike. So I will briefly review our third quarter financial results the key driver of revenue and profitability, and close with our outlook. Third quarter revenue was $242 million down 8.9% year over year Adjusted EBITDA increased 6.3% to $42.2 million that is our highest quarterly gross margin since 2018, as Mike mentioned. Let's start with revenue. Our marketplace revenue is driven by 3 factors. 1st, we generate homeowner service requests. 2nd, those service requests turn into leads through matching. And 3, serve pro capacity. Service requests represent homeowner demand, matching determine how many leads we can deliver against pro budgets to generate revenue. And pro capacity represents the budgets available to purchase those leads. So starting with homeowner demand, service requests, declined 2.4% year over year to about 4 million compared with 5.5% decline last quarter. So these improvements reflects a more stable demand, while lower affiliate and organic sales traffic compared to last year continued to pressure results. Turning to leads, leads declined 17.6% year over year to 4.5 million This reflects the wind down of our legacy advertising product and the overall reduction in pro capacity from our reduced sales force. On pro capacity, average monthly active pros in The U. S. Declined 14.4% year over year to approximately 101 thousand That reflects the purposeful reduction in our sales organization, and our shift to our large pros who have bigger budgets converse more leads, and stay longer. Average pro capacity average pro capacity increased in the low double digits partially offsetting the decline in active pros, and as a result, total pro capacity declined in the mid single digits. Revenue per lead increased 9.8% to $47 as we moved out of the heavily discounted legacy advertising product. And large pros became a bigger part of the mix. Partially offsetting the decline in lead volume. Large pro revenue grew 20% year over year, while revenue from smaller pros declined 17%. Sorry, revenue from smaller pro declined by 13%. In summary, service requests are more stable, leads per service request has declined year over year, partially offset by improved revenue per lead and we are continuing to shift our pro capacity mix to large pros. Turning to profitability, adjusted EBITDA increased primarily reflecting lower fixed expense and more disciplined marketing spending compared to earlier this year, but before any benefits from the new cost action Mike described fixed expense declined $14 million or 24.4% year over year reflecting the workforce reduction announced earlier this year in Q1 Sequentially, consumer marketing declined $13 million from 41.4% of revenue in Q2 to 77% in Q3, while fixed expense were about flat. As Mike discussed, our latest organizational changes are expected to generate approximately $40 million to $50 million in annualized operating expense saving and reduced capital expenditure by approximately $10 million. So that is $50 million to $60 million Of total annual savings. We will also have approximately $18 million to $30 million of onetime restructuring costs primarily related to severance expense. So we expect to reach the full annualized savings run rate by the end of the first half of 27. These savings, they are incremental to the $70 million to $80 million that we announced earlier this year in Q1. Some of those savings will be reinvested but the majority will fall to the bottom line and increase profitability and cash flow. Now on to cash flow and our balance sheet. Our operating cash flow for the quarter, was $28.5 million compared with $21 million last year Capital expenditures were $14.1 million resulting in free cash flow of $14.4 million compared with $4.9 million last year. We ended the quarter with $202 million in cash. And about $400 million in debt, with no borrowing and our revolving credit facility. Lastly, closing with the near term outlook, before we turn to questions. As Mike noted, due to efforts, the team has been making to remove unprofitable or lower quality marketing and sales efforts. Revenue comp remained challenging for the next few quarters, especially with unusually high marketing expense in Q4 25, At the same time, we do expect profitability to benefit from the cost discipline already underway. So while we are not providing detailed financial guidance for 2027 today, we expect the action we have taken will drive higher adjusted EBITDA with stronger cash flow We are focused on improving pro capacity increasing leads, and operating at higher margins. This will result in stronger and more profitable operating business. And with that, we will open it to questions. Operator: We will now begin the question and answer session. The first question today comes from Sergio Segura of KeyBanc. Please go ahead. Sergio Segura: Great. Thanks for taking the questions and good morning. Mike, appreciate the comments upfront and how you are viewing the business and breakdown of the business. I am curious, just as you have come into ANGI and developed your initial, framework on strategy. How we should think about the priorities that were laid out over the past few quarters from previous management and are the core pillars largely intact? Or do you see any areas where you think you are going to make more meaningful changes? Michael F. Steib: Thanks, Sergio. The core pillars are intact. From my time on the Board, the time I have spent with Jeffrey and with the leadership team, here since I joined, I believe we are very much on the right track. Taking advantage of the power of AI agents in our homeowner product and in our pro product can ensure many more people who need to get jobs done get those jobs done, and our pros can recognize much more value in the marketplace, Making these better connections is what has compounding benefits to a marketplace in my experience. Secondly, the shift to large pros grows capacity and it brings you pros who often have a lot more resource to put against converting leads to happy satisfied customers. Again, good for the marketplace and good for revenue. Finally, the work that the team has been doing and the great expertise we have built internally to plug into the LLMs and make sure that the this trusted Angi brand and the value we bring can open up this new channel for service requests through LLMs is right on the money. I would just add that you know, I bring a high velocity operating system that insists on leadership being close to the action. Making fast data driven decisions, And the risk that we were talking about today while sad, I do believe for those who are staying with Angie now, sets this organization up to move with alacrity and to allow talented people to do their best work. Sergio Segura: Understood. And maybe just a follow-up on the large pro strategy. Can you just give us a little bit more detail going under the hood there on the traction you are seeing there and the opportunity that you see going forward? Michael F. Steib: Yes. So to reiterate from my from my script with the. To SEO. Unbranded SEO declines and the affiliate declines that the that the team is self imposed, if you would, for the benefit of the marketplace We did not. We needed less pro capacity to consume those service requests. Which gave us the opportunity to both reduce the size of the small business sales team but also to shift resources to larger pros. Shifting business. Shifting those resources to larger pros does 2 things for us. 1, these pros come with you know, 2 orders of magnitude greater budget than the average small pro. And secondly, they often have these teams and sophisticated technology that they put to work to make sure an inbound lead turns into a job. We saw better than 20% growth in the large pro segment this quarter. it is our second consecutive 20% growth quarter. Team is scaling up with people who are skilled in enterprise sales. And I am watching those new members of the team ramp in their productivity. So to me, it all looks it all looks very encouraging. Understood. Thanks for the color, Mike. Operator: Our next question comes from Eric Sheridan of Goldman Sachs. Please go ahead. Eric Sheridan: Thanks so much for taking the questions. Maybe 2 following up on the prepared remarks. With respect to the cost savings you mentioned, is there a way to conceptualize or quantify the mix between cost saved dropping into margin and free cash flow relative to what needs to be reinvested? And maybe the broader question would be how you think about broadly investing or reinvesting in the platform over the medium to long term? And then how would you characterize the difference in what you were trying to accomplish with this restructuring as opposed to what took place earlier this year? Thanks so much. Michael F. Steib: Yeah. Thank you, Eric. I will reiterate, we, expect $40 million to $50 million in annualized operating expense savings. plus $10 million in reduced capital expenditures. I expect at least half of that to fall to the bottom line, and any reinvestment is going to be reinvestment in the strategic priorities I outlined. Earlier. I am looking forward to future earnings calls where I can give you more fidelity on the 2027 numbers as I get my arms all the way around the business. But for now, that is how to think about the positive financial impact of the restructuring the company. Secondly, this is the second RIF this year. The first 1 impacted roughly 350 roles. This 1 roughly 300 roles. The way that I would say this 1 is different is it was very much focused on my operating principles of having leaders close to the action. The average manager should be able to manage between 6 and 12 people. At ANGI, the number of people managed by the average manager was 3. With this change, we now put more responsibility into our managers, It also allows us to take down some support functions that were out of line with our investments in the company in the core work of building marketing and selling. And in my experience, and I have seen this work, when you put your leaders closer to the action, especially at a moment where you are bringing new technology into the organization, where you are bringing new features and capabilities in your products, it is so important and valuable to be close to the action that the restructuring that we have just done while positive for cash flow is most important for the velocity it can unlock in our organization. Operator: Thank you. The next question comes from Daniel Kurnos of Stonex. Please go ahead. Mr. Kurnos, could your line be muted? Daniel Kurnos: Yes, apologies. Mike, good morning, and know, different sector, but great to be working with you again. Michael F. Steib: it is nice to be working with you again, Daniel. Daniel Kurnos: So a couple for you. And, you know, look, you have given us some great color already. I think there is some, you know, clearly some of the ad wind down is gonna be impacting this, and I appreciate you are gonna refocus us on the KPIs that truly matter in your view. Going forward, which I think has been a little jumbled in the past. But I will ask 2 kind of questions since we have what we have today. I think they are related on this. So you guys did address a little bit the approach churn. So it did increase pretty significantly. Year over year and quarter over quarter as you have shifted more towards larger and more tenured pros. And I guess we kind of know what is driving that, but I am I am sort of curious if you wanna give more color there and just where you think kind of the bottom is, how much more internal decision you have to make around either reallocating resources or focusing more of those resources on large pro. And then as kind of a byproduct, you also have leads per service request have fallen, but you have seen that revenue per lead increase. And, again, I think that is primarily large pro, but is that a trend that can continues? We have had some commentary in the past from prior management about you know, shift towards smaller jobs. Youssef know, the economy is kind of all over the place. So if you could just help us think about how we should think about sort of those 2 trends given your now strategic priorities would be super helpful. Thank you. Julie Gosal Hoarau: So regarding churn, so our approach has increased and that is due to the launch of our online enrolled product. Which we started to ramp up in Q4 last year. And that is really scaled up this year. So these online enrolled pros, they sign up online with no upfront commitment. No upfront payment or commitment, and they have a much lower cost of acquisitions. So they do not talk to our sales team. However, since they have lower commitments and low barrier to entry, these pros are less attached to NG and have a higher churn rate as a result. So today, we signed up thousands of those pros, and this has driven our overall reported churn rate up If you look at PROS who have signed up through our traditional sales channel, so excluding online enroll. Churn is actually meaningful. Meaningfully down year over year, Large pros, they have larger budgets. They tend to stay and increase their budgets over time with NG, when NG works for them. So in addition, we have like, a smaller cell source So that means we are acquiring less net new pros and have, like, more to use and a more stable pro base with a higher retention rate. So we happy with the progress we are making to improve the pro experience and drive retention. However, however, the measure that really matters is pro capacity to self-service request. Rather than the nominal numbers of pro So active pro could decline while capacity and revenue rise. So you should really do. Like, think about pro capacity. Yeah. And I wanna double underline that pro capacity is the number for us it is not hard to imagine having 2 small pros churn out and 1 large pro join, and the capacity difference to be a 100x to the positive. So the number that really matters is capacity. Not the number of pros or the or the churn of the total probation. So regarding your second question on lead per SR, lead by service request and revenue per leads, So we want down our legacy advertising product and that generated a lot of very heavily discounted or, in many cases, free leads And as a result, our number of leads per service request has fallen. But at the same time, revenue barely does increase as we moved away, from that product and large probe became a higher part of the mix. So we are prioritizing the economics and success of the and we are not maximizing the lead volume. Got it. Thank you both so much. Operator: The next question comes from Stephen Ju of UBS. Please go ahead. Stephen Ju: Hi, guys. This is Tarni on for Steven. So, first, Google headwinds have been a drag on growth for the past few years. Do you guys see them continuing to have an impact on the business? And then as kind of a follow-up, because of those headwinds, Angie's stock is cheap and other companies in your sector are probably cheap too. And you guys have some debt coming due. Youssef could buy back stock. And from an m and a standpoint, you could be a buyer or a seller. With your, increased cash flow, do you guys how are you guys thinking about capital allocation? Thanks. Michael F. Steib: Thank you. So on the first question, SEO declines, think, have been the story for consumer Internet broadly in the last couple of years. For ANGI now, unbranded SEO is 5% of total service requests. I think that story is largely behind us. I will note that sort of the advent of the new LLM channels is something that we are really excited about. it is the first what seems to be a significant potential source of new service requests going forward. Our team has us well positioned for that channel. On capital allocation, I would say so thank you for noting that the stock is cheap. I. Youssef know, part of the reason I am here is that I agree with you at the end. The optionality and opportunity here is substantial. Substantial. My first priority as we think about capital allocation is the 2028 notes. And I am glad that we are gonna be approaching that from a position of strength now with improved margins in the business. As for the rest of our capital allocation strategy, the core principle here is this is not our capital. It is our shareholders' capital. And it is our job to deploy it where it creates the most value for our shareholders. And all of the levers that you all know well will have our attention, and we will approach this in a way that maximizes shareholder value And my. Hopefully, track record gives you all confidence. I have I have a good I have a good record of creating value for my shareholders. Analyst: Great. Thank you. Operator: Our next question comes from Bradley Erickson of RBC Capital Markets. Please go ahead. Brad Erickson: Hi, good morning. This is Khadija on for Brad Erickson. 2 questions me, if I may. The first 1 is, what progress have you made on PRO CRO since last quarter? There any updates you can give on that front? And then secondly, can you dig a little more into what drove the EBITDA outperformance for Q3? Thank you. Michael F. Steib: I will take the pro CRO 1. And if you will indulge me, I have had a chance to get to know a bunch of our pros in my time here. And what I can share with you is that a these large pros who are putting up roofs in, you know, 20 or 30 markets or fences or siding I have built these organizations that often look like a technology company that happens to install roofs. They have, sophisticated AI that leads that warms leads, and helps to convert people to appointments, They have live operators standing by to get their hands on a lead as soon as it is available. And they are very good at turning someone who needs a fence or needs their lawnmode into an appointment and ultimately into a booking. The average small pro whether it is 1 plumber or electrician in a truck or a small outfit, tend to be spending all of their time and energy on doing the work. They do not have often the same sophisticated capabilities that maybe a private equity backed or just large multistate operation can. What we are doing with Pro CRO is giving the small pro the power of a large pro receiving a lead and turning it into a into a job that they can do well. What we have seen so far on our ProCR o work the replatforming that is foundational to it. That Jeff talked about in our previous calls. Has continued on schedule and on budget. The early pro CRO work that we have in the field started with a small group of test pros. We now have about 1 thousand pros in that test We launched the alpha migration of the replatforming on the pro side on schedule earlier this week. All of which is giving us a lot of confidence in our ability to build these features. In the test group, and it is still early, we are seeing that the conversion rate to an appointment is in line with the conversion rates that you would expect when a human reaches out and talks to and talks to the homeowner. And that is very encouraging for what it can mean longer term with the value of our leads. it is early, but this is, like, this is the kind of work I was excited to come here and dig into with the team. And what they have achieved so far gets me very excited. Julie Gosal Hoarau: Yeah. Regarding the Q3 EBITDA performance, so 2 items contributed to the other performance. First, we had lower fixed cost reflecting the workforce reduction we announced in the first quarter. And second, we had more disciplined marketing As we said last quarter, we pulled back on TV and other offline spend whether returns were not there. And we shifted the last to higher return channels like paid social. So as a result, consumer marketing was down from 41% of revenue in Q2 to 37% in Q3. And that came before the action we just announced. So the new savings are on top of that. On whether this carries forward, So we do think that the structural pieces, do carry forward over time. And we believe that this should be a structurally higher margin business. Prospectively. The lower fixed cost base is better than and we will continue to run marketing to a breakeven return on the dollar. The majority of the new savings should reach a bottom line, However, as caution against, extrapolating the Q3 margin quarter by quarter, marketing is viable and we will adjust it to returns And in addition, regarding Q4, seasonality is softer, and we do have a difficult revenue comparison against the higher market in Q4 last year. So as we said on the Q2 call, Q4 usually, comes down a bit. So in summary, quarterly results can still vary with seasonality, channel mix, and investment timing. Our goal is a sustainable. Sustainably more efficient cost structure not by simply maximizing 1 quarter margin, but we do expect the cost action to drive higher adjusted EBITDA, and stronger cash flow over time. Analyst: Great. Thanks for the color. Operator: The next question comes from Brian Nowak of JPMorgan. Please go ahead. Analyst: Yes. Hey, guys. This is Vignesh on for Brian. Thanks for taking my question. Guess you kind of touched on it, but just looking at the tech replatforming as a kind of key milestone to getting more agentic features to market. Could you talk a little more about the status of the project and maybe what you kind of expect from this product in the future? And then second, real quick on accounting. I guess, seemed like the SBC depreciation and tax rate kind of had a notable step up. If you can share any color on that would be helpful. Thanks. Michael F. Steib: Yeah. So. And I believe everyone has this background, but the tech rate we is bringing together the technology stack that drives our European marketplaces and the technology stack that drives our U. S. Marketplace The, I say, international and US There. And there are advantages to each and bringing them together should give us should give us the best of both. And an easier platform to manage and maintain, platform on which we can innovate and ship features a lot faster. The progress has been good here so far. I am really proud of the work I have seen in my short time with the company from Kris Boon and the rest of the organization. Replatforming are hard. And these guys are on it, and they have been hitting their milestones so far. The homeowner side, we have seen a large portion now of the homeowners and revenue moved to the new platform. On the pro side, the alpha product with a handful of pros launched earlier this week We will continue to ramp these up incrementally. Wanna test and make sure it has the right impact on the marketplace performance before you scale it the way. I have got a lot of confidence in this team, and I am and I am optimistic that this will continue to click along on schedule. Julie Gosal Hoarau: Regarding your accounting questions, so taking this into pieces, on stock based compensation, it was higher in Q3. But that was due to a onetime acceleration of stock based compensation expense related to the outgoing CEO separation agreement terms So it is really a onetime item. Depreciation expense that has been running a little higher for the last few quarters. This is linked to our 1 platform work. We have been capitalizing more internally developed software cost which we deprecate over 2 years So that is showing up in a higher depreciation, as we place the new platform into service. We also have some assets that are being retired related to 1 platform and also resulted in some accelerated depreciation. And then last on tax, as a pretax, like, decrease and it is closer to breakeven, the effective tax rate movements are magnified. In Q3, specifically, the rate is elevated because the Q3 pretax income excluding discrete item, was significantly higher than Q1 and Q2. So a larger share of, The US tax expense was recognized in Q3 including a catch up from applying the higher effective tax rate to prior quarters. Year to date, the rate is negative, and that is not meaningful. Because of the Q2 goodwill impairment. Which is largely a nondeductible item. So the pretax loss generated little tax benefits. Analyst: Super helpful. Thank you. Operator: Our next question comes from Matthew Condon of Citizens JMP. Please go ahead. Matthew Condon: Thank you for taking my questions. Michael, welcome aboard. You have addressed this a lot on the call, but you have expressed a lot of confidence in ENGIE's ability to improve EBITDA. And cash flow in the near term. But as you evaluate the business, just can you just talk about how you balance that? Obviously, a lot of that is going to flow through to the bottom line. How do you balance that against investments that are necessary to return the business to sustainable growth? And then can you also just talk about your AI strategy more broadly across products, but also in the enterprise as well? Thank you so much. Michael F. Steib: Thank you, Matthew. The reductions that we described today we did not reach that number by saying we have to get to a number. Of cuts We said, what is the right organization and the right structure of that organization? To deliver on the strategic priorities I laid out for you before? So that is the way that we think about the balance of investment. The balance is return to growth execute your priorities, do not spend a dollar that is not necessary to build market and sell and sell that product and deliver profit for our shareholders. Second thing I would just note for you is some companies will stretch their sales and marketing spend from 1 quarter to the next to hit a revenue or growth target just wanna be transparent with you all that my focus is always gonna be on what maximizes the present value of future cash flows. And so that means we are not going to approach quarter to quarter with a target on what percentage of revenue, for example, we will spend on marketing. We are gonna look at the cost of acquiring service requests. And we will do it at the point that maximizes cash flow today and over the long term. And while it was important to get this restructuring of the organization done and behind us, so we can get cracking with the right organization on our priorities I know better than anyone, you cannot cut your way to growth. The growth is going to come from us executing on our agentic future on our products our agentic future in our enterprise, our agentic future in our partnerships with LLMs, on the shift of the composition of our revenue to accommodate more and more of the large pro capacity. Matthew, your second question was about the AI strategy. So let me touch on it in 3 parts, each of which you have sort of heard through today's conversation. The first is when a homeowner comes to us she has a problem that needs to be solved. And the problem is not always simple. it is not always as simple as I need a plumber at ZIP code 10 thousand. Right? People want to describe the problem. They want to describe when they are available. The kind of pro that they think they need. It could be something more complex like a kitchen renovation or an addition to the home All of these things are underserved by the historical sort of user experience that people run into on the web or on an app. An agentic partner to that homeowner However, can much better come to understand their needs and help to match them to the right solution in our marketplace. As I discussed on the pro side, having an agent there, especially for smaller pros who can step in and work with that homeowner and the pro to get you to that magical moment of an appointment. Both, I think, will create a lot of incremental value for the participants in our marketplace and therefore for the marketplace. The second part though is bringing AI into the enterprise. And I have seen firsthand the power of this. When you move from being a company that does not really use AI, which is where most companies truly are today, a company where people use AI to support their work which is probably where Angi sits today. to becoming AI supercharged people who manage teams of agents and who not only, like, use those agents to help them do the work, but who actually teach the agents how to do the work with them. We are already starting to see the results from that in our engineering organization. Although it is still early. And we have got a road map for the way. The ways that AI can take the busy work, the groundwork off the plates of our people, and free them up to do the really high impact selling, marketing, and building that is gonna drive us. that is gonna drive our growth in the future. The last part I want to sort of leave us with is these LLMs in a lot of ways to me remind me of the early days when we were all figuring out Google. It would become a source, you know, Google is going to become a source of free traffic was going to become a source of paid traffic. and the question was how do you maximize your opportunity there? And 1 way was a strong and trusted brand that people recognize. And Angi is very fortunate to have that. Second was to have your team very focused on it and to be building ahead of the growth in that platform. And that is what you see ANGI doing today. And thirdly, there are technical capabilities. In the same way that we were building technical capabilities for SEO and SEM 2.5 decades ago, Angie has built the technical capabilities in house to know how to partner with and embed with these LLMs to set us up for longer term success as the you know, as the average user starts to become the power user, in an agentic world. I think we are putting ourselves in the right position there, and we will have another announcement later today that just shows the sort of the drumbeat of the work that we are doing here. Operator: This concludes the question and answer session. I would like to turn the conference back over to Mr. Steib for any closing remarks. Michael F. Steib: Well, just I want to thank you all for your interest in ANGI and the questions are really helpful and thanks for the warm welcome. The team here is doing an incredible-- The conference is now concluded. Operator: Thank you for attending today's presentation. You may now disconnect.