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Angi (ANGI)
NASDAQ:ANGI
Risk Overview Q4, 2024
Risk Distribution
46% Finance & Corporate
22% Legal & Regulatory
18% Tech & Innovation
8% Ability to Sell
6% Production
0% Macro & Political
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
This chart displays the stock's most recent risk distribution according to category. TipRanks has identified 6 major categories: Finance & corporate, legal & regulatory, macro & political, production, tech & innovation, and ability to sell.
Risk Change Over Time
S&P500 Average
Sector Average
Risks removed
Risks added
Risks changed
Angi Risk Factors
New Risk (0)
Risk Changed (0)
Risk Removed (0)
No changes from previous report
The chart shows the number of risks a company has disclosed. You can compare this to the sector average or S&P 500 average.
The quarters shown in the chart are according to the calendar year (January to December). Businesses set their own financial calendar, known as a fiscal year. For example, Walmart ends their financial year at the end of January to accommodate the holiday season.
The quarters shown in the chart are according to the calendar year (January to December). Businesses set their own financial calendar, known as a fiscal year. For example, Walmart ends their financial year at the end of January to accommodate the holiday season.
Risk Highlights Q4, 2024
Main Risk Category
Finance & Corporate
With 23 Risks
Finance & Corporate
With 23 Risks
Number of Disclosed Risks
50
+18
From last reportS&P 500 Average: 31
50
+18
From last reportS&P 500 Average: 31
Recent Changes
18Risks added
0Risks removed
5Risks changed
Since Dec 2024
18Risks added
0Risks removed
5Risks changed
Since Dec 2024
Number of Risk Changed
5
+2
From last reportS&P 500 Average: 3
5
+2
From last reportS&P 500 Average: 3
See the risk highlights of Angi in the last period.
Risk Word Cloud
The most common phrases about risk factors from the most recent report. Larger texts indicate more widely used phrases.
Risk Factors Full Breakdown - Total Risks 50
Finance & Corporate
Total Risks: 23/50 (46%)Above Sector Average
Share Price & Shareholder Rights17 | 34.0%
Share Price & Shareholder Rights - Risk 1
IAC controls our company and will have the ability to control the direction of our business.Share Price & Shareholder Rights - Risk 2
Our amended and restated certificate of incorporation could prevent us from benefiting from certain corporate opportunities.Our amended and restated certificate of incorporation has a "corporate opportunity" provision that requires us to renounce any interests or expectancy in corporate opportunities for both us and IAC. This provision also includes a disclaimer that states that we recognize that: (i) any of our directors or officers who are also officers, directors, employees or other affiliates of IAC or its affiliates (except that we and our subsidiaries are not considered affiliates of IAC or its affiliates for purposes of this provision) and (ii) IAC itself, will have no duty to offer or communicate information regarding such corporate opportunities to us. Generally, neither IAC nor any of our officers or directors who are also officers or directors of IAC or its affiliates will be liable to us or any of our stockholders for breach of any fiduciary duty by reason of the fact that any such person pursues or acquires any corporate opportunity for the account of IAC or any of its affiliates, directs or transfers such corporate opportunity to IAC or any of its affiliates or does not communicate information regarding such corporate opportunity to us. This corporate opportunity provision may exacerbate conflicts of interest between us and IAC because the provision effectively permits any of our directors or officers who also serves as a director or officer of IAC to choose to direct a corporate opportunity to IAC instead of us.
Share Price & Shareholder Rights - Risk 3
IAC's interests may conflict with our interests and the interests of our other stockholders. Conflicts of interest between us and IAC could be resolved in a manner unfavorable to us and our other stockholders.Various conflicts of interest between us and IAC could arise. As of the date of this report, six of our eleven directors are nominated by IAC and four of our eleven directors are current directors or executive officers of IAC. Ownership interests of these individuals and IAC in our capital stock and ownership interests of our directors and officers in IAC capital stock, or service by an individual as either a director and/or officer of both companies, could create or appear to create potential conflicts of interest when such individuals are faced with decisions relating to us. These decisions could include:
- corporate opportunities;- the impact that operating or capital decisions (including the incurrence of indebtedness) relating to our business may have on IAC's consolidated financial statements and/or current or future indebtedness (including related covenants);- business combinations involving us;- our dividend and stock repurchase policies;- management stock ownership; and - the intercompany agreements and services between us and IAC.
Potential conflicts of interest could also arise if we decide to enter into new commercial arrangements with IAC in the future or in connection with IAC's desire to enter into new commercial arrangements with third parties. Additionally, IAC may be constrained by the terms of agreements relating to its indebtedness from taking actions, or permitting us to take actions, that may be in our best interest.
Furthermore, disputes may arise between us and IAC relating to our past and ongoing relationships, and these potential conflicts of interest may make it more difficult for us to favorably resolve such disputes, including those related to: tax, employee benefit, indemnification and other matters arising from the Combination; the nature, quality and pricing of services IAC agrees to provide to us; sales or other disposals by IAC of all or a portion of its ownership interest in us; and business combinations involving us.
We may not be able to resolve any potential conflicts, and even if we do, the resolution may be less favorable to us than if we were dealing with an unaffiliated third-party. While we are controlled by IAC, we may not have the leverage to negotiate amendments to our various agreements with IAC (if required) on terms as favorable to us as those we would negotiate with an unaffiliated third-party.
Share Price & Shareholder Rights - Risk 4
We rely on exemptions from certain Nasdaq corporate governance requirements that provide protection to stockholders of other companies.Because IAC owns more than 50% of the combined voting power of our outstanding capital stock, we are a "controlled company" under the Marketplace Rules of The Nasdaq Stock Market, LLC (the "Marketplace Rules"). As a "controlled company," we are exempt from compliance with certain Marketplace Rules related to corporate governance, including that a majority of our board of directors consists of "independent directors" (as defined in the Marketplace Rules) and that we have a nominating/governance committee composed entirely of independent directors with a written charter addressing the committee's purpose and responsibilities.
Accordingly, for so long as we are a "controlled company" and avail ourselves of these exemptions, our stockholders will not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of the Marketplace Rules.
Share Price & Shareholder Rights - Risk 5
IAC's desire to maintain flexibility with respect to its ability to distribute the shares of our capital stock it holds on a tax-free basis to its stockholders, and its desire to preserve the ability to maintain tax consolidation for U.S. federal income tax purposes, may prevent us from pursuing opportunities to raise capital, acquire other businesses or provide equity incentives to our employees, or otherwise impact our ability to manage our capital structure.Under current laws, IAC must retain beneficial ownership of at least 80% of our combined voting power and 80% of each class of our non-voting capital stock (if any is outstanding) in order to effect a tax-free distribution of our shares held by IAC to its stockholders. IAC has advised us that it does not have any present intention or plans to undertake such a tax-free distribution. However, IAC does currently intend to use its majority voting interest to retain its ability to engage in such a transaction. In addition, IAC must maintain ownership of at least 80% of our outstanding capital stock in order to maintain tax consolidation with us for U.S. federal income tax purposes. IAC has advised us that it currently intends to take such actions, or cause the Company to take such actions, as may be necessary in order to preserve tax consolidation. Each of these intentions may cause IAC not to support transactions that we wish to pursue that involve issuing shares of our capital stock, including for capital-raising purposes, as consideration for an acquisition or as equity incentives to our employees, or otherwise impact our overall capital management strategy. Our inability to pursue such transactions, or any reduced flexibility in the management of our capital structure, may adversely affect our business, financial condition and results of operations.
Share Price & Shareholder Rights - Risk 6
Future sales or distributions of shares of our capital stock by IAC could depress the price of our Class A common stock.IAC has the right to sell or distribute to its stockholders all or a portion of the shares of our capital stock that it holds. Although as of the date of this report IAC has advised us that it does not have any present intention or plans to undertake such a sale or distribution, sales by IAC in the public market or distributions to its stockholders of substantial amounts of our capital stock (shares of Class B common stock or Class A common stock) could depress the price of our Class A common stock. In addition, IAC has the right, subject to certain conditions, to require us to file registration statements covering the sale of the shares of our capital stock it holds or to include such shares in other registration statements that we may file. If IAC exercises these registration rights and sells all or a portion of the shares of our capital stock it holds, the price of our Class A common stock could decline.
Share Price & Shareholder Rights - Risk 7
The multiclass structure of our capital stock has the effect of concentrating voting control with IAC and limiting the ability of holders of our Class A common stock to influence corporate matters.Each share of our Class B common stock has ten votes per share and each share of our Class A common stock has one vote per share. As of December 31, 2024, IAC owned all of our outstanding shares of Class B common stock, and 2,588,180 outstanding shares of the Company's Class A common stock, in total representing approximately 85.3% of our total outstanding shares of capital stock and approximately 98.3% of the total combined voting power of our outstanding capital stock. Due to the ten-to-one voting ratio between our Class B common stock and Class A common stock, IAC (and any future holders of our Class B common stock, collectively) will continue to control a substantial majority of the combined voting power of our capital stock. This concentrated control will significantly limit the ability of holders of our Class A common stock to influence matters submitted to our stockholders for approval.
Share Price & Shareholder Rights - Risk 8
The difference in the voting rights of our Class B common stock and Class A common stock may harm the value and liquidity of our Class A common stock.This difference in voting rights between our Class B common stock and Class A common stock could harm the value of our Class A common stock to the extent that any investor or potential future purchaser of our Class A common stock ascribes value to the right of the holders of our Class B common stock to ten votes per share. The existence of two classes of common stock with different voting rights could result in less liquidity for our Class A common stock than if there were only one class of common stock, which could adversely affect the price of our Class A common stock.
Share Price & Shareholder Rights - Risk 9
The Delaware General Corporation Law and certain provisions in our amended and restated certificate of incorporation and bylaws may discourage, delay or prevent a change of control of our company and/or changes in our management.The Delaware General Corporation Law (the "DGCL") and our amended and restated certificate of incorporation and bylaws contain provisions that could discourage, delay or prevent a change in control of our Company and/or changes in our management that our stockholders may deem advantageous, including provisions that: (i) authorize the issuance of "blank check" preferred stock, which our board of directors could issue to discourage a takeover attempt; (ii) limit the ability of our stockholders to call special meetings of stockholders; and (iii) provide that our board of directors is expressly authorized to make, alter or repeal our bylaws.
Any provision of the DGCL or our amended and restated certificate of incorporation and bylaws that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a related premium for their Class A common stock and could also affect the price that some investors are willing to pay for our Class A common stock.
Share Price & Shareholder Rights - Risk 10
The choice of forum provision in our amended and restated bylaws could limit the ability of our stockholders to obtain the judicial forum of their choice for certain disputes.Our amended and restated bylaws provide that unless we consent in writing to the selection of an alternative forum, a state court within the State of Delaware (or, if no state court located within Delaware has jurisdiction, the federal district court for the District of Delaware) will be the sole and exclusive forum for all of the following actions: (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim for (or based on breach of) fiduciary duty owed by any of our current or former directors, officers or other employees to us or to our stockholders, (iii) any action asserting a claim against us or any of our current or former directors, officers or other employees pursuant to the DGCL, our certificate of incorporation or our bylaws, (iv) any action asserting a claim relating to or involving us that is governed by the internal affairs doctrine or (v) any action asserting an "internal corporate claim" (as defined under the DGCL). This choice of forum provision may limit the ability of our stockholders to bring claims in a judicial forum that they find favorable for disputes with us or our current or former directors, officers or other employees, which may discourage such lawsuits. Alternatively, if a court were to find our choice of forum provision to be inapplicable or unenforceable in an action, we could incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, results of operations, and financial condition.
Share Price & Shareholder Rights - Risk 11
The value of the shares of Class A common stock that current holders of IAC capital stock receive in the Distribution might be less than the value of shares of Class A common stock prior to the Distribution.Added
If the Distribution is completed, holders of IAC common stock and IAC Class B common stock will receive shares of our Class A common stock. The prices at which shares of our Class A common stock may trade at post-Distribution are unpredictable. The market value of one share of our Class A common stock following the Distribution may be less than, equal to or greater than the market value of one share of our Class A common stock prior to the Distribution.
Additionally, the value of shares of our Class A commons stock may be negatively impacted by a number of factors after the completion of the Distribution. Some of these matters are described in these risk factors, and others may or may not have been identified by us prior to the completion of the Distribution, and many of them are not within our control.
Share Price & Shareholder Rights - Risk 12
The market price and trading volume of our Class A common stock may be volatile and may face negative pressure.Added
We cannot accurately predict how our investors will behave after the Distribution. The market price for our shares of Class A common stock following the Distribution may be more volatile than the market price of our Class A common stock before the Distribution. The market price of shares of our Class A common stock could fluctuate significantly for many reasons, including the risks identified in this annual report or reasons unrelated to our performance. Among the factors that could affect the stock price of our Class A common stock are:
- actual or anticipated fluctuations in operating results;- changes in earnings estimated by securities analysts or in our ability to meet those estimates;- the operating and stock price performance of comparable companies;- changes to the regulatory and legal environment under which we operate;- changes in relationships with significant customers; and - domestic and worldwide economic conditions.
These factors, among others, may result in short- or long-term negative pressure on the value of our Class A common stock.
Share Price & Shareholder Rights - Risk 13
Substantial sales of our Class A common stock following the Distribution, or the perception that such sales might occur, could depress the market price of our Class A common stock.Added
Holders of IAC common stock or IAC Class B common stock may not wish to continue to hold the shares of our Class A common stock that they will receive as a result of the Distribution, which may lead to the disposition of a substantial number of shares of our Class A common stock following the Distribution. There is no assurance that there will be sufficient buying interest to offset any such sales, and, accordingly, the price of our Class A common stock may be depressed by those sales, or by the perception that such sales may occur, and have periods of volatility.
Share Price & Shareholder Rights - Risk 14
After the Distribution, our Class A common stock may not qualify for investment indices. In addition, our Class A common stock may fail to meet the investment guidelines of institutional investors. In either case, these factors may negatively impact the price of our Class A common stock and may impair our ability to raise capital through the sale of securities.Added
Some of the holders of IAC common stock are index funds tied to Nasdaq or other stock or investment indices, or are institutional investors bound by various investment guidelines. Companies are generally selected for investment indices, and in some cases selected by institutional investors, based on factors such as market capitalization, industry, trading liquidity and financial condition. Following the Distribution, our Class A common stock may not qualify for those investment indices. In addition, shares of our Class A common stock that are received in the Distribution may not meet the investment guidelines of some institutional investors. Consequently, these index funds and institutional investors may have to sell some or all of the shares of our Class A common stock they receive in the Distribution, and the price of shares of our Class A common stock may fall as a result. Any such decline could impair our ability to raise capital through future sales of securities.
Share Price & Shareholder Rights - Risk 15
Provisions in our certificate of incorporation and bylaws or Delaware law may discourage, delay or prevent a change of control, or changes in management and, therefore, depress the trading price of our Class A common stock.Added
The DGCL and our certificate of incorporation and bylaws currently contain provisions, and will be amended in connection with the Distribution to include provisions, that could discourage, delay or prevent a change in control, or changes in management that stockholders may deem advantageous, and provisions which:
- provide that, from and after the completion of the Distribution until our 2032 meeting of stockholders, our board of directors will be divided into classes, which could have the effect of making the replacement of incumbent directors more time-consuming and difficult;- provide that, as long as our board of directors is classified, members of our board of directors can be removed by stockholders only for cause;- provide that holders of our Class A common stock will not have the right to act by written consent following the Distribution;- provide that vacancies on our board of directors may be filled only by the remaining directors following the Distribution;- provide that, after the Distribution, we will be subject to the Delaware statute governing business combinations with interested stockholders;- authorize the issuance of "blank check" preferred stock or authorized but unissued shares of Class B common stock and/or Class C common stock that our board of directors could issue to increase the number of outstanding shares and to discourage a takeover attempt;- provide that our board of directors is expressly authorized to make, alter or repeal the bylaws;- provide that there will not be cumulative voting on the election of directors; and - establish advance notice procedures with respect to stockholder proposals and the nomination of candidates for election as directors, other than nominations made by or at the direction of our board of directors.
Any provision of our certificate of incorporation, our bylaws or Delaware law that has the effect of delaying, deterring or preventing a change in control could limit the opportunity for our stockholders to receive a premium for their shares of Class A common stock, and could also affect the price that some investors are willing to pay for such shares.
Share Price & Shareholder Rights - Risk 16
Our bylaws designate specified courts as the sole and exclusive forum for certain types of actions or proceedings that may be initiated by our stockholders, which could discourage lawsuits against the Company and its directors, officers and other employees.Added
Our bylaws provide that, unless we consent in writing to the selection of an alternative forum, a state court located in the State of Delaware (or, if no state court located within the State of Delaware has jurisdiction, the federal district court for the District of Delaware) will, to the fullest extent permitted by law, be the sole and exclusive forum for:
- any derivative action or proceeding brought on behalf of the Company;- any action asserting a claim for or based on a breach of a fiduciary duty owed by any current or former director or officer or other employee of the Company to the Company or its stockholders, including a claim alleging the aiding and abetting of such a breach of fiduciary duty;- any action asserting a claim against the Company or any current or former director or officer or other employee of the Company arising pursuant to any provision of the DGCL, our certificate of incorporation or our bylaws;- any action asserting a claim related to or involving the Company that is governed by the internal affairs doctrine; and - any action asserting an "internal corporate claim," as that term is defined in Section 115 of the DGCL.
The exclusive forum provisions do not apply to suits brought to enforce any liability or duty created by the Securities Exchange Act of 1934, as amended. The enforceability of similar exclusive forum provisions in other companies' organizational documents has been challenged in legal proceedings, and it is possible that a court could find the exclusive forum provisions in our bylaws to be inapplicable or unenforceable.
These exclusive forum provisions may limit a stockholder's ability to bring a claim in a judicial forum that such stockholder may find favorable for disputes with the Company or its directors, officers or employees, and may discourage lawsuits with respect to such claims and may increase the costs to bring such claims. Alternatively, if a court were to find these exclusive forum provisions inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings described above for each company, the applicable company may incur additional costs associated with resolving such disputes in other jurisdictions, which could have an adverse impact on the applicable company's business and financial condition.
Share Price & Shareholder Rights - Risk 17
If securities or industry analysts do not publish research or publish unfavorable research about us, the price and trading volume of our Class A common stock could decline.Added
The trading market for our Class A common stock is, and will continue to be, influenced by the research and reports that industry or securities analysts publish about us and our business. If one or more of these analysts ceases coverage, or fails to publish reports about the applicable company regularly, we could lose visibility in the financial markets, which in turn could cause our stock price and/or trading volume to decline. Moreover, if our operating results do not meet the expectations of the investor community, one or more of the analysts who cover us may change their recommendations, and the stock price could decline.
Accounting & Financial Operations1 | 2.0%
Accounting & Financial Operations - Risk 1
We do not expect to declare any regular cash dividends in the foreseeable future.Added
Debt & Financing2 | 4.0%
Debt & Financing - Risk 1
We may not be able to generate sufficient cash to service our indebtedness.Debt & Financing - Risk 2
We may not be able to engage in desirable capital-raising or strategic transactions following the Distribution.Added
Under current U.S. federal income tax law, a distribution that otherwise qualifies for tax-free treatment can be rendered taxable to the distributing corporation and its stockholders as a result of certain post-distribution transactions, including certain acquisitions of shares or assets of the corporation the stock of which is distributed. To preserve the tax-free treatment of the Distribution, the tax sharing agreement imposes certain restrictions on the Company and its subsidiaries during the two-year period following the Distribution (including restrictions on share issuances and repurchases, business combinations, sales of assets and similar transactions). The tax sharing Agreement also prohibits the Company from taking or failing to take any action that could reasonably be expected to prevent the Distribution from qualifying as a transaction that is generally tax-free for U.S. federal income tax purposes under Section 355 of the Code. These restrictions may limit the ability of the Company to pursue certain equity issuances, strategic transactions, repurchases or other transactions that it may otherwise believe to be in the best interests of its stockholders or that might increase the value of its business.
Corporate Activity and Growth3 | 6.0%
Corporate Activity and Growth - Risk 1
Some or all of the expected benefits of the Distribution may not be achieved.Added
Corporate Activity and Growth - Risk 2
After the Distribution, actual or potential conflicts of interest may develop between the management and directors of IAC, on the one hand, and Company management and directors, on the other hand.Added
After the completion of the Distribution, the management and directors of IAC and the Company may own capital stock of both companies, and certain members of IAC senior management team may continue to serve as directors of the Company after the Distribution. For example, Mr. Levin, who is the current, and following the Distribution will be the former, Chief Executive Officer of IAC, will serve as Executive Chairman of Angi following the Distribution. This overlap could create (or appear to create) potential conflicts of interest when directors and executive officers affiliated with both companies face decisions that could have different implications for IAC and the Company. For example, potential conflicts of interest could arise in connection with the resolution of any dispute between IAC and the Company regarding the relationship between IAC and the Company following the Distribution, including any commercial agreements between the parties or their affiliates. Potential conflicts of interest could also arise if IAC and the Company enter into any commercial arrangements in the future.
Corporate Activity and Growth - Risk 3
The synergies that IAC achieves with all of its businesses under the same corporate structure, and the benefits of those synergies that the Company enjoys, will cease to exist with regard to our businesses following the Distribution.Added
Currently, IAC's businesses share certain economies of scale in costs, human capital, vendor relationships and customer relationships with our businesses. While we expect to enter into third party agreements with respect to these matters after the Distribution, those arrangements may not fully capture the benefits that our businesses currently enjoy as a result of IAC's majority ownership. The loss of these benefits as a consequence of the Distribution could have an adverse effect on our business, financial condition and results of operations.
Legal & Regulatory
Total Risks: 11/50 (22%)Above Sector Average
Regulation4 | 8.0%
Regulation - Risk 1
Changes to certain requirements applicable to certain communications with consumers may adversely impact our ability to generate leads for our professionals.Changed
Regulation - Risk 2
IAC will provide certain services to us pursuant to a services agreement following the Distribution. When such services terminate, we will be required to replace such services, and the economic terms of the new arrangements may be less favorable to us.Added
IAC and the Company are party to a services agreement. In connection with the Distribution, we and IAC anticipate that we will update the schedule of services under the existing services agreement to provide that following the Distribution, IAC will provide us, for a fee, specified support services related to corporate functions for various terms following the Distribution (not to exceed one year), such as information security, legal, finance, human resources, tax, treasury services and participation in IAC's U.S. health and welfare, 401(k) and flexible benefits plans. As each of the foregoing services terminate, we will be required to enter into new agreements or assume the responsibility for these functions. We cannot assure you that the economic terms of the new arrangements will be similar to those under our current arrangements with IAC. If we are unable to renew or replace such arrangements on a comparable basis, our business, financial condition and results of operations may be materially and adversely affected.
Regulation - Risk 3
IAC or the Company may fail to perform under the agreements between them and the Company may be unable to replace some of these agreements.Added
IAC and the Company are party to a number of agreements that either include obligations relating to the Distribution, will be amended in connection with the Distribution or will survive the completion of the Distribution in accordance with their terms. Each party will rely on the other to satisfy its performance obligations under these agreements. If either party is unable to satisfy its obligations under these agreements, including its indemnification obligations, it could have a material adverse effect on the other party's business, financial condition and results of operations.
In addition, the Company may be required to enter into new agreements or assume the responsibility if and when certain of these agreements with IAC terminate. We cannot assure you that the economic terms of the new arrangements will be similar to those under our current arrangements with IAC. If we are unable to renew or replace such arrangements on a comparable basis, our business, financial condition and results of operations may be materially and adversely affected.
Regulation - Risk 4
The Distribution may be abandoned by IAC at any time prior to completion, and is subject to certain closing conditions that, if not satisfied or waived, will result in the Distribution not being completed.Added
The IAC board of directors may abandon the Distribution at any time prior to completion. In addition, the completion of the Distribution is subject to the satisfaction (or waiver) of a number of conditions, including the final approval of the IAC board of directors. Some of the conditions to the completion of the Distribution are outside of the Company's control. If any condition to the closing of the Distribution is not satisfied or waived, or if the IAC board of directors otherwise determines to abandon the Distribution, the Distribution will not be completed.
If IAC does not complete the Distribution, the market price of IAC or the Company's securities may fluctuate to the extent that the current market prices of those securities reflect a market assumption that the Distribution will be completed. The Company will also be obligated to pay certain legal and accounting fees and related expenses in connection with the Distribution, whether or not the Distribution is completed. In addition, the Company has expended, and will continue to expend, management resources in an effort to complete the Distribution.
Litigation & Legal Liabilities2 | 4.0%
Litigation & Legal Liabilities - Risk 1
In connection with the Distribution, IAC will indemnify us for certain liabilities, and we will indemnify IAC for certain liabilities, in each case, pursuant to existing agreements between IAC and us. If we are required to pay under these indemnities to IAC, our financial results could be negatively impacted.Added
Litigation & Legal Liabilities - Risk 2
The Distribution may result in litigation and/or regulatory inquiries and investigations, which would harm our business, financial condition and results of operations and could divert management attention.Added
In the past, securities class action litigation and/or shareholder derivative litigation and inquiries or investigations by regulatory authorities have often followed certain significant business transactions, such as the sale of a company or announcement of any other strategic transaction, such as the Distribution. Any litigation or investigation relating to the Distribution against us or IAC, whether or not resolved in either party's favor, could result in substantial costs and divert management's attention from other business concerns, which could adversely affect our business, financial condition and results of operations and the ultimate value of our Class A common stock.
Taxation & Government Incentives3 | 6.0%
Taxation & Government Incentives - Risk 1
If the Distribution were to fail to qualify as a transaction that is generally tax-free for U.S. federal income tax purposes, IAC, Angi and their respective stockholders could suffer material adverse consequences.Added
Taxation & Government Incentives - Risk 2
There may be adverse tax, legal and other consequences if the contractor classification or employment status of the professionals who use our platform is challenged.Changed
We are particularly sensitive to the adoption of worker classification laws, specifically, laws that could effectively require us to change our classification of certain of our professionals from independent contractors to employees, as well as changes to state and local laws or judicial decisions related to the definition and/or classification of independent contractors. We continue to monitor the worker classification laws to ensure compliance with their laws. If we are required to reclassify professionals from independent contractors to employees and/or their classification is challenged for any reason, we could be exposed to various liabilities and additional costs for prior and future periods, including under federal, state and local tax laws, workers' compensation and unemployment benefits, minimum and overtime wage laws, and other labor and employment laws, as well as potential liability for penalties and interest. If the amounts related to such liabilities and additional costs are significant, our business, financial condition and results of operations could be adversely affected. See Item 8 - Consolidated Financial Statements and Supplementary Data - Note 15 - Contingencies.
Taxation & Government Incentives - Risk 3
Our agreements with IAC will require us to indemnify IAC for certain tax liabilities and may limit our ability to engage in desirable strategic or capital-raising transactions.Pursuant to our tax sharing agreement with IAC, we generally will be responsible and will be required to indemnify IAC for: (i) all taxes imposed with respect to any consolidated, combined or unitary tax return of IAC or its subsidiaries that includes us or any of our subsidiaries to the extent attributable to us or any of our subsidiaries (excluding certain taxes attributable to Angi and its subsidiaries for taxable periods (or portions thereof) ending on or before the completion of the Combination), as determined under the tax sharing agreement, and (ii) all taxes imposed with respect to any consolidated, combined, unitary or separate tax returns of ours or any of our subsidiaries. To the extent IAC fails to pay taxes imposed with respect to any consolidated, combined or unitary tax return of IAC or one of its subsidiaries that includes us or any of our subsidiaries, the relevant taxing authority could seek to collect such taxes (including taxes for which IAC is responsible under the tax sharing agreement) from us or our subsidiaries.
Under the tax sharing agreement, we generally will be responsible for any taxes and related amounts imposed on IAC or us (or our respective subsidiaries) that arise from the failure of a future spin-off of IAC's retained interest in us to qualify as a transaction that is generally tax-free for U.S. federal income tax purposes under Section 368(a)(1)(D) and/or Section 355 of the Internal Revenue Code of 1986, as amended (the "Code"), to the extent that the failure to so qualify is attributable to: (i) a breach of the relevant representations and covenants made by us in the tax sharing agreement (or any representation letter provided in support of any tax opinion or ruling obtained by IAC with respect to the U.S. federal income tax treatment of such spin-off), (ii) an acquisition of our equity securities or assets or (iii) any other action or inaction by us after any such spin-off.
To preserve the tax-free treatment of any potential future spin-off by IAC of its interest in us, the tax sharing agreement restricts us and our subsidiaries, for the two-year period following any such spin-off (except in specific circumstances), from: (i) entering into any transaction pursuant to which shares of our capital stock would be acquired above a certain threshold, (ii) merging, consolidating or liquidating, (iii) selling or transferring assets above certain thresholds, (iv) redeeming or repurchasing stock (with certain exceptions), (v) altering the voting rights of our capital stock, (vi) actions and inactions that are inconsistent with representations or covenants in any tax opinion or private letter ruling document or (vii) ceasing to engage in any active trade or business as defined in the Code. The indemnity obligations and other limitations under the tax sharing agreement could have an adverse effect on our business, financial condition and results of operations.
Environmental / Social2 | 4.0%
Environmental / Social - Risk 1
The processing, storage, use and disclosure of personal data could give rise to liabilities and increased costs.Environmental / Social - Risk 2
Our success depends, in part, on our ability to access, collect and use personal data about consumers.We depend on search engines, digital app stores and social media platforms, in particular, those operated by Google, Apple and Facebook, to market, distribute and monetize our products and services. Consumers engage with these platforms directly, and as a result, these platforms generally receive personal data about consumers that we would otherwise receive if we transacted with them directly. Certain of these platforms have restricted (and continue to restrict) our access to personal data about users of our products and services obtained through their platforms. In addition, the privacy and data collection policies of certain platforms require users to opt-in to sharing their devices' unique identifiers with our businesses, which allow them to recognize a given device and track related activity across applications and websites, primarily for marketing purposes. If these platforms continue to limit, eliminate or otherwise interfere with our ability to access, collect and use personal data about users of our products and services, our ability to identify, communicate with, and market to a meaningful portion of our user base may be adversely impacted. If so, our customer relationship management efforts, our ability to identify, target and reach new segments of our user base and the population generally, and the efficiency of our paid marketing efforts could be adversely affected. We cannot assure you that search engines, digital app stores, and social media platforms upon which we rely will not continue to limit, eliminate or otherwise interfere with our ability to access, collect and use personal data about users of our products and services. To the extent that any or all of them do so, our business, financial condition and results of operations could be adversely affected.
Tech & Innovation
Total Risks: 9/50 (18%)Above Sector Average
Innovation / R&D2 | 4.0%
Innovation / R&D - Risk 1
Our success depends on our ability to continue to balance our various offerings to service professionals across the Angi platforms.Changed
Innovation / R&D - Risk 2
Our success depends, in part, on our ability to continue to develop and monetize versions of our products and services for mobile and other digital devices.As consumers increasingly access our products and services through mobile and other digital devices (including through digital voice assistants), we will need to continue to devote significant time and resources to ensure that our products and services are accessible across these platforms (and multiple platforms generally). If we do not keep pace with evolving online, market and industry trends including the continuing evolution of AI, the introduction of new and enhanced digital devices and changes in the preferences and needs of consumers and professionals generally, offer new and/or enhanced products and services in response to such trends that resonate with consumers and professionals, monetize products and services for mobile and other digital devices as effectively as our traditional products and services and/or maintain related systems, technology and infrastructure in an efficient and cost-effective manner, our business, financial condition and results of operations could be adversely affected.
In addition, the success of our mobile and other digital products and services depends on their interoperability with various third-party operating systems, technology, infrastructure and standards, over which we have no control. Any changes to any of these things that compromise the quality or functionality of our mobile and other digital products and services could adversely affect their usage levels and/or our ability to attract consumers and professionals, which could adversely affect our business, financial condition and results of operations.
Cyber Security3 | 6.0%
Cyber Security - Risk 1
We may not be able to protect our systems, technology and infrastructure from cyberattacks or cyberattacks experienced by third parties may adversely affect us.Cyber Security - Risk 2
If personal, confidential or sensitive user information that we maintain and store is breached or otherwise accessed by unauthorized persons, it may be costly to mitigate and our reputation could be harmed.We receive, process, store and transmit a significant amount of personal, confidential or sensitive user and subscriber information and, in the case of certain of our products and services, enable users and subscribers to share their personal information with each other. Our efforts to develop and maintain systems designed to protect the security, integrity and confidentiality of this information may not prevent inadvertent or unauthorized use or disclosure, and third parties may gain unauthorized access to this information. When such events occur, we may not be able to remedy them, we may be required by law to notify regulators and impacted individuals and it may be costly to mitigate the impact of such events and to develop and implement protections to prevent future events of this nature from occurring. When breaches of security (ours or that of any third party that we engage to store such information) occur, we could face governmental enforcement actions, significant fines, litigation (including consumer class actions) and the reputation of our brands and business could be harmed, any or all of which could adversely affect our business, financial condition and results of operations. Our insurance coverage for these matters may be insufficient to cover our losses, and in the future, we may be unable to obtain cybersecurity insurance on commercially reasonable terms. In addition, if any of the search engines, digital app stores or social media platforms through which we market, distribute and monetize our products and services were to experience a breach, third parties could gain unauthorized access to personal data about our users and subscribers, which could indirectly harm the reputation of our brands and business and, in turn, adversely affect our business, financial condition and results of operations.
Cyber Security - Risk 3
Credit card data security breaches or fraud could adversely affect our business, financial condition and results of operations.We accept payments (including recurring payments) from professionals and consumers, primarily through credit and debit card transactions. The ability to access payment information on a real-time basis without having to proactively reach out to professionals and consumers to process payments is critical to our success.
When third parties (including credit card processing companies, as well as any business that offers products and services online or offline) experience a data security breach involving credit card information, affected cardholders will often cancel their credit cards. The more sizable a given affected third-party's customer base, the greater the number of accounts impacted and the more likely it will be that our professionals and consumers would be impacted by such a breach. If such a breach were to impact our professionals and consumers, we would need to contact affected professionals and consumers to obtain new payment information. It is likely that we would not be able to reach all affected professionals and consumers, and even if we could, new payment information for some may not be obtained and pending payments may not be processed, which could adversely affect our business, financial condition and results of operations.
Even if our professionals and consumers are not directly impacted by a given data security breach, they may lose confidence in the ability of providers of online products and services to protect their personal information generally. As a result, they may stop using their credit cards online and choose alternative payment methods that are not as convenient for us or restrict our ability to process payments without significant effort, which could adversely affect our business, financial condition and results of operations.
Technology4 | 8.0%
Technology - Risk 1
Our success depends, in part, on the integrity, quality, efficiency and scalability of our systems, technology and infrastructure, and those of third parties.Technology - Risk 2
Our success will depend, in substantial part, on the continued migration of the home services market online.We believe that the digital penetration of the home services market remains low, with the vast majority of consumers continuing to search for, select and hire professionals offline. While many consumers have historically been (and remain) averse to finding professionals online, others have demonstrated a greater willingness to embrace the online shift. Professionals must also continue to embrace the online shift, which will depend, in substantial part, on whether online products and services help them to better connect and engage with consumers relative to traditional offline efforts. The speed and ultimate outcome of the shift of the home services market online for consumers and professionals is uncertain and may not occur as quickly as we expect, or at all. The failure or delay of a meaningful number of consumers and/or professionals to migrate online and/or the return of a meaningful number of existing participants in the online home services market to offline solutions, could adversely affect our business, financial condition and results of operations.
Technology - Risk 3
We rely on Internet search engines to drive traffic to our various properties. Certain operators of search services offer products and services that compete directly with our products and services. If links to websites offering our products and services are not displayed prominently in search results, traffic to our properties could decline and our business could be adversely affected.In addition to paid marketing, we rely heavily on Internet search engines, such as Google, to drive traffic to our properties through their unpaid search results. Although search results have allowed us to attract a large audience with low organic traffic acquisition costs in the past, if they fail to continue to drive sufficient traffic to our properties, we may need to increase our marketing spend to acquire additional traffic. We cannot assure you that the value we ultimately derive from any such additional traffic would exceed the cost of acquisition, and any increase in marketing expense may in turn harm our operating results.
The amount of traffic we attract from search engines is due in large part to how and where information about our brands (and links to websites offering our products and services) are displayed on search engine results pages. The display, including rankings, of unpaid search results can be affected by a number of factors, many of which are not in our direct control, and may change frequently. Search engines have made changes in the past to their ranking algorithms, methodologies and design layouts that have reduced the prominence of links to websites offering our products and services, and negatively impacted traffic to such websites, and we expect that search engines will continue to make such changes from time to time in the future. In addition, changes in the usage and functioning of search engines and/or decreases in consumer use of search engines, for example, as a result of the continued development of artificial intelligence technology, could negatively impact our ability to drive traffic to our properties.
However, we may not know how (or otherwise be in a position) to influence actions of this nature taken by search engines. With respect to search results in particular, even when search engines announce the details of their methodologies, their parameters may change from time to time, be poorly defined or be inconsistently interpreted.
In addition, in some instances, search engines may change their displays or rankings in order to promote their own competing products or services, or the products or services of one or more of our competitors. Any such action could negatively impact the search rankings of links to websites offering our products and services, or the prominence with which such links appear in search results. Our success depends on the ability of our products and services to maintain a prominent position in search results, and in the event operators of search engines promote their own competing products in the future in a manner that has the effect of reducing the prominence or ranking of our products and services, our business, financial condition and results of operations could be adversely affected.
Technology - Risk 4
Our ability to communicate with consumers and professionals via email (or other sufficient means) is critical to our success.Changed
Historically, one of our primary means of communicating with consumers and professionals and keeping them engaged with our products and services has been via email communication. Through email, we provide consumers and professionals with service request and offering updates, as well as present or suggest new products and services (among other things) and market our products and services in a cost-effective manner. As consumers increasingly communicate via mobile and other digital devices and messaging and social media apps, usage of email (particularly among younger consumers) has declined and we expect this trend to continue. In addition, deliverability and other restrictions could limit or prevent our ability to send emails to consumers and professionals. For example, in early 2024, email providers tightened their spam thresholds. Exceeding these more stringent spam thresholds could result in some or all of our emails being delayed or blocked, and therefore less likely to be opened. We cannot assure you that any alternative means of communication (for example, push notifications and text messaging) will be as effective as email has been historically.
Further, consumers also increasingly screen their incoming emails, telephone calls and text messages, including via screening tools and warnings, and, therefore, our professionals and consumers may not reliably receive our communications. A continued and significant erosion in our ability to communicate with consumers and professionals via email could adversely impact the overall user experience, consumer and professional engagement levels and conversion rates, which could adversely affect our business, financial condition and results of operations.
Ability to Sell
Total Risks: 4/50 (8%)Below Sector Average
Competition1 | 2.0%
Competition - Risk 1
Our brands and businesses operate in an especially competitive and evolving industry.Sales & Marketing1 | 2.0%
Sales & Marketing - Risk 1
Marketing efforts designed to drive traffic to our brands and businesses may not be successful or cost-effective.Brand / Reputation2 | 4.0%
Brand / Reputation - Risk 1
Our brands and businesses are sensitive to general economic events and trends, particularly those that adversely impact consumer confidence and spending behavior, as well as general geopolitical risks.Brand / Reputation - Risk 2
Our success depends, in substantial part, on our ability to maintain and/or enhance our brands, which could be negatively impacted by various factors.We own and operate two of the leading home services brands in the United States (Angi and HomeAdvisor), as well as leading brands in several foreign jurisdictions.
We believe that our success depends, in substantial part, on our continued ability to build awareness and loyalty to our Angi brand, maintain and enhance our established brands, as well as build awareness of (and loyalty to) our newer brands. Events that could negatively impact our brands and brand-building efforts include (among others): product and service quality concerns; professional quality concerns; consumer and professional complaints and lawsuits; lack of awareness of our policies or confusion about how the policies are applied; a failure to respond to feedback from our professionals and consumers; ineffective advertising; inappropriate and/or unlawful acts perpetrated by professionals and consumers; actions or proceedings commenced by governmental or regulatory authorities; and inadequate data protection and security breaches including related bad publicity. Any factors that negatively impact the Angi and/or HomeAdvisor brand(s) could materially and adversely affect our business, financial condition and results of operations.
In addition, trust in the integrity and objective, unbiased nature of the ratings and reviews found across our various brands contributes significantly to public perception of these brands and their ability to attract consumers and professionals. If consumer reviews are perceived as not authentic in general, the reputation and strength of the relevant brand could be materially and adversely affected. While we use, and will continue to use, filters (among other processes) to detect fraudulent reviews, the accuracy of consumer reviews cannot be guaranteed. If fraudulent or inaccurate reviews (positive or negative) increase and we are unable to effectively identify and remove such reviews, the overall quality of the ratings and reviews across our various brands could decrease and the reputation of affected brands might be harmed. This could deter consumers and professionals from using our products and services, which in turn could adversely affect our business, financial condition and results of operations.
Production
Total Risks: 3/50 (6%)Below Sector Average
Employment / Personnel2 | 4.0%
Employment / Personnel - Risk 1
Our success depends, in substantial part, on our ability to establish and maintain relationships with quality and trustworthy professionals.Changed
Employment / Personnel - Risk 2
We depend on our key personnel.Our future success depends upon our continued ability to identify, hire, develop, motivate and retain highly skilled, diverse and talented individuals, particularly in the case of senior leadership. Competition for well-qualified employees across our various businesses has been (and is expected to continue to be) intense, particularly in the case of senior leadership, technology and product development roles, and we must continue to attract new (and retain existing) employees to compete effectively. While we have established programs to attract new (and retain existing) key and other employees, we may not be able to do so in the future. If we fail to retain key and other employees, this could result in the loss of institutional knowledge and the disruption of our day-to-day operations, which could adversely impact the effectiveness of our internal control framework and our ability (and the ability of our various businesses) to successfully execute long term strategic initiatives and other goals. If we do not ensure the effective transfer of knowledge to successors and smooth transitions (particularly in the case of senior leadership) by way of tailored succession plans across Angi and our various businesses, our business, financial condition and results of operations could be adversely affected.
Supply Chain1 | 2.0%
Supply Chain - Risk 1
The services that IAC provides to us may not be sufficient to meet our needs.See a full breakdown of risk according to category and subcategory. The list starts with the category with the most risk. Click on subcategories to read relevant extracts from the most recent report.
FAQ
What are “Risk Factors”?
Risk factors are any situations or occurrences that could make investing in a company risky.
The Securities and Exchange Commission (SEC) requires that publicly traded companies disclose their most significant risk factors. This is so that potential investors can consider any risks before they make an investment.
They also offer companies protection, as a company can use risk factors as liability protection. This could happen if a company underperforms and investors take legal action as a result.
It is worth noting that smaller companies, that is those with a public float of under $75 million on the last business day, do not have to include risk factors in their 10-K and 10-Q forms, although some may choose to do so.
How do companies disclose their risk factors?
Publicly traded companies initially disclose their risk factors to the SEC through their S-1 filings as part of the IPO process.
Additionally, companies must provide a complete list of risk factors in their Annual Reports (Form 10-K) or (Form 20-F) for “foreign private issuers”.
Quarterly Reports also include a section on risk factors (Form 10-Q) where companies are only required to update any changes since the previous report.
According to the SEC, risk factors should be reported concisely, logically and in “plain English” so investors can understand them.
How can I use TipRanks risk factors in my stock research?
Use the Risk Factors tab to get data about the risk factors of any company in which you are considering investing.
You can easily see the most significant risks a company is facing. Additionally, you can find out which risk factors a company has added, removed or adjusted since its previous disclosure. You can also see how a company’s risk factors compare to others in its sector.
Without reading company reports or participating in conference calls, you would most likely not have access to this sort of information, which is usually not included in press releases or other public announcements.
A simplified analysis of risk factors is unique to TipRanks.
What are all the risk factor categories?
TipRanks has identified 6 major categories of risk factors and a number of subcategories for each. You can see how these categories are broken down in the list below.
1. Financial & Corporate
- Accounting & Financial Operations - risks related to accounting loss, value of intangible assets, financial statements, value of intangible assets, financial reporting, estimates, guidance, company profitability, dividends, fluctuating results.
- Share Price & Shareholder Rights – risks related to things that impact share prices and the rights of shareholders, including analyst ratings, major shareholder activity, trade volatility, liquidity of shares, anti-takeover provisions, international listing, dual listing.
- Debt & Financing – risks related to debt, funding, financing and interest rates, financial investments.
- Corporate Activity and Growth – risks related to restructuring, M&As, joint ventures, execution of corporate strategy, strategic alliances.
2. Legal & Regulatory
- Litigation and Legal Liabilities – risks related to litigation/ lawsuits against the company.
- Regulation – risks related to compliance, GDPR, and new legislation.
- Environmental / Social – risks related to environmental regulation and to data privacy.
- Taxation & Government Incentives – risks related to taxation and changes in government incentives.
3. Production
- Costs – risks related to costs of production including commodity prices, future contracts, inventory.
- Supply Chain – risks related to the company’s suppliers.
- Manufacturing – risks related to the company’s manufacturing process including product quality and product recalls.
- Human Capital – risks related to recruitment, training and retention of key employees, employee relationships & unions labor disputes, pension, and post retirement benefits, medical, health and welfare benefits, employee misconduct, employee litigation.
4. Technology & Innovation
- Innovation / R&D – risks related to innovation and new product development.
- Technology – risks related to the company’s reliance on technology.
- Cyber Security – risks related to securing the company’s digital assets and from cyber attacks.
- Trade Secrets & Patents – risks related to the company’s ability to protect its intellectual property and to infringement claims against the company as well as piracy and unlicensed copying.
5. Ability to Sell
- Demand – risks related to the demand of the company’s goods and services including seasonality, reliance on key customers.
- Competition – risks related to the company’s competition including substitutes.
- Sales & Marketing – risks related to sales, marketing, and distribution channels, pricing, and market penetration.
- Brand & Reputation – risks related to the company’s brand and reputation.
6. Macro & Political
- Economy & Political Environment – risks related to changes in economic and political conditions.
- Natural and Human Disruptions – risks related to catastrophes, floods, storms, terror, earthquakes, coronavirus pandemic/COVID-19.
- International Operations – risks related to the global nature of the company.
- Capital Markets – risks related to exchange rates and trade, cryptocurrency.