Coming off his company’s first full quarter after closing on the acquisition of Angie’s List, ANGI Homeservices Inc. CEO Chris Terrill told IBJ he is feeling “bullish” about the company’s overall prospects and its future in Indianapolis.
On Thursday, Golden, Colorado-based ANGI Homeservices—the publicly traded enterprise that combined Angie’s List and HomeAdvisor—reported an 80 percent year-over-year quarterly revenue increase. The company registered an operating loss of $33.9 million due to costs and deferred revenue write-offs connected to the Angie’s List deal, but excluding the transaction-related items, quarterly operating income rose from $6.2 million to $13.3 million.
“It was a strong quarter,” Terrill said. “We feel good about where we are going.”
Part of the feel-good story, Terrill said, is the performance of Angie’s List.
“When we did the deal, the assumption was [Angie’s List] was a declining brand,” Terrill said. “It’s been a nice re-set combining the two properties. … It’s a healthier business than it was just a year ago. We’re quite bullish on it long-term.”
IAC, the New York-based parent company of HomeAdvisor, announced in May 2017 that it has agreed to buy Indianapolis-based Angie’s List Inc. in a cash-and-stock deal worth $505 million. That deal closed in October.
Before the merger, HomeAdvisor had about 156,000 service providers, which pay for their leads, and some 15 million service requests per month. Angie’s List had about 5 million members, most of them free, and about 56,000 service providers, which buy advertising from the company.
Terrill said his company is focused on “three buckets of synergy.”
The first is cost savings, which Terrill said is “ahead of projections.”
The second, Terrill said is “synergy of [web] traffic.”
“Angie’s List has had a lot of traffic, but they couldn’t monetize it,” Terrill said. “HomeAdvisor has a strong monetization engine.” He added that ANGI Homeservices is working on best practices to maximize the conversion rate.
One of the Angie’s List issues being addressed, Terrill said, is the number of people who are “bounced off paywalls.”
“It was an advertising model,” he said, adding that it didn’t effectively “funnel [users] through the process. It was a mismatch of supply and demand.”
HomeAdvisor, on the other hand, has a system that charges service providers based on how many connections they make with people seeking their services, a system Terrill said encourages companies big and small to participate in.
Part of the plan is to reduce the number of paying subscribers, while getting more people looking for services through the system.
“We’re getting to a much more healthy base,” Terrill said. “Soon, we’ll have a really healthy ecosystem.”
The third bucket of synergy, Terrill said, is a “unified sales force.”
Terrill said that part will take some time, with early testing taking place this year with implementation planned for 2019 and beyond.
Terrill thinks the full benefits of the merger will begin to be felt in the “latter part of next year.”
In the meantime, he said no more staff cuts are planned, and the company aims to have Angie’s List 17.5-acre campus on the near east side of Indianapolis sold in the next few months and have the staff moved entirely to its new location at 130 E. Washington St. by August. Terrill thinks moving from a campus of separate buildings into a single structure will improve communication and collaboration at the Indianapolis operation.
While Terrill said ANGI officials are working “with an interested party” on the sale of the Indianapolis campus, he declined to divulge details.
In September, 230 Angie’s List employees were layed off. In October, Terrill told IBJ in a wide-ranging interview that Angie’s List accounted for 1,010 of ANGI’s 3,855 employees. On Thursday, Terrill said those numbers remain largely unchanged, but he expects the company’s Indianapolis work force to increase going forward.
“We’re still keeping a dramatic presence in downtown Indianapolis and anticipate being a big part of the Indy tech scene for a long time,” Terrill said. “We’re in the early innings [of the acquisition], but we’re definitely hoping for growth in Indianapolis. We’re in a better place today, and we’ll be in a better place a year from now. I’d be disappointed if we didn’t add to our workforce there.”