ANGI

Angi is a textbook 'shrink-to-profitability' story, and the market is pricing the shrink far more than the profitability. Revenue fell 13% to $1.03B in FY2025 — the fourth straight annual decline, down 41% from the $1.76B FY2022 peak — yet operating income nearly tripled (+198.9% to $65.4M), net income grew 19% to $43.8M, and diluted EPS rose 32.4% to $0.94. That divergence is the whole thesis: management is trading top-line for margin, and it's working on the bottom line. At $6.06 the stock trades at just 6.4x earnings and 0.3x sales, with an 8.4% reduction in share count (buybacks) amplifying EPS. Operating cash flow of $105M against $59.6M capex leaves roughly $45M of free cash flow, so the earnings are cash-real, not accounting artifacts.

The balance sheet is adequate but not pristine: $304M cash (down 27%) against $498M long-term debt is ~$194M net debt, comfortably serviceable at this cash-generation rate, though the accumulated deficit (-$151M retained earnings) reminds you this is a business that only recently reached GAAP profitability. The 95.4% gross margin reflects the asset-light lead-gen model, but the thin 6.3% operating and 4.3% net margins show how much of that gross profit gets consumed by sales/marketing to keep filling the funnel — the core tension for a business whose revenue is contracting.