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INCOME TAXES
 9 Months Ended
Sep. 30, 2025
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
The Company is included within IAC’s tax group for purposes of federal and consolidated state income tax return filings through March 31, 2025. In all periods presented, the income tax provision and/or benefit has been computed for the Company on an as if standalone, separate return basis and payments to and refunds from IAC for the Company’s share of IAC’s consolidated federal and state tax return liabilities/receivables calculated on this basis have been reflected within cash flows from operating activities in the statement of cash flows. The tax sharing agreement between the Company and IAC remains in existence following the Distribution and governs the parties’ respective rights, responsibilities and obligations with respect to tax matters, including responsibility for taxes attributable to the Company, entitlement to refunds, allocation of tax attributes and other matters and, therefore, ultimately governs the amount payable to or receivable from IAC with respect to income taxes. Any differences between taxes currently payable to or receivable from IAC under the tax sharing agreement and the current tax provision or benefit computed on an as if standalone, separate return basis for GAAP are reflected as adjustments to additional paid-in capital in the statement of shareholders’ equity and financing activities within the statement of cash flows.
At the end of each interim period, the Company estimates the annual expected effective income tax rate and applies that rate to its ordinary year-to-date earnings or loss. The income tax provision or benefit related to significant, unusual, or extraordinary items, if applicable, that will be separately reported or reported net of their related tax effects are individually computed and recognized in the interim period in which they occur. In addition, the effect of changes in enacted tax laws or rates, tax status, judgment on the realizability of a beginning-of-the-year deferred tax asset in future years or unrecognized tax benefits is recognized in the interim period in which the change occurs.
For the three months ended September 30, 2025, the Company recorded an income tax provision of $10.2 million which represents an effective income tax rate of 49%. The effective income tax rate is higher than the statutory rate of 21% due primarily to changes to tax laws enacted in the period, the effect of cross-border tax laws and state taxes, partially offset by research credits. For the nine months ended September 30, 2025, the Company recorded an income tax provision of $21.4 million which represents an effective income tax rate of 37%. The effective income tax rate is higher than the statutory rate of 21% due primarily to the effect of cross-border tax laws, tax shortfalls generated by the vesting of stock-based awards and state taxes.
For the three and nine months ended September 30, 2024, the Company recorded an income tax benefit, despite pre-tax income, of $26.6 million and $18.5 million, respectively. For the three and nine months ended September 30, 2024, the effective income tax rates are higher than the statutory rate of 21% due primarily to the valuation allowance release for foreign net operating losses and research credits, partially offset by tax shortfalls generated by the vesting of stock-based awards.
As a result of the Distribution, the Company’s net deferred tax asset was adjusted via invested capital for tax attributes allocated to it from IAC consolidated federal and state tax filings. The allocation of tax attributes recorded as of March 31, 2025 is preliminary. Any subsequent adjustment to allocated tax attributes will be recorded as an adjustment to deferred taxes and additional paid-in capital. The Company also established a liability to IAC of $18.0 million via invested capital related to amounts owed pursuant to the tax sharing agreement when certain tax attributes are utilized. Any subsequent adjustment will be recorded as an adjustment to the liability and additional paid-in capital.
The Company recognizes interest and, if applicable, penalties related to unrecognized tax benefits in the income tax provision. Accruals for interest are not material and there are currently no accruals for penalties.
The Company’s income taxes are routinely under audit by federal, state, local and foreign authorities as a result of previously filed separate company and consolidated tax returns with IAC. These audits include questioning the timing and the amount of income and deductions and the allocation of income and deductions among various tax jurisdictions. The Internal Revenue Service has initiated an audit of IAC’s federal income tax return for fiscal year ending December 31, 2023, which includes operations of Angi legal entities. The start of this audit has not resulted in any changes to Angi’s financial positions. Returns filed in various other jurisdictions are open to examination for tax years beginning with 2015.
At September 30, 2025 and December 31, 2024, the Company has unrecognized tax benefits, including interest, of $11.8 million and $9.7 million, respectively. If unrecognized tax benefits at September 30, 2025 are subsequently recognized, the income tax provision would be reduced by $11.1 million. The comparable amount as of December 31, 2024 is $9.1 million. The Company believes that it is reasonably possible that its unrecognized tax benefits could decrease by $0.7 million by September 30, 2026 due to statute expirations and settlements; $0.6 million of which would reduce the income tax provision.
The Company regularly assesses the realizability of deferred tax assets considering all available evidence including, to the extent applicable, the nature, frequency and severity of prior cumulative losses, forecasts of future taxable income, tax filing status, the duration of statutory carryforward periods, available tax planning and historical experience. At September 30, 2025, the Company has a U.S. gross deferred tax asset of $193.4 million that the Company expects to fully utilize on a more likely than not basis. Of this amount, $25.1 million will be utilized upon the future reversal of deferred tax liabilities and the remaining net deferred tax asset of $168.3 million will be utilized based on forecasts of future taxable income. The Company’s most significant net deferred tax asset relates to U.S. federal net operating loss (“NOL”) carryforwards of $65.5 million. The Company expects to generate sufficient future taxable income of at least $311.9 million to fully realize this deferred tax asset.
On July 4, 2025, the United States enacted tax reform legislation through the One Big Beautiful Bill Act (“OBBBA”). Included in this legislation are provisions that allow for the immediate expensing of domestic United States research and development expenses, immediate expensing of certain capital expenditures, and other changes to the U.S. taxation of profits derived from foreign operations. The Company reflected necessary adjustments in the Consolidated Financial Statements for the quarter ended September 30, 2025.