TRANSACTION AND INTEGRATION RELATED COSTS IN CONNECTION WITH THE COMBINATION

3 Months Ended

Mar. 31, 2018

TRANSACTION AND INTEGRATION RELATED COSTS IN CONNECTION WITH THE COMBINATION

BUSINESS COMBINATIONS

Angie's List Combination

Through the Combination, the Company acquired 100% of the common stock of Angie's List on September 29, 2017 for a total purchase price valued at $781.4 million.

HomeStars Acquisition

The Company acquired a 90% voting interest in HomeStars on February 8, 2017. The purchase price was $16.6 CAD million (or $12.7 million) in cash. In connection with the acquisition, the Company measured and recorded the acquisition date fair value of the 10% noncontrolling interest in HomeStars, which totaled $1.9 CAD million (or $1.4 million).

MyBuilder Acquisition

The Company acquired a 75% voting interest in MyBuilder Limited on March 24, 2017. The purchase price was £32.6 million (or $40.7 million) in cash. In connection with the acquisition, the Company measured and recorded the acquisition date fair value of the 25% noncontrolling interest in MyBuilder, which totaled £10.7 million (or $13.3 million).

MyHammer Acquisition

On November 3, 2016, the Company acquired a 70% voting interest in MyHammer. The purchase price was €17.7 million (or $19.7 million) in cash. In connection with the acquisition, the Company measured and recorded the acquisition date fair value of the 30% noncontrolling interest in MyHammer, which totaled €9.4 million (or $10.4 million). At March 31, 2018, the Company's ownership stake in MyHammer is 81.6%.

Unaudited pro forma financial information

The unaudited pro forma financial information in the table below presents the combined results of the Company and Angie's List, HomeStars, MyBuilder and MyHammer as if these acquisitions had occurred on January 1, 2016. The unaudited pro forma financial information includes adjustments required under the acquisition method of accounting and is presented for informational purposes only and is not necessarily indicative of the results that would have been achieved had the acquisitions actually occurred on January 1, 2016. For the three months ended March 31, 2017, pro forma adjustments include increases in stock-based compensation expense of $14.7 million and amortization of intangibles of $12.3 million.



	Three Months Ended March 31, 2017
	(In thousands, except per share data)
Revenue	$	226,698
Net earnings attributable to ANGI Homeservices Inc. shareholders	$	16,520
Basic earnings per share attributable to ANGI Homeservices Inc. shareholders	$	0.04
Diluted earnings per share attributable to ANGI Homeservices Inc. shareholders	$	0.04

TRANSACTION AND INTEGRATION RELATED COSTS IN CONNECTION WITH THE COMBINATION

During the three months ended March 31, 2018, the Company incurred $2.5 million in costs related to the Combination (including severance, retention and integration related costs) as well as a deferred revenue write-off of $2.8 million. The Company also incurred $19.1 million in stock-based compensation expense during the three months ended March 31, 2018 related to the modification of previously issued HomeAdvisor equity awards and the expense related to previously issued Angie's List equity awards, both of which were converted into ANGI Homeservices' equity awards in the Combination, and the acceleration of expense related to certain converted equity awards resulting from the termination of Angie's List employees in connection with the Combination.

A summary of the costs incurred, payments made and the related accrual is presented below.



	Three Months Ended March 31, 2018
	(In thousands)
Integration related costs	$	2,504
Stock-based compensation expense	19,106
Total	$	21,610



	Three Months Ended March 31, 2018
	(In thousands)
Accrual as of January 1	$	8,480
Charges incurred	2,504
Payments made	(8,214		)
Accrual as of March 31	$	2,770

The costs are allocated as follows in the accompanying consolidated statement of operations:



	Three Months Ended March 31, 2018
	Integration Related Costs		Stock-based Compensation Expense		Total
	(In thousands)
Cost of revenue	$	—	$	—	$	—
Selling and marketing expense	—		410		410
General and administrative expense	2,504		16,704		19,208
Product development expense	—		1,992		1,992
Total	$	2,504	$	19,106	$	21,610