October 24, 2012

Angie's List Reports Third Quarter 2012 Results

  • Third quarter and year-to-date revenues increased to $42.0 and $109.6 million, up 75% over the prior year quarter.
  • Third quarter and year-to-date service provider revenue increased to $29.3 and $75.6 million, up 96% over the prior year quarter.
  • Total paid memberships of 1,656,768 at September 30, 2012, up 68% year-over-year.
  • Cost per acquisition ("CPA") in the third quarter was $76, a decrease of 3% over the prior year period, despite an increased marketing spend of 39%.

INDIANAPOLIS, Oct. 24, 2012 (GLOBE NEWSWIRE) -- Angie's List (Nasdaq:ANGI) announced today third quarter 2012 financial results for the quarter ended September 30, 2012.

"We are having a very good year. Third quarter was our 43rd consecutive quarter of record revenue. Household acquisition costs and renewals were excellent," said Angie's List CEO Bill Oesterle. "Advertising sales were even better. First year advertising revenue originations have grown 106% year-over-year. In addition, service provider revenue renewal rate remained over 100%. This dynamic should contribute significant additional margin in the coming quarters." 

Three months ended 9/30/2012      
  9/30/12 9/30/11  Change
 Total paid memberships (end of period)   1,656,768  988,224 68%
 Gross paid memberships added (in period)   341,522  240,334 42%
 Marketing cost per paid membership acquisition (in period)   $ 76  $ 78 -3%
 First-year membership renewal rate (in period)  76% 76%  flat 
 Average membership renewal rate (in period)  78% 78%  flat 
 Participating service providers (end of period)   33,209  21,927 51%
 Total service provider contract value (end of period, in thousands)   $ 119,091  $ 65,104 83%
       
       
 Nine months ended 9/30/2012       
  9/30/12 9/30/11  Change
 Gross paid memberships added (in period)   862,014  557,061 55%
 Marketing cost per paid membership acquisition (in period)   $ 83  $ 86 -3%
 First-year membership renewal rate (in period)  76% 76%  flat 
 Average membership renewal rate (in period)  78% 79%  -100bp 

Market Cohort Analysis

"Our most mature cohort continues to demonstrate the potential for the entire business. We're continuing to see high growth with memberships growing 44% in that cohort and high contribution," Oesterle stated.




Cohort


# of Markets


Avg. Revenue/ Market

Membership
Revenue/Paid Membership
Service
Provider
Revenue/Paid Membership
Avg.
Marketing Expense/
Market


Total Paid Memberships

Estimated Penetration
Rate

Annual
Membership Growth Rate
                 
Pre 2003  10  $ 4,350,693  $ 43.98  $ 107.53  $ 1,249,986  338,863 8.5% 44%
2003 - 2007  35  2,364,197  37.20  78.66  1,284,796  898,962 6.3% 70%
2008 - 2010  103  99,116  14.53  19.53  182,659  384,002 6.4% 78%
Post 2010  57  7,922  9.99  11.07  55,533  34,941 3.5% *
                 
  205          1,656,768    
Cohort table presents financial and operational data for the twelve months ended 9/30/2012
* Not meaningful

Third Quarter Results

Third quarter 2012 total revenue was $42.0 million, an increase of 75% from $24.0 million in the prior year period. Service provider revenue was the largest component of total revenue at $29.3 million and the fastest growing with a 96% growth rate. Marketing expense was up 39%, or $7.3 million, over the prior year period. Net loss was $18.5 million, with selling expense of $16.2 million and marketing expense of $26.1 million, compared to a net loss of $17.4 million with selling expense of $8.7 million and marketing expense of $18.8 million in the prior year period. Adjusted EBITDA, a non-GAAP financial measure, was a loss of $16.5 million, compared to a loss of $13.9 million in the prior year period.

For the nine months ended September 30, 2012, total revenue was $109.6 million, an increase of 75% from $62.6 million in the prior year period. Service provider revenue grew to $75.6 million, up 96% from the prior year period. Marketing expense was up 49%, or $23.3 million, over the prior year period. Net loss was $55.3 million, with selling expense of $43.0 million and marketing expense of $71.3 million, compared to a net loss of $43.2 million with selling expense of $22.4 million and marketing expense of $48.0 million in the prior year period. Adjusted EBITDA, a non-GAAP financial measure, was a loss of $49.8 million, compared to a loss of $35.8 million in the prior year period. The cash balance at September 30, 2012 was $65.5 million. In addition, the Company has a $15.0 million unused capacity on its line of credit.

"The positive unit economics of our business drove our results in the third quarter and we look forward to continued growth in the fourth quarter," stated Bob Millard, Angie's list CFO. "Based on normal seasonal trends, we will scale back on our marketing investment in the fourth quarter."

Business Outlook

The Company's financial and operating expectations for the fourth quarter and full year of 2012 are as follows:

  • Total revenue in the range of $45.0 million to $46.0 million for the fourth quarter.
  • Marketing expense in the range of $8.5 million to $9.5 million for the fourth quarter.

The Company has agreed on the principal terms of the purchase of its campus headquarters in Indianapolis from an affiliate of its CEO for approximately $6.25 million. The transaction, which is expected to close in the fourth quarter, will result in annual reduction in rental expense of approximately $1.5 million. Management believes they will be able to obtain long-term financing, but the transaction is not conditioned on obtaining financing.

Conference Call Information

The company will host a conference call at 5:00 PM (ET) / 2:00 PM (PT) to discuss the quarterly financial results with the investment community. A live webcast of the event will be available on the Angie's List Investor Relations website at http://investor.angieslist.com/

A live domestic dial-in is available at (877) 380-5664 or (253) 237-1143 internationally. An audio replay will be available at (855) 859-2056 domestically or (404) 537-3406 internationally, using Conference ID 39662368 through October 31, 2012.

Live audio webcast of the presentations will be available on Angie's List Investor Relations website at http://investor.angieslist.com/

About Angie's List

Angie's List helps consumers have happy transactions with local service professionals in more than 550 categories of service, ranging from home improvement to health care. More than 1.5 million subscribers across the U.S. share their consumer experiences and use Angie's List to gain unlimited access to local ratings, exclusive discounts, the Angie's List magazine, the Angie's List complaint resolution service and information about how to make the most of their home improvement projects.

Non-GAAP Financial Measures

In addition to providing financial measurements based on generally accepted accounting principles in the United States (GAAP), Angie's List has disclosed in this press release financial information that has not been prepared in accordance with GAAP. This information includes non-GAAP Adjusted EBITDA, which Angie's List defines as earnings before interest, income taxes, depreciation, amortization, loss on debt extinguishment, and non-cash stock-based compensation. Angie's List uses Adjusted EBITDA internally in analyzing its financial results and has determined to disclose this measure to investors because it believes it will be useful to them, as a supplement to GAAP measures, in evaluating Angie's List's operating performance relative to its industry sector and competitors. Angie's List believes that the use of Adjusted EBITDA provides additional insight for investors to use in evaluation of ongoing operating results and trends. However, non-GAAP financial measures such as Adjusted EBITDA should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Angie's List has significant uses of cash flows, including capital expenditures and other contractual commitments, interest payments and income taxes that are not reflected in adjusted EBITDA. Adjusted EBITDA does not consider the potentially dilutive impact of issuing non-cash stock-based compensation to Angie's List's management and other employees. It should also be noted that other companies, including companies in the same industry, may calculate adjusted EBITDA in a different manner than Angie's List. Angie's List has provided a reconciliation of Adjusted EBITDA measure to the most directly comparable GAAP financial measure. 

Forward-Looking and Cautionary Statements

This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding expected revenue, future marketing expense and growth opportunities. These forward-looking statements are based on Angie's List's current assumptions, expectations and beliefs and involve substantial risks and uncertainties that may cause results, performance or achievement to materially differ from those expressed or implied by these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to: our ability to accurately measure and predict revenue per paid membership, membership acquisition costs or costs associated with servicing our members; our ability to protect our brand and maintain our reputation among consumers and local service providers; our ability to attract and retain local service providers to advertise on our service; our ability to increase our pricing on memberships and service provider contracts as we increase our market penetration; our ability to replicate our business model in our less penetrated markets; our success in converting consumers and local service providers into paid memberships and participating service providers; competitive factors; our ability to stay abreast of modified or new laws and regulations applying to our business, including those regarding sales or transaction taxes and privacy regulation; our ability to adequately protect our intellectual property; our ability to manage our growth; and general economic conditions worldwide.

Further information on these factors and other risks that may affect our business is included in filings we make with the Securities and Exchange Commission from time to time, including Angie's List's Annual Report on Form 10-K and its subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

These documents are or will be available online from the SEC or on the SEC Filings section of the Investor Relations section of our website at http://investor.angieslist.com. Information on our website is not part of this release. All forward-looking statements in this press release are based on information currently available to us, and we assume no obligation to update these forward-looking statements in light of new information or future events.

Angie's List, Inc.
Condensed Consolidated Balance Sheet
(in thousands)
 
  September 30, December 31,
  2012 2011
   (Unaudited)  
Assets    
Cash $65,497 $88,607
Restricted cash 50 300
Accounts receivable, net 7,290 3,937
Prepaid expenses and other current assets 19,829 11,835
Total current assets 92,666 104,679
     
Property and equipment, net 5,384 3,883
Goodwill 415 415
Amortizable intangible assets, net 2,630 1,555
Deferred financing fees, net 694 866
Total assets $101,789 $111,398
     
Liabilities and shareholders' deficit  
Accounts payable $9,418 $5,266
Accrued liabilities 23,118 10,532
Deferred membership revenue 27,718 17,153
Deferred advertising revenue 20,162 13,643
Total current liabilities 80,416 46,594
     
Long-term debt, including accrued interest 14,857 14,820
Deferred membership revenue, noncurrent 4,385 3,751
Deferred advertising revenue, noncurrent 260 239
Deferred income taxes 158 158
Total liabilities 100,076 65,562
     
Shareholders' equity:    
Common stock 66 65
Additional paid-in-capital 247,150 235,950
Treasury stock (23,719) (23,719)
Accumulated deficit (221,784) (166,460)
Total shareholders' equity 1,713 45,836
Total liabilities and shareholders' equity $101,789 $111,398
 
Angie's List, Inc. 
Consolidated Statements of Operations 
(in thousands, except share and per share data) 
         
         
  Three Months Ended September 30, Nine Months Ended September 30,
  2012 2011 2012 2011
  (Unaudited) (Unaudited)
Revenue        
Membership  $12,769 $9,109 $34,036 $24,082
Service provider  29,253 14,899 75,584 38,512
Total revenue  42,022 24,008 109,620 62,594
Operating expenses        
Operations and support  7,140 4,697 19,631 12,294
Selling  16,240 8,736 42,974 22,392
Marketing  26,088 18,760 71,316 47,991
Technology  4,905 2,277 12,223 6,003
General and administrative  5,669 4,365 17,420 12,730
Operating loss    (18,020)   (14,827)   (53,944)   (38,816)
Interest expense  467 712 1,380 2,519
Loss on debt extinguishment 1,830 1,830
Loss before income taxes    (18,487)   (17,369)   (55,324)   (43,165)
Income tax expense 
Net loss  $ (18,487) $ (17,369) $ (55,324) $ (43,165)
Net loss per common share—basic and diluted  $ (0.32) $ (0.66) $ (0.96) $ (1.59)
         
Weighted average number of common shares outstanding—basic and diluted  57,768,777   26,141,678 57,369,674 27,125,491
         
Non-cash stock-based compensation        
Technology $225 $62 $563 $362
General and administrative 545 486 1,650 1,482
Total non-cash stock-based compensation $770 $548 $2,213 $1,844
         
         
         
Reconciliation of adjusted EBITDA to net income:        
Net loss: $ (18,487) $ (17,369) $ (55,324) $ (43,165)
Income tax
Interest expense 467 712 1,380 2,519
Depreciation and amortization 741 429 1,960 1,195
Loss on debt extinguishment 1,830 1,830
Non-cash stock-based compensation 770 548 2,213 1,844
Adjusted EBITDA loss $ (16,509) $ (13,850) $ (49,771) $ (35,777)
CONTACT: Investor Relations at Angie's List

         888-619-2655

         investorrelations@angieslist.com

         

         Or

         

         Brinlea Johnson or Allise Furlani

         The Blueshirt Group for Angie's List

         212-331-8424 or 212-331-8433

         brinlea@blueshirtgroup.com or allise@blueshirtgroup.com

 

 


Close window | Back to top

Copyright 2014 Angie's List