IBJNews

Angie’s List expected to continue financial losses

Back to TopCommentsE-mailPrintBookmark and Share

Angie’s List Inc. is expected to continue its streak of financial losses when reporting its first earnings as a public company after the stock market closes on Wednesday.

Analysts surveyed by Thomson Reuters predict the Indianapolis-based provider of online consumer reviews will post a loss of 11 cents per share for the quarter ended Dec. 31. Based on approximately 56.9 million outstanding shares, the loss would total more than $6.2 million.

Earnings in the current quarter, which ends March 31, are expected to be even worse. A per-share loss of 19 cents is forecast, or approximately $10.8 million.

The company, which provides reviews of plumbers, electricians and other service providers, hasn’t turned an annual profit since it was founded 17 years ago. It reported a net loss of $43.2 million in the nine months ended Sept. 30, 2011, more than the $19 million loss during the same period in 2010.

But at least one of the half-dozen analysts following Angie’s List is bullish on its long-term outlook. Jordan Rohan of the Stifel Nicolaus & Co. office in New York rates the stock a “buy” and thinks shares could rise to $21 each within the next three years.

Angie’s List went public in mid-November after raising $114 million in an initial public offering. The company sold 8.8 million shares for $13 apiece, and shares quickly surged to as high as $18.75 in its trading debut.

The stock opened at $14.93 on Wednesday morning, still above its debut price, but descended some 50 cents in early trading.

“Angie’s List can reach profitability any time the management team sees fit,” Rohan said in an e-mail. “There is a tradeoff between the hyper-growth of the member base and profitability of the company."

Spending on national advertising to support its growth isn’t cheap. The company spent $48 million on advertising through the first nine months of 2011, a 58-percent increase from the same period a year earlier, according to a Securities and Exchange Commission filing.

The company’s ability to become profitable has been a concern of market experts since Angie’s List announced its intention to go public in late August.

Angie’s List is available in 175 U.S. markets and entered 135 of those within the past three years, driving up expenses. As those markets mature, however, marketing expenses should decrease, helping the company to ultimately become profitable, Rohan said.

Angie's List currently claims membership of more than 1 million paying households.

Stifel Nicolaus projects a $3 million loss, before special charges such as interest and amortization, in the fourth quarter. Earnings from the three months ended Dec. 31 will be reported late Wednesday afternoon.

“If the loss is narrower, we believe the trajectory toward profitability will be clear,” Rohan said.

Fourth-quarter revenue is expected to rise to $25.4 million, up from $16.1 million in the year-earlier period, according to analysts in the Thomson Reuters survey.  For the current quarter, analysts predict revenue of $28.4 million.

Angie’s List should have ended 2011 with $88 million in revenue, up 49 percent from $59 million in 2010, according to analysts.

Angie Hicks started the company in 1995 and served as its president until 1998. Now chief marketing officer, Hicks has trimmed her stake in the company from 1.8 percent to 1.5 percent.
 

ADVERTISEMENT

  • Good for marketing
    I'm not only a member of AL, I'm also a business owner with positive AL reviews. I don't pay to be on the #1 spot (I'm far from it). However, when I say that I'm the only computer repair company in Madison County that has AL reviews, their jaws drop in awwwh. Priceless. The sole reason I purchased a membership was to save $100 off waterproofing my basement. It's not the end all be all, but it's good for marketing. Yes, Google reviews are free, but my dog Bullems can post a google review.
  • Puzzling
    It's all wrong. Concept, business plan, inaccurate and misleading marketing. You're right "J", why should consumers pay in this free information platform? Why keep great businesses from their customers? A.L wasn't built for the internet era. It's either back to the drawing board or pack it up.
  • Sorry Angie
    I am not surprised. The business model for this company makes no sense whatsoever. The firms that provided the underwriting for the stock offering cannot prop this stock up forever. I still view this stock to be a short sale opportunity going forward.
  • Millions
    The City of Indianapolis recently gave Angie's $7.1 million in incentives for their campus. Is this what you do for a company that is not profitable? On the other hand, I do subscribe to their service, but still have trouble finding reputable service providers despite their good ratings on the list.
  • Financial Status
    They have a large job fair today touting the very attractive compensation salaries. Maybe this is part of the problem when it comes to their financial standing and the lack of profit in 17 years...makes you wonder.
  • Try it; You'll like it!
    J, have you tried the Angie's List service? I think you'll be able to answer your own question in the affirmative relative to AL's ability to remain relevant given whatever current competition exists. You know what you get when hiring a contractor because of the integrity of the members and that far out weighs the small annual fee (that can be billed monthly).
  • Not likely
    I have seen hundreds of their commercials and to date I have not used them once. Maybe its because the concept is wrong time, wrong place? No idea. I just know that everything is marketing and this typebusiness never had a for holdand likely will never.
  • Sell Sell Sell
    I just don't see how a pay-per-month review service can last long-term. There are so many free options to get business reviews (Google Maps).

    This article seems quite optimistic.

    Post a comment to this story

    COMMENTS POLICY
    We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
     
    You are legally responsible for what you post and your anonymity is not guaranteed.
     
    Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
     
    No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
     
    We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
     

    Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

    Sponsored by
    ADVERTISEMENT

    facebook - twitter on Facebook & Twitter

    Follow on TwitterFollow IBJ on Facebook:
    Follow on TwitterFollow IBJ's Tweets on these topics:
     
    Subscribe to IBJ
    1. Apologies for the wall of text. I promise I had this nicely formatted in paragraphs in Notepad before pasting here.

    2. I believe that is incorrect Sir, the people's tax-dollars are NOT paying for the companies investment. Without the tax-break the company would be paying an ADDITIONAL $11.1 million in taxes ON TOP of their $22.5 Million investment (Building + IT), for a total of $33.6M or a 50% tax rate. Also, the article does not specify what the total taxes were BEFORE the break. Usually such a corporate tax-break is a 'discount' not a 100% wavier of tax obligations. For sake of example lets say the original taxes added up to $30M over 10 years. $12.5M, New Building $10.0M, IT infrastructure $30.0M, Total Taxes (Example Number) == $52.5M ININ's Cost - $1.8M /10 years, Tax Break (Building) - $0.75M /10 years, Tax Break (IT Infrastructure) - $8.6M /2 years, Tax Breaks (against Hiring Commitment: 430 new jobs /2 years) == 11.5M Possible tax breaks. ININ TOTAL COST: $41M Even if you assume a 100% break, change the '30.0M' to '11.5M' and you can see the Company will be paying a minimum of $22.5, out-of-pocket for their capital-investment - NOT the tax-payers. Also note, much of this money is being spent locally in Indiana and it is creating 430 jobs in your city. I admit I'm a little unclear which tax-breaks are allocated to exactly which expenses. Clearly this is all oversimplified but I think we have both made our points! :) Sorry for the long post.

    3. Clearly, there is a lack of a basic understanding of economics. It is not up to the company to decide what to pay its workers. If companies were able to decide how much to pay their workers then why wouldn't they pay everyone minimum wage? Why choose to pay $10 or $14 when they could pay $7? The answer is that companies DO NOT decide how much to pay workers. It is the market that dictates what a worker is worth and how much they should get paid. If Lowe's chooses to pay a call center worker $7 an hour it will not be able to hire anyone for the job, because all those people will work for someone else paying the market rate of $10-$14 an hour. This forces Lowes to pay its workers that much. Not because it wants to pay them that much out of the goodness of their heart, but because it has to pay them that much in order to stay competitive and attract good workers.

    4. GOOD DAY to you I am Mr Howell Henry, a Reputable, Legitimate & an accredited money Lender. I loan money out to individuals in need of financial assistance. Do you have a bad credit or are you in need of money to pay bills? i want to use this medium to inform you that i render reliable beneficiary assistance as I'll be glad to offer you a loan at 2% interest rate to reliable individuals. Services Rendered include: *Refinance *Home Improvement *Inventor Loans *Auto Loans *Debt Consolidation *Horse Loans *Line of Credit *Second Mortgage *Business Loans *Personal Loans *International Loans. Please write back if interested. Upon Response, you'll be mailed a Loan application form to fill. (No social security and no credit check, 100% Guaranteed!) I Look forward permitting me to be of service to you. You can contact me via e-mail howellhenryloanfirm@gmail.com Yours Sincerely MR Howell Henry(MD)

    5. It is sad to see these races not have a full attendance. The Indy Car races are so much more exciting than Nascar. It seems to me the commenters here are still a little upset with Tony George from a move he made 20 years ago. It was his decision to make, not yours. He lost his position over it. But I believe the problem in all pro sports is the escalating price of admission. In todays economy, people have to pay much more for food and gas. The average fan cannot attend many events anymore. It's gotten priced out of most peoples budgets.

    ADVERTISEMENT