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Angie’s List expected to continue financial losses

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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.
 

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  • 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.

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