Angie's List turns corner on profitability

February 13, 2013

Hell has frozen over at Angie’s List, the consumer-review service that hasn’t posted a profit since it was founded in 1995.

The Indianapolis-based company Wednesday reported fourth-quarter profit of $2.4 million, or 4 cents a share, compared to a loss of $5.8 million, or 14 cents a share, in the same quarter in 2011.

Revenue rose 68 percent to $46.2 million.

For all of 2012, Angie’s List lost $52.8 million, or 92 cents a share, compared with a loss of $49 million, or $1.60 per share, the previous year. Annual revenue soared 73 percent to $155.8 million.

Some analysts had not expected Angie’s List to be profitable until late 2013, given the high cost of acquiring members in new markets. As the service matures its operations in several cities, expenses will drop and margins will improve. The company also has changed the way it pays its sales force, aiming to improve cash flow.

In recent years Angie’s List has focused heavily on increasing advertising revenue from service providers. That revenue jumped by 83 percent in the fourth quarter, to $32.5 million.

Meanwhile, the average cost to acquire new members fell 24 percent during the quarter.

“We made significant investments in our business during the year and achieved meaningful strides in our ability to monetize our membership base,” CEO Bill Oesterle said in a statement Wednesday.

The company is pouring massive amounts of money into television advertising, fueled by $72 million in proceeds from an initial public stock offering in November 2011.

Older markets like Indianapolis tend to generate the most revenue for Angie’s List.  Generally the older the market, the higher the membership fee–roughly $63 a year in Indianapolis versus around $30 a year in a newer market like New York City.

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