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Struggling Angie's List lays off 97 salespeople

August 22, 2014

Indianapolis-based consumer review firm Angie’s List Inc. on Friday laid off 97 members of its sales force, the firm told federal regulators.

The move came “as part of a focus on improving salesforce performance and productivity,” the firm reported to the U.S. Securities and Exchange Commission.

“It is extremely difficult to make a business decision that will have an impact on our colleagues and their families," Chief Operating Office Mark Howell said in a prepared statement.

"This painful step is part of an overall plan to improve our sales productivity and performance and establish a new performance-based measurement system by which we will evaluate our sales teams," Howell said.

Prior to Friday's layoffs, the firm's most recently disclosed employment number was around 2,000 workers, about 1,200 of which were in sales, according to a spokeswoman.

The firm’s sales force has become a big focus of its overall strategy. Angie's List primarily is known a subscription service in which participants can buy annual memberships in order to find and review service providers like plumbers, roofers and electricians. The revenue mix has shifted in recent years toward selling ads to those service providers.

One of those provider-driven avenues is e-commerce, which allows service providers to offer online deals directly to members. Angie's List said Friday that the biggest percentage of layoffs was coming from its sales team for Big Deal, in which users can sign up for heavily discounted services from providers—similar to Groupon.

In its most recent financial quarter, the company lost $18.4 million. That represented a significant dip from the same quarter in 2013, during which the firm lost $14.3 million.

It has not earned an annual profit in its 19 years in business. Its share price has fallen 47 percent since Jan. 1, to $8.08 early Friday afternoon.

Howell said that the business remains sound.

"We are focused on continuing to make progress on our strategy," he said. "We expect to continue to add resources to our salesforce over time to support growth in both advertising and e-commerce revenue."

Angie's List recently reported that total paid memberships reached 2.8 million as of June 30, a rise of 31 percent over a year earlier.

While a pioneer in consumer reviews of service contractors, Angie’s List has faced increased competition in recent years from rivals such as Yelp, Porch.com and Google Local.  Unlike Angie's List, those sites don’t require consumers to purchase paid memberships.

Over several years, the percentage of revenue from member subscriptions has declined as the firm has focused on selling ads to service providers. As far back as six years ago, Angie’s got 47 percent of revenue from membership and the other 53 percent from service providers they review.

By the time of Angie’s 2011 initial public stock offering, service-provider revenue had grown to 63 percent of total revenue, and hit 69 percent during 2012.

Investors have debated
over the firm's prospects for years. Doubters point to its desutory record on profits. Believers say Angie’s List’s years of spending massively to secure new subscribers and sign up service providers as advertisers is about to position it for robust long-term profits in a niche it dominates.

The company has received city and state financial incentives to help fund its growth. For example, in 2011, it announced that it planned to nearly double its local workforce by hiring an additional 500 employees at its corporate campus on the east side of downtown. State officials pledged as much as $7 million in tax credits, based on those plans.

The city of Indianapolis also pledged about $7 million in incentives, including about $4.6 million to help buy properties near its campus.

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