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Angie's List ekes out profit, but revenue woes persist

February 15, 2017

Angie's List Inc. beat Wall Street predictions with its fourth quarter profit, according to its earnings report released Wednesday, but it missed revenue expectations as service providers continued to spend less with the Indianapolis-based company.

Angie's List reeled in $76.7 million in revenue in the quarter ended Dec. 31, an 11 percent drop from the $86.3 million it brought in during the same period of 2015. That marked the biggest year-over-year revenue decline in the company's 22-year history on a percentage basis. Analysts expected the company to generate $78 million in revenue in the quarter.

Despite the lower revenue, the home-services-marketplace company was still able to net a profit of $8.9 million, or 15 cents a share. That's down from the $14.1 million, or 24 cents per share, it reported in the year-ago quarter, but enough to beat analyst estimates of 8 cents per share.

When the company announced third-quarter results Nov. 1, CEO Scott Durchslag said the company had "decided to explore strategic alternatives," comments usually associated with companies looking for merger opportunities. Early in the company's quarterly conference call Wednesday, Durchslag said the exploration of strategic alterantives is active and ongoing, "but we will not comment further."

But Durchslag did note that 2016 was a pivotal year for the company, partly because it involved a business model change that attracted 2.9 million new members in 2016, more than half of the 5.1 million members it has in total.

"We achieved a number of important objectives, including removing the reviews paywall, introducing freemium tiers, migrating our technology platform, strengthening our marketing and sales processes, and delivering new products to our customers," Durchslag said in written remarks.

"These accomplishments enabled us to end the year with momentum in new member growth as we added approximately 785,000 gross members in the fourth quarter and finished the year with 5.1 million members, an increase of 55 [percent] from a year ago," he said. "Importantly, we achieved these results while balancing investments for growth with significant reductions in our cost structure. While this is good progress, we continue to expect it will take time before we meaningfully improve trends in our financial results."

As the company works toward monetizing its new influx of members, service provider revenue continues to soften. While it accounts for more than 80 percent of overall revenue, it was down 7.9 percent versus the year-ago period, to $64.2 million.

For the full year, the company generated $323.3 million in revenue and a loss of $7.9 million, or 13 cents a share. Here, too, the company missed analyst revenue forecasts of $324.6 million but beat earnings forecasts of a loss of 19 cents a share.

The company's stock closed Tuesday at $6.31 per share, a 52-week low.

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