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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowShares in Angie’s List Inc. seesawed in morning trading Wednesday after the Indianapolis-based company reported an unexpected loss in the first quarter.
The home-services marketplace company lost $4 million, or 7 cents per share, in the quarter ended March 31, down from a gain of $4.4 million, or 7 cents per share, in the first quarter of 2015.
The loss ended a two-quarter streak of money-making quarters for the 21-year-old company, which reported its first profitable year in 2015 in its fifth year as a public company.
Angie’s List reported revenue of $83.9 million in the first quarter, up slightly from $83.5 million a year ago.
The results fell short of Wall Street expectations. The average estimate of eight analysts surveyed by Zacks Investment Research was for earnings of 5 cents per share. And six analysts surveyed by Zacks expected revenue of $86.7 million.
Angie's List shares dropped 7 percent shortly after the market opened Wednesday, but rebounded to $8.01, up 3.4 percent, by midday. The shares are down 14 percent since the beginning of the year.
Angie's List CEO Scott Durchslag called the results “encouraging,” considering the company is overhauling its paid membership model by offering a tiered subscription plan that includes free access to its ratings and reviews.
Durchslag announced the new strategy in March, six months after taking over leadership of the company.
“We made good progress preparing for the strategic and operational shift in our business,” Durchslag said Wednesday in written remarks. “The rollout of our technology platform, AL 4.0, is on schedule, and we are on track to remove the reviews paywall by this summer.”
Total paid memberships increased 7 percent, to 3.3 million, in the quarter. The number of participating service providers crept up 1 percent, to 54,864. Service-provider revenue rose 2 percent, to $67.5 million. Membership revenue dropped 5.8 percent, to $16.3 million.
"While turnarounds take time, we are approaching a key inflection point in our business as we make major progress toward introducing our new freemium business model," Durchslag said.
Blake Harper, an analyst with Topeka Capital Markets, said one of the things that may have prompted a late-morning stock rebound could be Durchslag's remarks on a conference call about web traffic growing 25 percent in the recent quarter.
"It means a lot more now because they could monetize that traffic now better than they could before when they had the paywall up," he said. "So, there are probably some shareholders who are supporting it now because they can see the transition (to the new model)."
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