Angie's List loss widens on higher marketing costs
INDIANAPOLIS (AP) — Angie's List posted a wider loss in the third quarter due to hefty advertising spending, but succeeded in attracting hundreds of thousands of new subscribers to its online business ratings and reviews, boosting revenue by 75 percent.
Shares rose $1.21, or more than 13 percent, to $10.30 in after-hours trading on the news. The stock had closed the regular session down 9 cents at $9.09 before the report.
The company said Wednesday that its total paid memberships increased 68 percent to 1.66 million for the period ended Sept. 30. Paying customers have access to consumer ratings on everything from local plastic surgeons to sewer cleaners. The company's revenue increased 75 percent to $42 million. However, that gain was partially offset by higher selling and marketing expenses.
Angie's list reported a quarterly loss of $18.5 million, or 32 cents per share, compared with a loss of $17.4 million, or 66 cents per share, in the prior-year period. The larger per-share loss in last year's quarter reflects that the company had fewer shares outstanding before going public last November.
Analysts polled by FactSet expected losses of 33 cents per share and revenue of $41.3 million.
"We look forward to continued growth in the fourth quarter," Bob Millard, Angie's List CFO, said in a statement. "Based on normal seasonal trends, we will scale back on our marketing investment in the fourth quarter."
Marketing expenses in the third quarter grew 39 percent as the Indianapolis-based company continued promoting its website and trying to sell its services. The company reported that 76 percent of first-year customers renewed their membership. Angie's list requires visitors to subscribe to see its A to F ratings on businesses that are submitted by consumers. The annual fees range from $28.50 to $46.
Looking ahead, Angie's List forecast fourth-quarter revenue of $45 million to $46 million, in line with analysts' estimates.