- Published: 25 October 2012
- Written by Editor
Angie's List Reports Third Quarter 2012 Results
- Third quarter and year-to-date revenues increased to $42.0 and $109.6 million, up 75% over the prior year quarter.
- Third quarter and year-to-date service provider revenue increased to $29.3 and $75.6 million, up 96% over the prior year quarter.
- Total paid memberships of 1,656,768 at September 30, 2012, up 68% year-over-year.
- Cost per acquisition ("CPA") in the third quarter was $76, a decrease of 3% over the prior year period, despite an increased marketing spend of 39%.
Angie's List (ANGI) announced today third quarter 2012 financial results for the quarter ended September 30, 2012.
"We are having a very good year. Third quarter was our 43rd consecutive quarter of record revenue. Household acquisition costs and renewals were excellent," said Angie's List CEO Bill Oesterle. "Advertising sales were even better.
First year advertising revenue originations have grown 106% year-over-year. In addition, service provider revenue renewal rate remained over 100%. This dynamic should contribute significant additional margin in the coming quarters."
| Three months ended 9/30/2012 | |||
| 9/30/12 | 9/30/11 | Change | |
| Total paid memberships (end of period) | 1,656,768 | 988,224 | 68% |
| Gross paid memberships added (in period) | 341,522 | 240,334 | 42% |
| Marketing cost per paid membership acquisition (in period) | $ 76 | $ 78 | -3% |
| First-year membership renewal rate (in period) | 76% | 76% | flat |
| Average membership renewal rate (in period) | 78% | 78% | flat |
| Participating service providers (end of period) | 33,209 | 21,927 | 51% |
| Total service provider contract value (end of period, in thousands) | $ 119,091 | $ 65,104 | 83% |
| Nine months ended 9/30/2012 | |||
| 9/30/12 | 9/30/11 | Change | |
| Gross paid memberships added (in period) | 862,014 | 557,061 | 55% |
| Marketing cost per paid membership acquisition (in period) | $ 83 | $ 86 | -3% |
| First-year membership renewal rate (in period) | 76% | 76% | flat |
| Average membership renewal rate (in period) | 78% | 79% | -100bp |
Market Cohort Analysis
"Our most mature cohort continues to demonstrate the potential for the entire business. We're continuing to see high growth with memberships growing 44% in that cohort and high contribution," Oesterle stated.
Cohort |
# of Markets |
Avg. Revenue/ Market |
Membership Revenue/Paid Membership |
Service Provider Revenue/Paid Membership |
Avg. Marketing Expense/ Market |
Total Paid Memberships |
Estimated Penetration Rate |
Annual Membership Growth Rate |
| Pre 2003 | 10 | $ 4,350,693 | $ 43.98 | $ 107.53 | $ 1,249,986 | 338,863 | 8.5% | 44% |
| 2003 - 2007 | 35 | 2,364,197 | 37.20 | 78.66 | 1,284,796 | 898,962 | 6.3% | 70% |
| 2008 - 2010 | 103 | 99,116 | 14.53 | 19.53 | 182,659 | 384,002 | 6.4% | 78% |
| Post 2010 | 57 | 7,922 | 9.99 | 11.07 | 55,533 | 34,941 | 3.5% | * |
| 205 | 1,656,768 | |||||||
| Cohort table presents financial and operational data for the twelve months ended 9/30/2012 | ||||||||
| * Not meaningful | ||||||||
Third Quarter Results
Third quarter 2012 total revenue was $42.0 million, an increase of 75% from $24.0 million in the prior year period. Service provider revenue was the largest component of total revenue at $29.3 million and the fastest growing with a 96% growth rate. Marketing expense was up 39%, or $7.3 million, over the prior year period. Net loss was $18.5 million, with selling expense of $16.2 million and marketing expense of $26.1 million, compared to a net loss of $17.4 million with selling expense of $8.7 million and marketing expense of $18.8 million in the prior year period. Adjusted EBITDA, a non-GAAP financial measure, was a loss of $16.5 million, compared to a loss of $13.9 million in the prior year period.
For the nine months ended September 30, 2012, total revenue was $109.6 million, an increase of 75% from $62.6 million in the prior year period. Service provider revenue grew to $75.6 million, up 96% from the prior year period. Marketing expense was up 49%, or $23.3 million, over the prior year period. Net loss was $55.3 million, with selling expense of $43.0 million and marketing expense of $71.3 million, compared to a net loss of $43.2 million with selling expense of $22.4 million and marketing expense of $48.0 million in the prior year period. Adjusted EBITDA, a non-GAAP financial measure, was a loss of $49.8 million, compared to a loss of $35.8 million in the prior year period. The cash balance at September 30, 2012 was $65.5 million. In addition, the Company has a $15.0 million unused capacity on its line of credit.
"The positive unit economics of our business drove our results in the third quarter and we look forward to continued growth in the fourth quarter," stated Bob Millard, Angie's list CFO. "Based on normal seasonal trends, we will scale back on our marketing investment in the fourth quarter."
Business Outlook
The Company's financial and operating expectations for the fourth quarter and full year of 2012 are as follows:
- Total revenue in the range of $45.0 million to $46.0 million for the fourth quarter.
- Marketing expense in the range of $8.5 million to $9.5 million for the fourth quarter.
The Company has agreed on the principal terms of the purchase of its campus headquarters in Indianapolis from an affiliate of its CEO for approximately $6.25 million. The transaction, which is expected to close in the fourth quarter, will result in annual reduction in rental expense of approximately $1.5 million. Management believes they will be able to obtain long-term financing, but the transaction is not conditioned on obtaining financing.
Conference Call Information
The company will host a conference call at 5:00 PM (ET) / 2:00 PM (PT) to discuss the quarterly financial results with the investment community. A live webcast of the event will be available on the Angie's List Investor Relations website at http://investor.angieslist.com/
A live domestic dial-in is available at (877) 380-5664 or (253) 237-1143 internationally. An audio replay will be available at (855) 859-2056 domestically or (404) 537-3406 internationally, using Conference ID 39662368 through October 31, 2012.
Live audio webcast of the presentations will be available on Angie's List Investor Relations website at http://investor.angieslist.com/
About Angie's List
Angie's List helps consumers have happy transactions with local service professionals in more than 550 categories of service, ranging from home improvement to health care. More than 1.5 million subscribers across the U.S. share their consumer experiences and use Angie's List to gain unlimited access to local ratings, exclusive discounts, the Angie's List magazine, the Angie's List complaint resolution service and information about how to make the most of their home improvement projects.
Non-GAAP Financial Measures
In addition to providing financial measurements based on generally accepted accounting principles in the United States (GAAP), Angie's List has disclosed in this press release financial information that has not been prepared in accordance with GAAP. This information includes non-GAAP Adjusted EBITDA, which Angie's List defines as earnings before interest, income taxes, depreciation, amortization, loss on debt extinguishment, and non-cash stock-based compensation. Angie's List uses Adjusted EBITDA internally in analyzing its financial results and has determined to disclose this measure to investors because it believes it will be useful to them, as a supplement to GAAP measures, in evaluating Angie's List's operating performance relative to its industry sector and competitors. Angie's List believes that the use of Adjusted EBITDA provides additional insight for investors to use in evaluation of ongoing operating results and trends. However, non-GAAP financial measures such as Adjusted EBITDA should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Angie's List has significant uses of cash flows, including capital expenditures and other contractual commitments, interest payments and income taxes that are not reflected in adjusted EBITDA. Adjusted EBITDA does not consider the potentially dilutive impact of issuing non-cash stock-based compensation to Angie's List's management and other employees. It should also be noted that other companies, including companies in the same industry, may calculate adjusted EBITDA in a different manner than Angie's List. Angie's List has provided a reconciliation of Adjusted EBITDA measure to the most directly comparable GAAP financial measure.
Forward-Looking and Cautionary Statements
This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding expected revenue, future marketing expense and growth opportunities. These forward-looking statements are based on Angie's List's current assumptions, expectations and beliefs and involve substantial risks and uncertainties that may cause results, performance or achievement to materially differ from those expressed or implied by these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to: our ability to accurately measure and predict revenue per paid membership, membership acquisition costs or costs associated with servicing our members; our ability to protect our brand and maintain our reputation among consumers and local service providers; our ability to attract and retain local service providers to advertise on our service; our ability to increase our pricing on memberships and service provider contracts as we increase our market penetration; our ability to replicate our business model in our less penetrated markets; our success in converting consumers and local service providers into paid memberships and participating service providers; competitive factors; our ability to stay abreast of modified or new laws and regulations applying to our business, including those regarding sales or transaction taxes and privacy regulation; our ability to adequately protect our intellectual property; our ability to manage our growth; and general economic conditions worldwide.
Further information on these factors and other risks that may affect our business is included in filings we make with the Securities and Exchange Commission from time to time, including Angie's List's Annual Report on Form 10-K and its subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
These documents are or will be available online from the SEC or on the SEC Filings section of the Investor Relations section of our website at http://investor.angieslist.com. Information on our website is not part of this release. All forward-looking statements in this press release are based on information currently available to us, and we assume no obligation to update these forward-looking statements in light of new information or future events.
| Angie's List, Inc. | ||
| Condensed Consolidated Balance Sheet | ||
| (in thousands) | ||
| September 30, | December 31, | |
| 2012 | 2011 | |
| (Unaudited) | ||
| Assets | ||
| Cash | $65,497 | $88,607 |
| Restricted cash | 50 | 300 |
| Accounts receivable, net | 7,290 | 3,937 |
| Prepaid expenses and other current assets | 19,829 | 11,835 |
| Total current assets | 92,666 | 104,679 |
| Property and equipment, net | 5,384 | 3,883 |
| Goodwill | 415 | 415 |
| Amortizable intangible assets, net | 2,630 | 1,555 |
| Deferred financing fees, net | 694 | 866 |
| Total assets | $101,789 | $111,398 |
| Liabilities and shareholders' deficit | ||
| Accounts payable | $9,418 | $5,266 |
| Accrued liabilities | 23,118 | 10,532 |
| Deferred membership revenue | 27,718 | 17,153 |
| Deferred advertising revenue | 20,162 | 13,643 |
| Total current liabilities | 80,416 | 46,594 |
| Long-term debt, including accrued interest | 14,857 | 14,820 |
| Deferred membership revenue, noncurrent | 4,385 | 3,751 |
| Deferred advertising revenue, noncurrent | 260 | 239 |
| Deferred income taxes | 158 | 158 |
| Total liabilities | 100,076 | 65,562 |
| Shareholders' equity: | ||
| Common stock | 66 | 65 |
| Additional paid-in-capital | 247,150 | 235,950 |
| Treasury stock | (23,719) | (23,719) |
| Accumulated deficit | (221,784) | (166,460) |
| Total shareholders' equity | 1,713 | 45,836 |
| Total liabilities and shareholders' equity | $101,789 | $111,398 |
| Angie's List, Inc. | ||||
| Consolidated Statements of Operations | ||||
| (in thousands, except share and per share data) | ||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||
| 2012 | 2011 | 2012 | 2011 | |
| (Unaudited) | (Unaudited) | |||
| Revenue | ||||
| Membership | $12,769 | $9,109 | $34,036 | $24,082 |
| Service provider | 29,253 | 14,899 | 75,584 | 38,512 |
| Total revenue | 42,022 | 24,008 | 109,620 | 62,594 |
| Operating expenses | ||||
| Operations and support | 7,140 | 4,697 | 19,631 | 12,294 |
| Selling | 16,240 | 8,736 | 42,974 | 22,392 |
| Marketing | 26,088 | 18,760 | 71,316 | 47,991 |
| Technology | 4,905 | 2,277 | 12,223 | 6,003 |
| General and administrative | 5,669 | 4,365 | 17,420 | 12,730 |
| Operating loss | (18,020) | (14,827) | (53,944) | (38,816) |
| Interest expense | 467 | 712 | 1,380 | 2,519 |
| Loss on debt extinguishment | -- | 1,830 | -- | 1,830 |
| Loss before income taxes | (18,487) | (17,369) | (55,324) | (43,165) |
| Income tax expense | -- | -- | -- | -- |
| Net loss | $ (18,487) | $ (17,369) | $ (55,324) | $ (43,165) |
| Net loss per common share--basic and diluted | $ (0.32) | $ (0.66) | $ (0.96) | $ (1.59) |
| Weighted average number of common shares outstanding--basic and diluted | 57,768,777 | 26,141,678 | 57,167,929 | 27,125,491 |
| Non-cash stock-based compensation | ||||
| Technology | $225 | $62 | $563 | $362 |
| General and administrative | 545 | 486 | 1,650 | 1,482 |
| Total non-cash stock-based compensation | $770 | $548 | $2,213 | $1,844 |
| Reconciliation of adjusted EBITDA to net income: | ||||
| Net loss: | $ (18,487) | $ (17,369) | $ (55,324) | $ (43,165) |
| Income tax | -- | -- | -- | -- |
| Interest expense | 467 | 712 | 1,380 | 2,519 |
| Depreciation and amortization | 741 | 429 | 1,960 | 1,195 |
| Loss on debt extinguishment | -- | 1,830 | -- | 1,830 |
| Non-cash stock-based compensation | 770 | 548 | 2,213 | 1,844 |
| Adjusted EBITDA loss | $ (16,509) | $ (13,850) | $ (49,771) | $ (35,777) |
Investor Relations at Angie's List 888-619-2655 This email address is being protected from spambots. You need JavaScript enabled to view it. Or Brinlea Johnson or Allise Furlani The Blueshirt Group for Angie's List 212-331-8424 or 212-331-8433 This email address is being protected from spambots. You need JavaScript enabled to view it. or This email address is being protected from spambots. You need JavaScript enabled to view it.
