Angie’s List Reports First Quarter 2016 Results
- Company on track to remove reviews paywall by summer of 2016
-
Revenue of $83.9 million for the first quarter of 2016 as compared
to $83.5 million for the first quarter of 2015 -
Adjusted EBITDA1 of $4.8 million for the
first quarter of 2016 as compared to $8.6 million for the first
quarter of 2015 -
Net loss of $4.0 million2 for the first
quarter of 2016 as compared to net income of $4.4 million for the
first quarter of 2015 -
Year over year growth in participating service providers, total
contract value, traffic and first-year membership renewal rates
INDIANAPOLIS–(BUSINESS WIRE)–Angie’s List, Inc. (NASDAQ:ANGI) today announced financial results for
the quarter ended March 31, 2016.
“We made good progress preparing for the strategic and operational shift
in our business,” said Scott Durchslag, President and Chief Executive
Officer of Angie’s List. “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.”
“Our freemium offering, which is being piloted in some top markets,
continues to perform robustly, with logins, searches, contract value and
reviews each up compared with our control markets,” Durchslag continued.
“These encouraging results give us confidence that our upcoming
nationwide freemium rollout will drive a re-acceleration of our
business.”
“We are also focused on stabilizing our core business during this time
of change,” continued Durchslag. “Our overall first quarter revenue was
flat year over year as we continued to face headwinds on member and
advertising revenue. Adjusted EBITDA1 declined from a
year ago due largely to non-recurring expenses and investments in our
initiatives to reignite revenue growth. On a more positive note, we
sequentially grew our total number of service providers and our backlog
of contract value, and our total site traffic increased approximately
25% in the first quarter of 2016 from the year-ago quarter.”
“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.”
1 Adjusted EBITDA is a non-GAAP financial measure.
2 Includes a $3.5 million contingent liability
recorded during the quarter related to pending litigation.
Key Operating Metrics
Three months ended |
March 31, |
March 31, |
Change |
|||||||
Total paid memberships (end of period) | 3,309,166 | 3,103,367 |
7% |
|||||||
Gross paid memberships added (in period) | 188,242 | 229,987 |
(18)% |
|||||||
First-year membership renewal rate (in period) | 73 | % | 71 | % | 2 pts | |||||
Average membership renewal rate (in period) | 75 | % | 75 | % | flat | |||||
Participating service providers (end of period)* | 54,864 | 54,341 |
1% |
|||||||
Total service provider contract value (end of period, in thousands) | $ | 267,302 | $ | 263,349 |
2% |
|||||
Total service provider contract value backlog (end of period, in thousands) |
$ | 165,360 | $ | 165,600 |
—% |
|||||
* We include in participating service providers the total number of
service providers under contract for advertising, e-commerce or both at
the end of the period.
Market Cohort Analysis
Pre-2003 | 2003-2007 | Post-2007 | Total | |||||||||||||||||||||
March 31, | March 31, | March 31, | March 31, | |||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | |||||||||||||||||
Number of Markets | 10 | 10 | 35 | 35 | 208 | 208 | 253 | 253 | ||||||||||||||||
Average Revenue/Market | $ | 8,011,151 | $ | 7,696,718 | $ | 6,200,540 | $ | 5,851,214 | $ | 226,773 | $ | 211,270 | $ | 1,360,866 | $ | 1,287,367 | ||||||||
Average Marketing Expense/Market | $ | 1,272,695 | $ | 1,367,509 | $ | 1,339,087 | $ | 1,437,514 | $ | 117,678 | $ | 126,499 | $ | 332,300 | $ | 356,917 | ||||||||
Membership Revenue/Paid Member | $ | 24.42 | $ | 30.89 | $ | 22.71 | $ | 27.83 | $ | 14.47 | $ | 15.66 | $ | 20.89 | $ | 25.18 | ||||||||
Service Provider Revenue/Paid Member | 105.59 | 110.87 | 100.92 | 103.33 | 42.04 | 42.03 | 86.49 | 88.47 | ||||||||||||||||
Total Revenue/Paid Member | $ | 130.01 | $ | 141.76 | $ | 123.63 | $ | 131.16 | $ | 56.51 | $ | 57.69 | $ | 107.38 | $ | 113.65 | ||||||||
Total Paid Memberships | 640,384 | 592,037 | 1,815,927 | 1,694,950 | 852,855 | 816,380 | 3,309,166 | 3,103,367 | ||||||||||||||||
Estimated Penetration Rate* | 17% | 16% | 13% | 13% | 12% | 12% | 14% |
13% |
||||||||||||||||
Annual Membership Growth Rate | 8% | 20% | 7% | 19% | 4% | 16% | 7% |
18% |
Cohort table presents financial and operational data for the twelve
months ended March 31, 2016 and 2015.
* Demographic information used in penetration rate calculations is
based on third-party studies we commissioned in December 2015 and March
2015, respectively. According to these studies, the number of U.S.
households in our target demographic was 27 million for each of the
periods ended December 31, 2015 and March 31, 2015.
First Quarter Results
Revenue
Total revenue for the first quarter of 2016 was $83.9 million compared
to $83.5 million in the year-ago period, driven by higher service
provider revenue, which increased 2% to $67.5 million, offset by a
decline in membership revenue of 6% to $16.3 million from a year ago.
The growth in service provider revenue, which includes both advertising
and e-commerce revenue, quarter over quarter was largely the result of
higher service provider revenue per average participating service
provider and service provider contract value. These gains were partially
offset by the impact of near-term reductions in average e-commerce take
rates in previous periods as well as revenue losses attributable to the
ongoing migration to our new technology platform.
The decline in membership revenue quarter over quarter is primarily the
result of a 12% decrease in membership revenue per average paid member
attributable to tiered pricing, which has reduced average membership
fees. The Company added 188,242 gross paid memberships in the period, a
decline from gross paid member additions of 229,987 in the year-ago
quarter.
Operating Expenses
Operations and support expense was $12.2 million, a decrease from $14.0
million in the year-ago quarter, attributable to quarter over quarter
reductions in compensation and personnel-related costs and credit card
processing fees.
Selling expense was $27.8 million, down from $28.3 million in the
year-ago quarter, due primarily to lower headcount. The total number of
employees in the sales organization declined 7% year over year,
resulting in reduced selling compensation and personnel-related costs.
Marketing expense, which now includes the marketing costs that were
previously classified in general and administrative expense, was $19.1
million, an increase from $18.8 million in the year-ago quarter,
attributable to increases in marketing outsourced services expenditures
and compensation and personnel-related costs quarter over quarter,
partially offset by a decrease in advertising spend over the same time
period.
Product and technology expense was $10.0 million, an increase from $8.4
million in the year-ago period, largely attributable to headcount
increases.
General and administrative expense was $18.0 million, an increase from
$8.7 million in the year-ago period, driven by period over period
increases in outsourced services expenditures and compensation and
personnel-related costs as well as a $3.5 million one-time contingent
liability recorded during the quarter related to pending litigation.
Net Income (Loss)
Net loss for the quarter was $4.0 million compared to net income of $4.4
million in the year-ago quarter, attributable to higher operating
expenses, including the aforementioned contingent legal liability
recorded in general and administrative expense.
Adjusted EBITDA1
Adjusted EBITDA1 was $4.8 million for the period, down from
adjusted EBITDA1 of $8.6 million in the year-ago period.
Cash
Cash provided by operations for the first quarter was $9.2 million. At
March 31, 2016, the balance of cash, cash equivalents and investments
was $59.1 million.
Business Outlook
The Company reiterated its full year guidance for revenue of $345
million to $355 million and adjusted EBITDA1 of $31 million
to $35 million.
1 Adjusted EBITDA is a non-GAAP financial measure.
Angie’s List, Inc.
March 31,
December 31,
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