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8-K - FORM 8-K - Angie's List, Inc.d486248d8k.htm

Exhibit 99.1

 

LOGO

www.angieslist.com

Angie’s List Reports Fourth Quarter and Fiscal Year 2012 Results

 

  Fourth quarter revenues increased to $46.2 million, up 68% over the prior year quarter

 

  Fourth quarter service provider revenue increased to $32.5 million, up 83% over the prior year quarter

 

  Cost per acquisition (“CPA”) in the fourth quarter was $39, a decrease of 24% over the prior year period

 

  Fiscal year 2012 revenues increased to $155.8 million, up 73% compared to fiscal year 2011

 

  Total paid memberships of 1,787,394 at December 31, 2012, up 66% year-over-year

INDIANAPOLIS – February 13, 2013 – Angie’s List, Inc. (NASDAQ: ANGI) announced today fourth quarter and fiscal year 2012 financial results for the year ended December 31, 2012.

“We had a great fourth quarter concluding an exceptional year,” said Angie’s List CEO Bill Oesterle. “Entering 2012, we set specific operational objectives, and we exceeded them. We made significant investments in our business during the year and achieved meaningful strides in our ability to monetize our membership base.”

Three months ended 12/31/2012

 

     12/31/12     12/31/11     Change  

Total paid memberships (end of period)

     1,787,394        1,074,757        66

Gross paid memberships added (in period)

     230,921        159,289        45

Marketing cost per paid membership acquisition (in period)

   $ 39      $ 51        (24 %) 

First-year membership renewal rate (in period)

     71     71     flat   

Average membership renewal rate (in period)

     75     75     flat   

Participating service providers (end of period)

     35,952        24,095        49

Total service provider contract value (end of period, in thousands)

   $ 132,646      $ 73,609        80

Twelve months ended 12/31/2012

 

     12/31/12     12/31/11     Change  

Gross paid memberships added (in period)

     1,092,935        716,350        53

Marketing cost per paid membership acquisition (in period)

   $ 73      $ 78        (6 %) 

First-year membership renewal rate (in period)

     75     75     flat   

Average membership renewal rate (in period)

     78     78     flat   

Market Cohort Analysis

“We saw continued improvement in each of our cohorts marked by strong membership growth, higher penetration rates and increasing average revenue per market,” continued Oesterle. “Our penetration rate within the markets in our oldest cohort increased nearly 40 percent during 2012 with continued membership growth and high contribution. The operating characteristics of our oldest cohort continue to demonstrate the potential for the entire business.”


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      $ 4,689,796      $ 43.08      $ 111.48      $ 1,247,670        358,180        8.5     44

2003 - 2007

    35        2,716,037        37.59        85.12        1,292,726        973,101        6.3     69

2008 - 2010

    103        125,483        15.86        23.66        182,286        414,710        6.5     73

Post 2010

    71        10,606        12.92        16.05        52,555        41,403        3.3     **   
 

 

 

           

 

 

     
    219                1,787,394       

Cohort table presents financial and operational data for the twelve months ended 12/31/2012

 

* Demographic information used in penetration rate calculations is based on a third party study we commissioned in January, 2013. According to the study, the number of households in our target demographic increased to 31 million from 29 million in 2012.
** Not meaningful

Fourth Quarter Results

Fourth quarter 2012 total revenue was $46.2 million, an increase of 68% from $27.4 million in the prior year period. Service provider revenue was the largest component of total revenue at $32.5 million and the fastest growing with an 83% growth rate. Marketing expense was up 10%, or $0.8 million, over the prior year period. Net income was $2.4 million, with selling expense of $15.6 million and marketing expense of $8.9 million, compared to a net loss of $5.9 million with selling expense of $11.4 million and marketing expense of $8.1 million in the prior year period. Adjusted EBITDA, a non-GAAP financial measure, was $4.4 million, compared to a loss of $2.9 million in the prior year period.

Fiscal Year 2012 Results

Our total 2012 revenue was $155.8 million, an increase of 73% from $90.0 million in the prior year period. Membership revenue of $47.7 million increased 41% year-over-year and service provider revenue of $108.1 million increased 92% compared to the prior year period. We increased our marketing expense 43%, or $24.1 million, over the prior year period while decreasing our CPA to $73 from $78. We added a total of 1,092,935 new gross paid memberships in 2012, compared to adding 716,350 in 2011.

Net loss was $52.9 million for fiscal year 2012, with selling expense of $58.6 million and marketing expense of $80.2 million, compared to a net loss of $49.0 million with selling expense of $33.8 million and marketing expense of $56.1 million in the prior year period.

Adjusted EBITDA, a non-GAAP financial measure, was a loss of $45.3 million, compared to a loss of $38.7 million in the prior year period. The cash and investments balance at December 31, 2012 was $53.1 million. In addition, we have $15.0 million of unused capacity on our line of credit.

“In 2012 we made broad investments across the company that resulted in strong membership and service provider growth, greater efficiency in cost per member acquisition and additional tools to further enhance our member and service provider experiences,” stated Bob Millard, Angie’s List CFO. “We look forward to building upon those investments with a keen focus on managing the business to deliver strong unit economics.”

Business Outlook

The Company’s financial and operating expectations for the first quarter of 2013 are as follows:

 

   

Total revenue in the range of $51.0 million to $52.0 million for the first quarter of 2013.

 

   

Marketing expense in the range of $19.0 million to $20.0 million for the first quarter of 2013.


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 91566587 through February 20, 2013.

Live audio webcast of the presentation will be available on the 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 1.7 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.

CONTACT:

Investor Relations at Angie’s List

888-619-2655

investorrelations@angieslist.com

Or

 

Tom Ward    Cheryl Reed
Investor Relations    Public Relations
317-808-4527    317-396-9134
tomw@angieslist.com    cherylr@angieslist.com


Angie’s List, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

 

     December 31,     December 31,  
     2012     2011  
     (Unaudited)        

Assets

    

Cash and cash equivalents

   $ 42,638      $ 88,607   

Investments

     10,460        —     

Restricted cash

     50        300   

Accounts receivable, net

     7,787        3,937   

Prepaid expenses and other current assets

     19,810        11,835   
  

 

 

   

 

 

 

Total current assets

     80,745        104,679   

Property and equipment, net

     12,079        3,883   

Goodwill

     415        415   

Amortizable intangible assets, net

     2,356        1,555   

Deferred financing fees, net

     634        866   
  

 

 

   

 

 

 

Total assets

   $ 96,229      $ 111,398   
  

 

 

   

 

 

 

Liabilities and stockholders’ equity

    

Accounts payable

   $ 6,489      $ 5,266   

Accrued liabilities

     14,058        10,532   

Deferred membership revenue

     27,627        17,153   

Deferred advertising revenue

     23,160        13,643   
  

 

 

   

 

 

 

Total current liabilities

     71,334        46,594   

Long-term debt, including accrued interest

     14,869        14,820   

Deferred membership revenue, noncurrent

     4,330        3,751   

Deferred advertising revenue, noncurrent

     214        239   

Deferred income taxes

     163        158   
  

 

 

   

 

 

 

Total liabilities

     90,910        65,562   

Stockholders’ equity:

    

Common stock

     66        65   

Additional paid-in-capital

     248,326        235,950   

Treasury stock

     (23,719     (23,719

Accumulated deficit

     (219,354     (166,460
  

 

 

   

 

 

 

Total stockholders’ equity

     5,319        45,836   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 96,229      $ 111,398   
  

 

 

   

 

 

 


Angie’s List, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

 

     Three Months Ended December 31,     Year Ended December 31,  
     2012      2011     2012     2011  
     (Unaudited)     (Unaudited)        

Revenue

         

Membership

   $ 13,681       $ 9,733      $ 47,717      $ 33,815   

Service provider

     32,498         17,716        108,082        56,228   
  

 

 

    

 

 

   

 

 

   

 

 

 

Total revenue

     46,179         27,449        155,799        90,043   

Operating expenses

         

Operations and support

     7,450         4,123        27,081        16,417   

Selling

     15,622         11,423        58,596        33,815   

Marketing

     8,914         8,131        80,230        56,122   

Technology

     4,647         3,106        16,870        9,109   

General and administrative

     6,635         6,010        24,055        18,740   
  

 

 

    

 

 

   

 

 

   

 

 

 

Operating income (loss)

     2,911         (5,344     (51,033     (44,160

Interest expense, net

     476         485        1,856        3,004   

Loss on debt extinguishment

     —           —          —          1,830   
  

 

 

    

 

 

   

 

 

   

 

 

 

Income (loss) before income taxes

     2,435         (5,829     (52,889     (48,994

Income tax expense

     5         43       5        43   
  

 

 

    

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ 2,430       $ (5,872   $ (52,894   $ (49,037
  

 

 

    

 

 

   

 

 

   

 

 

 

Net income (loss) per common share

         

Basic

   $ 0.04       $ (0.14   $ (0.92   $ (1.60

Diluted

   $ 0.04       $ (0.14   $ (0.92   $ (1.60

Weighted average common shares outstanding

         

Basic

     57,831         41,131        57,486        30,656   

Diluted

     57,889         41,131        57,486        30,656   

Non-cash stock-based compensation

         

Technology

   $ 199       $ 424      $ 762      $ 786   

General and administrative

     531         1,574        2,181        3,056   
  

 

 

    

 

 

   

 

 

   

 

 

 

Total non-cash stock-based compensation

   $ 730       $ 1,998      $ 2,943      $ 3,842   
  

 

 

    

 

 

   

 

 

   

 

 

 

Reconciliation of adjusted EBITDA (loss) to net income (loss) (Unaudited):

         

Net income (loss):

   $ 2,430       $ (5,872   $ (52,894   $ (49,037

Income tax

     5         43       5       43   

Interest expense, net

     476         485        1,856        3,004   

Depreciation and amortization

     793         465        2,753        1,660   

Loss on debt extinguishment

     —           —          —          1,830   

Non-cash stock-based compensation

     730         1,998        2,943        3,842   
  

 

 

    

 

 

   

 

 

   

 

 

 

Adjusted EBITDA (loss)

   $ 4,434       $ (2,881   $ (45,337   $ (38,658
  

 

 

    

 

 

   

 

 

   

 

 

 


Angie’s List, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

 

     Year Ended     Year Ended  
     2012     2011  
     (Unaudited)        

Operating activities

  

Net loss

   $ (52,894   $ (49,037

Adjustments to reconcile net loss to net cash used in operating activities:

  

Depreciation and amortization

     2,753        1,660   

Deferred income taxes

     5        4   

Accrued interest due on debt maturity date

     —          625   

Amortization of debt discount and deferred financing fees

     312        596   

Non-cash stock-based compensation expense

     2,943        3,842   

Non-cash loss on debt extinguishment

     —          1,075   

Changes in certain assets:

  

Accounts receivable, prepaid expenses and other current

     (11,825     (7,343

Changes in certain liabilities:

  

Accounts payable and accrued liabilities

     4,764        3,918   

Deferred advertising revenue

     9,492        5,433   

Deferred membership revenue

     11,053        6,092   
  

 

 

   

 

 

 

Net cash used in operating activities

     (33,397     (33,135

Investing activities

  

Purchase of short-term investments

     (10,491     —     

Restricted cash

     250        —     

Property and equipment

     (9,730     (3,085

Data acquisition costs

     (2,035     (1,191
  

 

 

   

 

 

 

Net cash used in investing activities

     (22,006     (4,276

Financing activities

  

Principal payments on long-term debt, net

     —          (6,797

Sale of common stock, net of costs

     8,627        88,565   

Proceeds from exercise of stock options

     807        —     

Cash paid for financing costs and capital lease obligation

     —          (985

Purchase of treasury shares

     —          (21,897

Sales of preferred stock, net of costs

     —          57,923   
  

 

 

   

 

 

 

Net cash provided by financing activities

     9,434        116,809   

Net increase (decrease) in cash

     (45,969     79,398   

Cash and cash equivalents, beginning of period

     88,607        9,209   
  

 

 

   

 

 

 

Cash and cash equivalents, end of period

   $ 42,638      $ 88,607