In the recent past we have observed that the awareness in the dot com have been rising exponentially. As we witness this growth various companies are now focusing on the virtual online world to leverage the growth of their organizations. Angie’s list(ANGI, Financial) is one such company that is renowned for its online business model of subscription based websites that provides reviews and rating of various business to its customers. Their reviews range from the home improvement to health care sector. As I write this article the shares of the company is being traded at around $6.45, but from an investors perspective this can be the right time to opt for this company. The company recently declared its Q3 results for the fiscal 2014 which witnessed growth in top line and the company is also recovering in its bottom line.
Top line recording growth
The consolidated revenue increased by 24% year over year, to record $81.3 million as compared to $65.5 million in the same term last year. The growth in revenue was mainly to the increased number of subscription on the website. The subscription in the Q3 increased by 25%, it now records 2,983,439 as compared to 2,378,867 in the same term last year. Membership revenue in the third quarter of 2014 was $18.3 million, an increase of 7% if compared to same term last year.
Bottom line recovering
The company’s bottom line is loss making, but what impresses most is that the net loss has been decreasing which is a good sign for an investor. In Q3-2014, the company recorded a loss of $5.2 millions as compared to net loss of $13.5 million in same term last year. The loss for the company is reducing mainly due to the fact that the marketing is reducing for the company, this leveraged the bottom line. Marketing expense in Q3 decreased by 20%, to record $22.5 million as compared to $28.2 million in the same period last year.
Outlook
Though many analysts had estimated downfall in the market of Angie’s list, they stayed with their long term operating strategies. Their strategy was to increase their investment which would create more opportunities in long run. After getting better results in last quarter Angie’s list is expecting the growth to continue in fourth quarter. In Q4-2014, the company anticipates revenue to be in the range of $80 million to $82 million and the marketing expense to be around $5 million. The reduced marketing expenses and increased revenue can further bring down the net losses for the company in the last quarter of the fiscal 2014.
Angie’s list is delighted to have a significant growth in the membership and market transaction. Angie’s also anticipates that e-commerce segment will further provide wider opportunities for the growth and higher satisfaction among its customers.
The consensus of analyst also anticipates that Angie should attain growth of 50% in the current fiscal year, as against the industry growth of 11.5% and sector growth of 19%. Next year the growth is anticipated to be 92% as against the industry growth of 23.9%, while in next 5 year the company should grow by 27% annually. This goes on to exemplify that Angie’s future looks bright.
Conclusion:
Various segment of Angie’s list is recording growth which is a good sign for an investor. The loss is also reducing which will also influence the EPS in future. The company seems to be very focused on reducing it marketing expense which has been influencing the bottom line of the company and can have a positive impact on the EPS in future. The company is currently being traded at a lower price band of 52 weeks high-low slab ($6.17 - $19.8), so an investor can certainly opt for this company at the current price as its set to rebound and provide good returns to an investor.
