After months of disappointing results, Angie’s List (ANGI, Financial) finally provided investors with some good news when it released it Q4 results. The numbers show that Angie’s List may have finally bottomed and is taking some good initiatives to get its business back on track. The company is cutting back on expenditures and looks like a great turnaround candidate at the present valuations. I’ll tell you why I think Angie’s List may move higher going forward, but first let’s take a look at the quarterly numbers.
Beating the estimates
Angie’s List reported the fourth quarter results with a lofty profit of $15.3 million from $2.8 million, or 26 cents a share from 5 cents a share. The fourth quarter has been the feather in the cap for the company. The consensus estimation of 22 cents per share earnings and revenue of $81.2 million falls flat over the results. As we talk about the revenues, advertising and e-commerce revenue grew 36% and 23% respectively. There was a 28% increase in the revenue. Company’s sales increased to $82.15 million from $68.76 million. Marketing cost acquisition fell 48% to $27, while total paid membership hopped 22% to 3.04 million as of Dec. 31. Company’s household increased by 22%, and the paid members tripled in just three years and ending the year with more than $3 million.
The participating service providers matured 28% to 51,614. On the other hand the stock which was still immobile in pre-market trade was in the blind alley for the past three months and suffered a fall of 15%. S&P 500 put on 2.4%. Service provider contract’s value backlog’s figures were $153 million up by 26 %. %5 of backlog is not yet recognized as revenue.
Operating margin is 19% from 5% in just one year, the reason being the reduction of market spending in the quarter. Operating income was reported $16 million up by $3 million. Selling expenses saw an increase of $4 million as compared to the same quarter of the previous year. On the other hand, adjusted EBITDA, a non-GAAP financial gauge, was recorded $21 million in comparison with the previous year quarter. At last Angie’s List ended the quarter with approximately $64 million in cash, cash equivalents and Investments.
What does the future hold?
Angie’s list has come a long way with its fourth-quarter results. As we talk about the future developing the marketplace remains the top priority. Ecommerce being an important business field is now the core component of the proposal that the company offered to a service provider and is also becoming a constituent of subscription pricing. The strategy is not to break out ecommerce revenue but to share other metrics to exhibit the market rate performance.
The company seems to be more convinced by the strategy of adding low price ecommerce offers to existing advertisers’ subscription, while they do believe that the SPs they already have will be more interested in expanding their e-commerce presence inside of their market places by redistributing more and bulky offers.
The previously derived revenue solely from take rates is expected to be increased and replaced by higher dollar renewals. Working with high-quality brands in particular categories not only will give Angie’s better deals for service provider but also will provide greater ecommerce value for consumers.
In the fourth quarter the company committed to one of the top most paint provider company. This relationship is very beneficial for the partner as the distribution, advertising and offers expands. AĂ‚ formal announcement of this commitment can be heard in coming weeks.
The company may launch the Android version with app consumers in the next few months. SPs will be capable of accessing the functionality of Angie’s despite their location. During the quarter the company continues to invest in technology to facilitate rules and tools. A new creative campaign is to be launched in the quarter later; SCO will be updated to drive additional marketplace transaction. Commerce transactions will be stronger in this quarter, and the share of marketing dollars spent on digital is expected to grow.
Allstate is offering Angie’s List Allstate Agents while buying memberships through them. Allstate is promoting this via agents and numerous media channels.
Guidance
Revenue is expected to be in range of $357 million to $363 million. Adjusted EBITDA will be between $28 million and $30 million for 2015.Ă‚ Marketing and selling expenses are expected to decline while technology expenses are expected to increase as the company steps on its new platforms: build, launch and transit.
Conclusion
A glance back at the income statement for Angie's List in past years demonstrates that the organization has been gradually diminishing its operating losses. Still, the losses were to the point that it had more than a couple of heads being scratched when you consider the revenues. Toward the end of 2014, the organization reported an operating loss of $10.36 million, which was down from $31.08 million in 2013 and $51.03 million in 2012.
Perhaps Angie's rundown has at finally started to get its business back on track. Membership revenue dip may look awful, yet down just 5% with so much free rivalry may be a win. The organization likewise appears as though it is bringing down its expenses, while its administration supplier revenues are scaling up. Angie’s List is a great turnaround candidate.
