Angie’s List saw revenue jump to $81.3 million for the third quarter of 2014, nearly 25 percent higher than the previous year, and lowered its net loss to $5.2 million (nine cents a share) against $13.5 million (23 cents a share the year before) but analysts had predicted a loss of just six cents per share.
The company reported the addition of 350,376 gross paid memberships during the period, down six percent from the third quarter of 2013.
Shares fell more than 17% percent on Wednesday as it continued an 18-month drop that has seen it plummet from $28 per share on July 5, 2013 to its current levels.
Still, Angie’s List executives attempted to spin a positive story. “We continue to add new members and grow revenue while we transition our business to a marketplace model,” CEO Bill Oesterle said. “Margins improved significantly as we reduced our marketing spend and improved operating efficiency. While we made strides executing on our marketplace, we see opportunity for further improvement.”
He continued this tack during the earnings call: “Our performance adding new members was strong. Aided by the tail from our second quarter spend and improved efficiency, we acquired 350,000 gross members, down from a year ago but on a lower spend and on a lower CPA,” he said, later adding “Looking to the fourth quarter we expect to significantly improve operating margins as we continue to focus on productivity and cost management.”
The company lowered its guidance for the fourth quarter.
“We expect total revenue of $80-$82 million, which is slower growth than previously expected, due primarily to the unfavorable trends in eCommerce, and we expect to generate significant positive adjusted EBITDA in the fourth quarter and to be positive EBITDA for the year,” chief financial officer Tom Fox said.
ECommerce, which saw disappointing revenues of just $7 million, remains a focus for Angie’s List going forward. “While our progress in scaling eCommerce was disappointing, we remain confident in our ability to execute against the expansive opportunity in the local services marketplace,” Oesterle said. “We have a base we can build. It’s going to take a couple quarter for it to really flex its muscle.”
He also warned that the eCommerce isn’t a distinct business but rather a part of the company’s holistic strategy and that Angie’s List might not break out the revenue in the future. Whether that was a hedge against the possibility of continued slow growth is anyone’s guess.
Finally, the CEO refused to say anything about a story that floated the possibility of the company investigating a possible sale. “We’re not commenting on rumors,” he said. “Particularly rumors that were as sort of speculative that was put out there by the Financial Times.”
Noah Davis is a senior editor at Street Fight.