UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 23, 2013
Angie’s List, Inc.
(Exact name of registrant as specified in its charter)
Delaware |
|
001-35339 |
|
27-2440197 |
(State or other jurisdiction of incorporation) |
|
(Commission File Number) |
|
(IRS Employer Identification No.) |
1030 E. Washington Street
Indianapolis, IN 46202
(Address of principal executive offices, including zip code)
(888) 888-5478
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 Results of Operations and Financial Condition
On October 23, 2013, Angie’s List, Inc. issued a press release announcing its financial results for the fiscal quarter ended September 30, 2013. A copy of the press release is furnished as Exhibit 99.1 to this current report and is incorporated herein by reference.
The information furnished on this Form 8-K, including Exhibit 99.1 attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits.
Exhibit No. |
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Exhibit Description |
99.1 |
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Press Release dated October 23, 2013 |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: October 23, 2013
ANGIE’S LIST, INC. |
/s/ Shannon M. Shaw |
By: Shannon M. Shaw |
Its: Vice President, General Counsel |
EXHIBIT INDEX
Exhibit No. |
|
Exhibit Description |
99.1 |
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Press Release dated October 23, 2013 |
Exhibit 99.1
|
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www.angieslist.com |
Angie’s List Reports Third Quarter 2013 Results
● |
Third quarter revenue was $65.5 million, up 56% over the prior year quarter |
● |
Third quarter cash used in operations was $0.8 million; cash provided by operations for the nine months ended September 30, 2013 was $13.4 million |
● |
Cost per acquisition ("CPA") in the third quarter was $76, which was flat compared to the prior year period |
INDIANAPOLIS – October 23, 2013 – Angie’s List, Inc. (NASDAQ: ANGI) announced today third quarter 2013 financial results for the quarter ended September 30, 2013.
“Our third quarter growth was driven by solid results across our key operating metrics,” said Angie’s List CEO Bill Oesterle. “We added a record number of new members while making significant investments in the business.”
Key Operating Metrics
Three months ended |
||||||||||||
9/30/13 |
9/30/12 |
Change |
||||||||||
Total paid memberships (end of period) |
2,378,867 | 1,656,768 | 44 | % | ||||||||
Gross paid memberships added (in period) |
371,318 | 341,522 | 9 | % | ||||||||
Marketing cost per paid membership acquisition (in period) |
$ | 76 | $ | 76 |
flat |
|||||||
First-year membership renewal rate (in period) |
75 | % | 76 | % |
(1.0) pts |
|||||||
Average membership renewal rate (in period) |
78 | % | 78 | % |
flat |
|||||||
Participating service providers (end of period) |
44,876 | 33,209 | 35 | % | ||||||||
Total service provider contract value (end of period, in thousands) |
$ | 181,975 | $ | 119,091 | 53 | % |
Nine months ended |
||||||||||||
9/30/13 |
9/30/12 |
Change |
||||||||||
Gross paid memberships added (in period) |
993,556 | 862,014 | 15 | % | ||||||||
Marketing cost per paid membership acquisition (in period) |
$ | 76 | $ | 83 | (8 | %) | ||||||
First-year membership renewal rate (in period) |
75 | % | 76 | % |
(1.0) pts |
|||||||
Average membership renewal rate (in period) |
78 | % | 78 | % |
flat |
Market Cohort Analysis
“Our cohorts continued to perform well in the third quarter,” continued Oesterle. “Each cohort recorded strong membership growth, higher penetration rates, and increasing average revenue per market and contribution.”
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 Post 2010
10
$
5,933,585
$
39.05
$
110.62
$
1,285,741
454,016
10.7
%
34
%
2003 - 2007
35
3,965,746
34.20
92.42
1,352,104
1,293,550
8.3
%
44
%
2008 - 2010
103
220,786
16.28
32.40
187,168
550,209
8.6
%
43
%
96
20,885
12.07
22.49
55,460
81,092
4.6
%
**
244
2,378,867
Cohort table presents financial and operational data for the twelve months ended 9/30/2013
* Demographic information used in penetration rate calculations is based on a third party study we commissioned in September, 2013.
According to the study, the number of U.S. households in our target demographic was 31 million.
** Not meaningful
Third Quarter Results
Third quarter 2013 total revenue was $65.5 million, an increase of 56 percent compared to $42.0 million in the prior year period. Membership revenue in the third quarter of 2013 was $17.1 million, an increase of 34 percent compared to the prior year period. Service provider revenue was the largest component of total revenue at $48.4 million and the fastest growing with a 66 percent growth rate year-over-year. Service provider revenue includes revenue from advertising contracts and fees from e-commerce transactions. Advertising revenue was $42.0 million in the third quarter of 2013, an increase of 65 percent compared to the prior year period and e-commerce revenue was $6.4 million, an increase of 70 percent year-over-year.
Marketing expense increased 8 percent, or $2.1 million, compared to the prior year period. Net loss was $13.5 million, with selling expense of $24.0 million and marketing expense of $28.2 million, compared to a net loss of $18.5 million with selling expense of $16.2 million and marketing expense of $26.1 million in the prior year period. Adjusted EBITDA loss, a non-GAAP financial measure, was $11.3 million, compared to a loss of $16.5 million in the prior year period.
“We remain focused on producing strong unit economics and are pleased with our continued leverage improvement and solid cash position,” said Tom Fox, CFO. “In addition, we are quite encouraged by the growth we recorded from our e-commerce offerings during the third quarter.”
Business Outlook
The Company’s financial and operating expectations for the fourth quarter of 2013 are as follows:
● |
Total revenue in the range of $68.0 million to $69.0 million. |
● |
Marketing expense in the range of $10.7 million to $11.7 million. |
Conference Call Information
The company will host a conference call on October 23, 2013 at approximately 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 72913994 through October 29, 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 720 categories of service, ranging from home improvement to health care. More than 2 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, 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 Investor Relations 317-808-4527 tomw@angieslist.com |
Cheryl Reed Public Relations 317-396-9134 cherylr@angieslist.com |
Angie’s List, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
September 30, 2013 |
December 31, 2012 |
|||||||
(Unaudited) |
||||||||
Assets |
||||||||
Cash and cash equivalents |
$ | 41,609 | $ | 42,638 | ||||
Restricted cash |
50 | 50 | ||||||
Short term investments |
20,972 | 10,460 | ||||||
Accounts receivable, net |
10,636 | 7,787 | ||||||
Prepaid expenses and other current assets |
15,000 | 19,810 | ||||||
Total current assets |
88,267 | 80,745 | ||||||
Property and equipment, net |
16,003 | 12,079 | ||||||
Goodwill |
1,145 | 415 | ||||||
Amortizable intangible assets, net |
3,864 | 2,356 | ||||||
Deferred financing fees, net |
456 | 634 | ||||||
Total assets |
$ | 109,735 | $ | 96,229 | ||||
Liabilities and stockholders’ equity (deficit) |
||||||||
Accounts payable |
$ | 3,814 | $ | 6,489 | ||||
Accrued liabilities |
35,481 | 14,058 | ||||||
Deferred membership revenue |
37,563 | 27,627 | ||||||
Deferred advertising revenue |
35,564 | 23,160 | ||||||
Total current liabilities |
112,422 | 71,334 | ||||||
Long-term debt, including accrued interest |
14,906 | 14,869 | ||||||
Deferred membership revenue, noncurrent |
4,888 | 4,330 | ||||||
Deferred advertising revenue, noncurrent |
387 | 214 | ||||||
Deferred income taxes |
163 | 163 | ||||||
Total liabilities |
132,766 | 90,910 | ||||||
Stockholders’ equity (deficit): |
||||||||
Common stock |
67 | 66 | ||||||
Additional paid-in-capital |
255,767 | 248,326 | ||||||
Treasury stock |
(23,719 | ) | (23,719 | ) | ||||
Accumulated deficit |
(255,146 | ) | (219,354 | ) | ||||
Total stockholders’ equity (deficit) |
(23,031 | ) | 5,319 | |||||
Total liabilities and stockholders’ equity (deficit) |
$ | 109,735 | $ | 96,229 |
Angie’s List, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
2013 |
2012 |
2013 |
2012 |
|||||||||||||
(Unaudited) |
(Unaudited) |
|||||||||||||||
Revenue |
||||||||||||||||
Membership |
$ | 17,050 | $ | 12,769 | $ | 47,598 | $ | 34,036 | ||||||||
Service provider |
48,450 | 29,253 | 129,288 | 75,584 | ||||||||||||
Total revenue |
65,500 | 42,022 | 176,886 | 109,620 | ||||||||||||
Operating expenses |
||||||||||||||||
Operations and support |
11,016 | 7,140 | 29,418 | 19,631 | ||||||||||||
Selling |
23,960 | 16,240 | 65,582 | 42,974 | ||||||||||||
Marketing |
28,189 | 26,088 | 75,870 | 71,316 | ||||||||||||
Technology |
6,942 | 4,905 | 19,349 | 12,223 | ||||||||||||
General and administrative |
8,421 | 5,669 | 21,019 | 17,420 | ||||||||||||
Total Operating Expenses |
78,528 | 60,042 | 211,238 | 163,564 | ||||||||||||
Operating loss |
(13,028 | ) | (18,020 | ) | (34,352 | ) | (53,944 | ) | ||||||||
Interest expense, net |
468 | 467 | 1,395 | 1,380 | ||||||||||||
Loss before income taxes |
(13,496 | ) | (18,487 | ) | (35,747 | ) | (55,324 | ) | ||||||||
Income tax expense |
15 | -- | 45 | -- | ||||||||||||
Net loss |
$ | (13,511 | ) | $ | (18,487 | ) | $ | (35,792 | ) | $ | (55,324 | ) | ||||
Net loss per common share – basic and diluted |
$ | (0.23 | ) | $ | (0.32 | ) | $ | (0.62 | ) | $ | (0.96 | ) | ||||
Weighted average common shares outstanding – basic and diluted |
58,389 | 57,769 | 58,164 | 57,370 | ||||||||||||
Non-cash stock-based compensation |
||||||||||||||||
Operations and support |
$ | 19 | $ | -- | $ | 52 | $ | -- | ||||||||
Selling |
50 | -- | 101 | -- | ||||||||||||
Technology |
(418 | ) | 225 | (55 | ) | 563 | ||||||||||
General and administrative |
1,025 | 545 | 2,568 | 1,650 | ||||||||||||
Total non-cash stock-based compensation |
$ | 676 | $ | 770 | $ | 2,666 | $ | 2,213 | ||||||||
Reconciliation of adjusted EBITDA (loss) to net loss (Unaudited): |
||||||||||||||||
Net loss: |
$ | (13,511 | ) | $ | (18,487 | ) | $ | (35,792 | ) | $ | (55,324 | ) | ||||
Income tax |
15 | -- | 45 | -- | ||||||||||||
Interest expense, net |
468 | 467 | 1,395 | 1,380 | ||||||||||||
Depreciation and amortization |
1,050 | 741 | 2,874 | 1,960 | ||||||||||||
Non-cash stock-based compensation |
676 | 770 | 2,666 | 2,213 | ||||||||||||
Adjusted EBITDA (loss) |
$ | (11,302 | ) | $ | (16,509 | ) | $ | (28,812 | ) | $ | (49,771 | ) |
Angie’s List, Inc.
Condensed Consolidated Statements of Cash Flows
(Amounts in thousands)
Nine Months Ended September 30, |
||||||||
2013 |
2012 |
|||||||
(Unaudited) |
||||||||
Operating activities |
||||||||
Net loss |
$ | (35,792 | ) | $ | (55,324 | ) | ||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |
||||||||
Depreciation and amortization |
2,874 | 1,960 | ||||||
Amortization of debt discount, deferred financing fees and bond premiums |
420 | 209 | ||||||
Non-cash stock-based compensation expense |
2,666 | 2,213 | ||||||
Changes in certain assets: |
||||||||
Accounts receivable |
(2,849 | ) | (3,353 | ) | ||||
Prepaid expenses and other current assets |
4,810 | (7,994 | ) | |||||
Changes in certain liabilities: |
||||||||
Accounts payable |
(3,175 | ) | 4,152 | |||||
Accrued liabilities |
21,423 | 12,601 | ||||||
Deferred advertising revenue |
12,577 | 6,540 | ||||||
Deferred membership revenue |
10,494 | 11,199 | ||||||
Net cash provided by (used in) operating activities |
13,448 | (27,797 | ) | |||||
Investing activities |
||||||||
Restricted cash |
-- | 250 | ||||||
Purchase of short-term investments, net |
(10,717 | ) | -- | |||||
Acquisition of business assets |
(2,150 | ) | -- | |||||
Property and equipment |
(5,685 | ) | (2,583 | ) | ||||
Data acquisition costs |
(701 | ) | (1,968 | ) | ||||
Net cash used in investing activities |
(19,253 | ) | (4,301 | ) | ||||
Financing activities |
||||||||
Proceeds from common stock issuances under employee stock option plans |
4,776 | 361 | ||||||
Sale of common stock, net of costs |
-- | 8,627 | ||||||
Net cash provided by financing activities |
4,776 | 8,988 | ||||||
Net increase (decrease) in cash and cash equivalents |
(1,029 | ) | (23,110 | ) | ||||
Cash and cash equivalents at beginning of period |
42,638 | 88,607 | ||||||
Cash and cash equivalents at end of period |
$ | 41,609 | $ | 65,497 |