The Angie’s List (NASDAQ:ANGI) turnaround story is in full throttle.
Back in November 2011, Angie’s List — which operates a website that helps people find and read reviews about plumbers, roofers and other contractors — pulled off a successful IPO in which shares quickly jumped from $13 to $19. But the good times wouldn’t last for long thanks to a few lackluster earnings reports.
Of course, those earnings were depressed because ANGI was investing heavily in its branding campaign — an investment that’s really starting to see a payoff.
The most recent quarter’s revenues spiked by 68% to $52.2 million, and the number of paid subscribers jumped 60% to 1.95 million. While the company sustained a net loss of $7.9 million, or 14 cents per share, that’s a big improvement from the year-ago period’s $13.5 million (24-cent) loss. Both figures were better than Wall Street’s forecasts for a 17-cent loss on $51.6 million in revenues, and excited investors bid up shares by a whopping 29% by Thursday’s close.
Also exciting Wall Street was ANGI’s glimpse into the future, providing a forecast of $58.5 million to $59.5 million in Q2 revenues, trumping estimates for $57.2 million.
As the loss would indicate, the company isn’t letting up on its marketing expenditures, but the good news is that Angie’s List appears to be getting operating leverage. In the past year, the cost per customer fell 12% to $72. If this trend continues, ANGI will have a much easier time turning a profit.
Anyone who was late to the game should stay on the sidelines for now, however. The stock is up 110% year-to-date and is just coming off a big move. Plus, it’s far from clear whether Angie’s List can continue to get more people to pay for its subscription service — especially considering free alternatives such Yelp (NYSE:YELP), Kudzu and Insider Pages.
Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO Strategies, All About Commodities, and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.