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Will the company's history of losses hurt it in the public market?
Trusted consumer reviews site Angie’s List has decided to take the big plunge in the public market after operating as a private company for the last 16 years. The company filed for an IPO Thursday afternoon with plans to raise $75 million, but hasn’t yet decided on a ticker symbol.
Founded in 1995 in Indiana, Angie’s List is a trusted source of reviews on “high cost of failure” services, such as home repair service providers, landscapers, healthcare practitioners, mechanics, and more. In other words, the site focuses on services that could cost the average consumer a lot if done badly.
While you can get reviews from Yelp and other free review sites, Angie’s List prides itself on the fact that it’s a paid service that takes specific measures to prevent businesses from posting positive reviews of themselves. For example, Angie’s List doesn’t allow for anonymous reviews.
As of June 2011, Angie’s List had 820,000 paid members, 37% of whom wrote a review for at least one service in the last year. The service operates in 170 local markets throughout the U.S. and has seen a compound annual growth rate of 43.4%.
As for its financials, Angie’s List is seeing some revenue growth, but it has also taken some big losses. In 2010, the company took home $59 million in revenue, but incurred a net loss of $27.2 million, compared to an $11.9 million loss in 2009 and $20.3 million in 2008. And it looks like the company is on its way to suffer another big loss this year. Though it has made $38.5 million in revenue in the first half of 2011, it has already suffered a loss of $25.7 million. By comparison, in the first six months of 2010, Angie’s List suffered a loss of $10.9 million.
It turns out, Angie’s List has incurred net losses since its inception in 1995, and today the company has run up a deficit of $143.2 million. But it’s not without good reason, the company claims. It has raised the stakes in member acquisition, spending $30.2 million on marketing in 2010. In the first half of 2011, the company has already spent $29.2 million which explains the big loss.
To date, Angie’s List has raised over $140 million in financing, including its most recent round in March 2011 to the tune of $53.6 million.
In similar news, review competitor Yelp recently hired a new CFO, which could point to an impending IPO of its own.
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