Angie's List reported today its net income shrank to $8.95 million in the fourth quarter of 2016, a 36.8% drop from the year-earlier period, and that it swung to a $7.86 million net loss for the full year from a $10.2 million profit in 2015.
The Indianapolis-based firm's quarterly report reveals the impact of the company's shift in mid-2016 to a "freemium" membership model for homeowners that removed the initial paywall for getting reviews in a bid to get more participants and brought in charges to consumers only when they opted for premium services.
The changes brought in roughly 785,000 new members and pushed Angie's List total memberships count to 5.09 million, up 55% from year-end 2015. But they also resulted in a 24.8% drop in quarterly membership revenue to $12.45 million. Meanwhile, revenue from remodelers and other service providers declined 8% to $64.2 million. Angie's List attributed that "the ongoing impact of our technology platform migration," which it said led to lower e-commerce revenue and service provider renewal rates. The combined membership and service provider revenue was $76.67 million, down 11.1% for the quarter.
As partial compensation, Angie's List trimmed its expenses 7.1%, to $66.38 million, in the October-to-December period. The marketing and operations/support budget lines were slashed 38.5%, or nearly $8.7 million, while product and technology spending grew by more than half to $15.66 million.
For the full year, membership revenue sank 15% and service provider revenue dropped 4% to produce a combined $323.3 million, a 6% decline. Meanwhile, operating expenses dropped only 1.3% to $326.42 million. In addition, the company's interest expenses shot up during both the fourth quarter--to $1.34 million in 2016 from $591,000 in 2015--as well as in the full year--to $4.72 million from $2.97 million.
Angiel's List prefers to measure itself in terms of adjusted EBITDA--earnings before interest, taxes, depreciation and amortization as well as before non-cash stock-based compensation, legal settlment accruals, and impairment charges. By that measure, adjusted EBITDA for the quarter slipped to $16.87 million from $19.61 million, while for the year it was almost unchanged: $27.63 million in 2016 vs. an even $28 million the prior year.