Photo: Angie’s List
Angie’s List, which compiles business recommendations from real users, has filed for a $75 million IPO.The company has been around since 1995 and made it through the dot-com bust and the Great Recession, and it’s got more than 820,000 paying customers. So it seems like a survivor.
But the filing also shows that expenses have been growing faster than revenue for the past couple of years.
Revenue jumped 40% between the first half of 2010 and the first half of 2011 (from $27 million to $39 million). But expenses grew more than 80%, from $36 million to $63 million.
The company also has accumulated debt of more than $143 million, and warns that marketing expenses will continue to grow as they try to get new paid memberships. “This planned investment will consume a material portion of our cash flow and is expected to result in additional net losses and negative cash flow.”
There’s nothing wrong with companies going public before they’ve figured out how to make money, as long as investors know the kind of risk they’re taking. But this makes two in a row: Jive Software filed yesterday with similar warnings about its prospects.
It will be interesting to see how much appetite investors actually have for these companies once they go public.
The underwriting is being handled by Bank of America.