Why Angie's List Inc. Stock Dropped 20% Today

What:Shares of Angie's List were down 20.8% as of 11 a.m. Wednesday after the local business reviews specialist announced mixed second-quarter results.

So what:Quarterly revenue grew 10.7% year over year to $87.3 million, driven by a 17% jump in service provider revenue to $70.4 million, but partially offset by a 9% decline in membership revenue to $16.9 million. Regarding the latter, note that while Angie's List managed to grow paid memberships 11.7% year over year to 3.17 million, that's a deceleration from 31% growth in the year-ago period. In addition, the revenue it collected from each of those members fell 21.7% to $28.38.

To its credit, however, that translated to a net loss of $8.3 million, or $0.14 per share, which is a 55% improvement from the $0.31-per-share net loss Angie's List incurred in the year-ago period. Analysts, on average, were anticipating a wider net loss of $0.17 per share, but onhigher revenue of $89.4 million.

Now what: "We continued to execute on our strategy to grow revenue, increase margins and invest for growth," explained Angie's List Interim CEOMark Howell. "Our efforts manifested in the proliferation of e-commerce, operating efficiency and the continued development of our technology platform and product roadmap."

Howell also highlighted strength in Angie's List's efforts to attract new members through its Search, Shop, and Snapfix products, as well as recent improvements in its mobile interface for driving growth. Nonetheless, that's little solace for investors concerned about the deceleration of that growth, especially as the company remains on the cusp of sustained profitability. For now -- and even though Angie's List stock trades at a seemingly reasonable 12.9 times next year's expected earnings -- I'm content watching the company's progress from the sidelines.

The article Why Angie's List Inc. Stock Dropped 20% Today originally appeared on Fool.com.

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