Angie's List posts surprise profit helped by higher ad sales

By Subrat Patnaik (Reuters) - Angie's List Inc , operator of a website that allows users to review local businesses, reported a surprise quarterly profit as it earned more from advertising contracts. Shares of the company, which competes with Yelp Inc and TripAdvisor Inc , rose as much as 20 percent in early trading on Wednesday. Service provider revenue, which includes advertising contracts and fees from e-commerce transactions, rose 22 percent to $66.2 million for the first quarter ended March 31, while marketing costs for each member added fell 13 percent to $71. The company also reaffirmed its full-year revenue forecast. Angie's List expects marketing expenses to keep falling as a percentage of revenue, Chief Marketing Officer Angie Hicks said on a post-earnings call. The company is expanding from an online review site to a mobile-first, online marketplace offering bundled local services and products. Angie's List will return to a normalized growth rate in the long-term without a significant increase in marketing costs, Chief Executive Bill Oesterle said. The company reported a profit of $4.4 million, or 7 cents per share, for the quarter, compared with a loss of $3.8 million, or 6 cents per share, a year earlier. Total revenue rose 15 percent to $83.5 million. Analysts had expected Angie's List to break even in the quarter and post revenue of $84.7 million. The company's shares were up 13.4 percent at $6.98 on the Nasdaq. (Additional reporting by Abhirup Roy in Bengaluru; Editing by Simon Jennings)