Tom Ward William S. Oesterle - Co-Founder, Chief Executive Officer and Director Angela R. Hicks Bowman - Co-Founder, Chief Marketing Officer and Director Charles Hundt - Interim Chief Financial Officer and Controller

Aaron M. Kessler - Raymond James & Associates, Inc., Research Division Shawn C. Milne - Janney Montgomery Scott LLC, Research Division A. Justin Post - BofA Merrill Lynch, Research Division Jason S. Helfstein - Oppenheimer & Co. Inc., Research Division Jordan E. Rohan - Stifel, Nicolaus & Co., Inc., Research Division Sameet Sinha - B. Riley Caris, Research Division Lloyd Walmsley - Deutsche Bank AG, Research Division Andre Sequin - RBC Capital Markets, LLC, Research Division Kerry K. Rice - Needham & Company, LLC, Research Division Darren Aftahi - Northland Capital Markets, Research Division Charles Eugene Munster - Piper Jaffray Companies, Research Division Peter Stabler - Wells Fargo Securities, LLC, Research Division Todd Van Fleet - First Analysis Securities Corporation, Research Division Jeffrey L. Houston - Barrington Research Associates, Inc., Research Division

Good day, ladies and gentlemen. Thank you for standing by, and welcome to the Angie's List First Quarter 2013 Earnings Conference Call. [Operator Instructions] As a reminder, today's call is being recorded. I would now like to turn the conference over to Tom Ward, Angie's List's Vice President of Investor Relations. Please go ahead, Tom.

Thank you, Kate. Good afternoon, everyone, and welcome to the Angie's List First Quarter 2013 Earnings Call. With me today are Bill Oesterle, Angie's List Co-Founder and CEO; Angie Hicks, our Co-Founder and Chief Marketing Officer; and Chuck Hundt, the company's Interim CFO. As a reminder, today's discussion will include statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including predictions, expectations, estimates or other information that might be considered forward-looking. Throughout today's discussion, we will present some important factors relating to our business, which may potentially affect these forward-looking statements. While these forward-looking statements represent our current judgment, these statements are also subject to risks and uncertainties that may cause actual results to differ materially from statements made today. As a result, we caution you against placing undue reliance on these forward-looking statements. We encourage you to review our most recent public reports, including our 2012 annual report on Form 10-K, for a complete discussion of these factors and other risks that may affect our future results or the market price of our stock. We are not obligating ourselves to revise our results or publicly release any revisions to these forward-looking statements in light of new information or future events. In addition, as we refer to earnings, we also will refer to adjusted EBITDA, which we define as earnings before interest, income taxes, depreciation, amortization and noncash, stock-based compensation. Adjusted EBITDA is a non-GAAP financial measure, and you can find a reconciliation of adjusted EBITDA to the most directly comparable GAAP financial measure in our first quarter 2013 earnings release, which is posted on the Investor Relations section of our website. We believe that the use of adjusted EBITDA provides additional insight for investors to use in evaluating -- in evaluation of ongoing operating results and trends. However, non-GAAP financial measures, such as adjusted EBITDA, should not be considered in isolation from or as a substitute for financial information prepared in accordance with GAAP. I would now like to turn the call over to Bill Oesterle, Angie's List CEO. Bill? William S. Oesterle: Thanks, Tom. And welcome, everybody. As you may recall the last time we got together, I told you that Angie's List was attempting a trifecta of sorts. We projected that we could: one, continue our rapid growth; two, increase product investments and advance our marketplace initiatives; and three, build our cash security. This quarter, we hit all 3. We grew revenue 68% and we grew total paid households 60%. We increased our technology investments 80%, compared to the prior year. But more importantly, we achieved major objectives in search architecture, mobile capability and payments. Finally, we produced nearly $10 million in positive cash flow, increasing our total liquidity to approximately $78 million. As we have said before, our business model contains very substantial embedded margins. As our earnings in the fourth quarter of 2012 and our free cash flow this quarter demonstrate, those margins are beginning to reveal themselves. We expect this trend to continue throughout the year. Let me also provide one word of caution. It's springtime here in Indiana. It's the time of year that we plant the seeds for the fall harvest. So it is with Angie's List. As we have often reminded, the second quarter is when we make our investments in member acquisition. It is a cycle we have seen in the past 18 years. It's a critical time for us because the success of our investing this quarter and, to some degree, next, will determine the size of our yield in the fourth quarter of 2013 and first quarter of 2014. Lastly, I'd like to comment on developments in our senior team. We are very pleased to have Mark Howell join us as Chief Operating Officer. Mark's combination of operations and financial expertise is impressive, and he has already begun to contribute mightily. As you also know, we have a vacancy at CFO. We are moving to address this and have engaged a leading executive search firm to assist us through the process of finding a permanent one. We are still early in that process. But simply put, we intend to recruit a world-class individual. Not only do we need one, but we also believe we deserve one. I'd now like to turn the call over to Angie. Angela R. Hicks Bowman: Thanks, Bill. Our marketing team recorded another great member quarter with new member sales increasing 60% compared to last year. But the real story behind the numbers is the efficiency we continue to gain in our marketing investments. We achieved these through strong growth rates, with only a 12% increase in our total marketing investments, while our CPA declined 12%, compared to the first quarter of last year. This performance is driven by our continued efficiency across all of our channels including SEO. As Bill mentioned, we are now in the heavy investment part of the year, particularly in marketing. Our marketing investments typically peak in the spring and summer months, as we capitalize on seasonality to continue to drive strong membership growth. Additionally, as we mentioned last quarter, we have successfully moved more of our new members to annual members. This is good for the business because it improves overall retention and cash, but it may provide downward pressure on first year renewal rates as more marginal members move into that bucket. Additionally, this could provide downward pressure on ARPU, since our annual members are a discount to monthly. For the second quarter of 2013, we expect our marketing spend to be in the range of $27.8 million and $28.8 million. I'll now turn it over to Chuck Hundt. Chuck?

Thank you, Bill and Angie, and good afternoon, everyone. I will provide you with some additional detail in our financial results for the first quarter, and then we will discuss our outlook for the second quarter. As a quick reminder, my comments on growth rates will refer to year-on-year changes for the respective periods, unless I indicate otherwise. We delivered a strong first quarter to start 2013. Total paid memberships increased 60% during the quarter. Total revenue increased 68% to $52 million. Membership revenue increased 40% and total service provider revenue increased 78%. Our solid revenue growth rates reflect the successful investments we continue to make in the business to acquire new members and advertising service providers. Within the service provider revenue category, advertising revenue was $32.9 million, an increase of 89%. And eCommerce revenue was $4.7 million, up 24% compared to the first quarter of 2012. In addition, our service provider contract value backlog ended the first quarter at $95 million, an increase of more than 70% compared to the prior-year period. If you recall, the contract value backlog consists of that portion of service provider contract value that has not yet been recognized as revenues. Looking at our expenses. We continue to invest aggressively in the quarter to grow our base of memberships and advertising service providers, as well as technology to provide innovative, efficient tools to our members and service providers. In spite of these continued investments, we realized significant leverage in the business as our operating loss improved to 14% of total revenue compared to 42% in the prior year. Selling expense in the first quarter of 2013 was approximately $20 million. This result was slightly below our expectations. We are midway through the transition of our new sales rep compensation plan and that transition is going well, as evidenced by our first quarter results. Adjusted EBITDA loss, a non-GAAP financial measure, was $5.8 million for the first quarter, compared to the $11.8 million loss in the prior year period, despite higher marketing and selling investments in the first quarter of 2013. Turning to the balance sheet. We ended the first quarter with approximately $63 million in cash, cash equivalents and investments. We generated $9.9 million of cash from operations in the first quarter of 2013, compared to $2.3 million used in the prior year period. The year-over-year improvement in cash generation was due to a combination of increased operating leverage, which reduced our net loss compared to the prior year period, and improved working capital. The working capital improvement was primarily due to lower amounts of cash used for prepaid commissions. We believe our first quarter operating financial results position us well for the remainder of 2013 to deliver continued rapid growth in revenue and margins, increased investments in products, technology and mobile offerings and with secure levels of cash. Before we open the lines for your questions, I'd like to provide you with our outlook for the second quarter of 2013. We currently expect total revenue in the range of $58.5 million to $59.5 million. As Angie mentioned, we expect marketing expense in the range of $27.8 million to $28.8 million. We anticipate selling expense to be in the range of $21 million to $23 million. Non-cash, stock-based compensation expense is expected to be approximately $1.3 million in the second quarter. And we anticipate approximately 58.4 million shares outstanding at June 30, 2013. This concludes our prepared remarks. William S. Oesterle: Okay. We've had a couple of comments that we haven't had enough variety in the order that we're taking calls from analysts. So we're going to introduce a randomizing process this call and see how that works. So Katie, could you please spin the prize wheel.

[Operator Instructions] And I'm showing our first question comes from line of Aaron Kessler with Raymond James. Aaron M. Kessler - Raymond James & Associates, Inc., Research Division: First question on the marketing expenses. The guidance for Q2, I think, about $28 million to $29 million, that implies roughly flattish year-over-year. Do you think you're kind of at the right rate on an absolute basis for marketing spend? And secondly, just in terms of the [indiscernible] space on our model, the net service provider adds of about 3,300, slightly below our estimates, and it looks like the percentage growth slowed a bit. Was that pretty much in line with expectations? And was any of the -- was that related at all to those 12-month contracts that you talked about? William S. Oesterle: So certainly -- so I think just to attempt to restate the question. This level of -- our level of marketing expenditure is being helped considerably by the SEO success that we've had. So effectively we're getting additional yield out of the marketing expense. And so, the level that we've provided you, it -- I think that's -- it's consistent with sort of what we had in the first quarter. And we're getting, obviously -- you can see from the year-over-year increases in acquisition, we're getting significantly more yield out of it. So our CPAs are declining, which is always a good trend. Certainly, our -- the results of our marketing came in just fine. And so the net add number, I don't -- I'm not sure I can comment on that directly. So it surpassed our expectations. I'm not sure how that compares to what you might have had. Aaron M. Kessler - Raymond James & Associates, Inc., Research Division: Okay. Okay. That's all right [ph]. If you look at the growth year-over-year of 3,300, that's about 10% year-over-year. I think in the Q4 it's about 26%, only from a net add number. And there's been a -- no accounts [ph] being affected by the churn you talked about for the 12-month contracts coming off a little more maybe?

So, Aaron, were you asking about the number of participating service providers or you're asking about the growth in the contract value? Aaron M. Kessler - Raymond James & Associates, Inc., Research Division: The net adds. So I think you had a 3,300 in the quarter, which was up about 10% from the 3,000 last year.

When you say net adds, are you referring to memberships? Aaron M. Kessler - Raymond James & Associates, Inc., Research Division: Sorry. No, that's service providers. William S. Oesterle: Okay, I'm sorry. So I was completely -- so service provider, net adds, the mix of contracts is going to have -- it's like, you can see from our service provider growth that it was very strong. And so effectively what we've had is a concentration in -- the per-contract dollars have gone up at a faster rate than we've added the service providers. And we're always attempting to optimize between those 2. So our objective is to drive total revenue. And we use a variety of pricing strategies and renewal strategies. And that can cause slower growth in net service provider adds because our renewals were higher or because our pricing was different. But those things were all in line with our expectations. And in fact, we obviously had a very good quarter on service provider dollars.

Your next question comes from the line of Shawn Milne with Janney Capital Markets. Shawn C. Milne - Janney Montgomery Scott LLC, Research Division: A couple of things. Bill, if you look at the service provider growth and then think about the very strong second quarter revenue outlook, let me ask first, just housekeeping, can you give us the ad dollar renewal rate in the quarter and any commentary on your ad originations sales force? William S. Oesterle: Yes. So we don't provide the specific ad dollar renewal rate. I -- what we can tell you, it's well over 100%. We've said that before. And it is -- we're very pleased with it, too. That number has been very strong this year. So we don't provide the specifics, but that should give you some idea. Your second question...

Headcount. William S. Oesterle: Oh, total headcount. We can -- yes, we can give you the total headcount because I think we'll be issuing that in the 10-Q. What is it, Chuck?

569 reps responsible for new ad originations across advertising and eCommerce. William S. Oesterle: Yes. Shawn C. Milne - Janney Montgomery Scott LLC, Research Division: Okay. And just more qualitatively, the numbers looked very good. Was there anything in the quarter relative to maybe hiring people later in the quarter? Was there any weather impact? You have very strong outlook -- just anything qualitative to that. William S. Oesterle: No, everything -- I mean, the business -- we were a little better just managing margins in the income -- we just got more margin out of the business because we were working on it, we always are. And -- but there was no particular event that drove -- no one thing. We just had good broad-based performance on the ad side, both in originations and renewals, on the member side, origination and renewals, and on the eCommerce side. So it was just a broad-based good quarter. Shawn C. Milne - Janney Montgomery Scott LLC, Research Division: Okay. And just lastly, on the eCommerce, it was up about $1 million sequentially, up about 34%. Any more color on how that's developing between Storefront, Big Deal? William S. Oesterle: Yes, it's -- well, the growth is as we predicted. The growth is shifting to Storefront, which is sort of our strategic objective. And in fact, we have -- the growth numbers, the revenue growth numbers really don't yet give a good indication of the magnitude of the changes that are taking place for us with respect to eCommerce. Or that -- I won't hesitate to use that term anymore, it's becoming a very broad-based marketplace initiative for us, and we've got a lot going on in that. And these numbers, we're happy with them, but I don't think they begin to tell the story.

Our next question comes from the line of Justin Post with Merrill Lynch. A. Justin Post - BofA Merrill Lynch, Research Division: Two questions. First, can you give us a little update on kind of the activity per user on the site, as measured by reviews? And then on the business strength, maybe the service provider renewal rates? If you include the dollars, are those still over 100%? William S. Oesterle: I'll start -- yes, the dollar renewals are well over 100%. That's been going very well. And then member activity, I'll just speak to it globally. It's -- we're improving the per member activity numbers in the business. So I don't think we provide much detail on those. We've given percent of members reporting in the past, but our activity there is improving. A. Justin Post - BofA Merrill Lynch, Research Division: Okay. And maybe one big picture or maybe you can address it with Indianapolis. Is there a level of revenue or members where you really feel comfortable you'll be firmly profitable? Or maybe another way to ask is, when you look at Indianapolis and you look at the margins there, what are you seeing, and what gives you, really, confidence in the long-term profitability of the model? William S. Oesterle: Yes. Our entire -- you can sort of look at our cohort table and look at the entire mature market cohort. And then if you follow the cohort table since we took the company public, you can see just -- it's almost relentless progression of each of the cohorts with the one footnote of the last cohort because it's a catch-all, it gets all the new markets. So it's not a very -- but all of the markets are progressing. And their -- you can see that their contribution back to the overhead cost of the organization is improving across the board. And in our most mature markets, like Indianapolis, it's really not a question of age as much a question of how much are you reinvesting in growth. And so, Indianapolis and the mature markets represent this wonderful case where they're profitable, their -- they have very good contribution margins to the organization and we've been increasing the marketing spend. So their growth rates are still high, and that's what gets us this phenomena of sustainable growth and improving margin. And we've got that going on. To some degree, the entire business is shifting into that mode now.

Your next question comes from the line of Jason Helfstein with Oppenheimer & Co. Jason S. Helfstein - Oppenheimer & Co. Inc., Research Division: So 3 questions, 2 kind of more model based and then 1 kind of strategic. So first on the strategic question. When you think about Storefront, Bill, I think you talked about like the -- what we're actually seeing or the eCommerce isn't really indicative of, obviously, the potential, is there a way to think about it, perhaps the number of markets that Storefront has rolled out in? Just to give us a sense of -- it's obviously early days and kind of as you ramp that. So just to help us understand kind of in a limited way how that has been rolled out. The second question, can you help us understand the seasonality around CPA? I mean, last year, right, we had that big spike in the second quarter. We can kind of see what you're assuming that number will be based on the guidance to some extent -- to the extent that you expect basically CPA to be more smoother this year, right, relative to the spike that we saw last year in the second quarter. And then, the third question, in the backlog metric that you guys are now including in the charts, does that include eCommerce? Or is that just kind of traditional service provider revenue? William S. Oesterle: Okay. So, gosh, I'm trying to think. We -- eCommerce or Storefront or Marketplace, let me use that as a better term. Availability is still very limited for us. It's not -- we haven't -- penetration is infinitesimally small. When you think of it on the number of transactions that flow through Angie's List. So we have tens of thousands of transactions that are essentially flowing through our system, and a small fraction of those are eCommerce enabled. And some of that is very intentional. We're attempting to make sure that our solutions there are excellent, that the customer experiences associated with those are phenomenal. That's the big opportunity for us. And so, I would still characterize them, even though we had good growth this year and starting to become a real number, I would still characterize them as highly experimental. Much of the progress that we're experiencing these days is associated with the operational metrics that are internal to those numbers. And that's the part that's -- there just won't be much visibility on until we begin to roll out across the organization. We're finding transactions that work and then we're putting them under scale. And that is a very, very small percentage of our transactions today. And that's intentional. Jason S. Helfstein - Oppenheimer & Co. Inc., Research Division: Okay. And maybe a follow-up to that and then we'll have just the 2 modeling questions. So would you say the majority of the increase in technology in the first quarter was driven by eCommerce-related initiative? William S. Oesterle: Yes. And in fact -- that yes, and to some degree, you can think about is as -- if we're doing this right, all of our investments or anything that we invest in, in the business, is enabling our marketplace initiatives, which are -- have a lot of eCommerce in them. So one, we increased those. But everything that we're investing in has benefit directly to this notion of a marketplace model. So the answer to that question is clearly yes. And by the way, all of our expenditures are now being tuned very specifically to do that. So on -- and on your model questions, the... Jason S. Helfstein - Oppenheimer & Co. Inc., Research Division: Seasonality around CPA. William S. Oesterle: Seasonality, yes. We shouldn't -- you can -- you'll be able to infer. The thing that causes us problems -- or not problems, but that caused last year a step up in the average CPA was that we had big marginal dollars going to work. And when we do that -- and in fact, we had a remarkable number of marginal dollars last year. The amount of the marginal spend was huge in the second quarter. And the number popped up, the average number. We were happy with it because it -- we were looking at it in terms of the effectiveness of the marginal investment. It worked really well. We're forecasting this year a much smaller marginal investment because we're getting so much yield out of, effectively, the free stuff. And so, we don't anticipate the same kind of -- the same magnitude of change in the second quarter that we had last year. There is a change because we put more dollars to work, but we're not putting marginal dollars to work this year. And that will just soften the impact. Jason S. Helfstein - Oppenheimer & Co. Inc., Research Division: And then lastly, just to confirm that, right, that the backlog number does not include eCommerce?

That is correct.

Our next question comes from the line of Jordan Rohan with Stifel. Jordan E. Rohan - Stifel, Nicolaus & Co., Inc., Research Division: We haven't heard too much about the progress you're making in the different vertical healthcare providers. Can you update us on the progress there? And also, when you -- when are you really going to flip the switch and broaden the availability of Marketplace/Big Deal, eCommerce so that we see a meaningful uptick in revenues there? Is there something you're waiting for or a catalyst that will tell you it's the right time? Or is there a product-related development or milestone that you're waiting for? William S. Oesterle: So I'll take the second question first. No, there's not any individual thing. We're -- we have transactions that are running through a series of steps. And we're deconstructing those. And we're measuring them and we're managing them for yield. And so, as we incrementally get better and better and better at the -- at the throughput rates with those. We're simultaneously raising the standards on the service providers that are participating. So our goal here is to just have continuous improvement on customer experiences. And that is a continuous process improvement exercise. So we haven't put it under marketing scale yet with respect to-- neither the members nor the service companies. And we don't have a projection yet when exactly. To some degree, we're developing the tools to do that as well, and this is all happening simultaneously. So I would like to be able to give you much better precision on, okay, we're going to flip the switch on July of whatever, but it's not going to work that way. We're incrementally attacking all parts of the process simultaneously. And as we make progress, there'll be sort of this organic scaling. And that's how it's working today. I mean, we find good service providers. We get them to adopt the tools. We start measuring their performance. They start recruiting more business. So it -- you can improve on multiple factors at the same time. And that's how we're going to attack this. Jordan E. Rohan - Stifel, Nicolaus & Co., Inc., Research Division: All right. Great. Healthcare? William S. Oesterle: Oh, and then the -- yes, the vertical. So healthcare -- we don't break out the individual performance of healthcare, as you know. But I'm actually very happy with the activity that we're getting in that area. We -- it continues to be -- if we had significantly more dollars to invest, we would put them in healthcare, because the prospects for our solutions in that space just continue to look good. Jordan E. Rohan - Stifel, Nicolaus & Co., Inc., Research Division: All right. A little more clarity there. What do you look at as an indicator, a leading indicator of a successful vertical? What kind of things are you looking? William S. Oesterle: Yes, the big leading indicator is member activity. So, are the members using us to solve their -- for healthcare solutions, and that's where we have fantastic activity levels from the members.

Our next question comes from the line of Sameet Sinha with B. Riley. Sameet Sinha - B. Riley Caris, Research Division: A couple of questions. So, Bill, you spoke about the Storefront and you're getting a lot of questions on that. From the current standpoint, what is the -- what's the GMV of transactions that are passing through your platform versus the previous model? And I know in the previous model you didn't necessarily see the value of the transactions necessarily. But from what you could guess, can you talk about what the multiples higher that go-through Storefront? The second thing is in terms of -- you spoke about increasing yield through SEO and whether there are -- that's fairly web 1.0 kind of model, and you've seen the efficiency that's fantastic. Can you speak about word of mouth and maybe when -- use of social media to continue to derive increasing efficiencies in member acquisition cost? And third thing is, I think you're back to a point that you made at the beginning of the conference where you spoke about search, mobile and payment. Can you elaborate on those points? William S. Oesterle: Yes. So let's see. So on Storefront, we -- I can't break down for you the specifics precisely for the factor that you outlined, which is our -- the best we could do is estimate the throughput that we were getting, the volume of the transactions that were flowing through Angie's List. Now -- in the historical model. What I can tell you is under any reasonable assumption, eCommerce or our marketplace initiative capture significantly larger portions of the transaction flow, significantly. Now it is totally dependent on category. It's totally dependent on service company. It's totally dependent on the offerings that they have in the portfolio. But as a -- as just a macro proposition, it's some multiple, large multiple of the traditional transaction volumes. I will say on SEO, maybe we aren't stating it right. The way that we're approaching SEO is not a 1.0 approach. We're building tailored content that is proprietary and it's localized. And I would say, it is a very, very different approach. The tools are 1.0 tools. But the way that we approach the content and how it's formulated, how it's localized, how it's -- there is nothing 1.0 about that. I think we're doing that as well as anybody. Now -- and that ties in to sort of social media/word of mouth. Because word of mouth, we just historically have been very, very strong. It may drive -- as much as a quarter of our sales comes directly from word of mouth, and that's been true for 15 years. Angela R. Hicks Bowman: In a larger member base, just -- that's drives -- that's one of our -- when we talk about the efficiencies we're getting in marketing, I mean, a larger member base with strong word of mouth certainly helps to drive efficiency, we're saying. And the social tools are just ways for us to amplify the word-of-mouth opportunity. Sameet Sinha - B. Riley Caris, Research Division: Yes, the final question was about the comments that you've made at the beginning of the call about search, mobile and payment. I was curious about the mobile side, specifically. William S. Oesterle: Yes. So, okay. Well, on the mobile side, specifically, we are -- we have rolled out a couple of new consumer apps that are doing a better job of pulling members into the transaction loop, the full transaction loop that we have in eCommerce. But the really interesting stuff is what -- we're in the process of doing, on the service provider side with mobile, the information that we can provide to them and also the information that they can provide to us with respect to performance. And ultimately, that is the user experience that we want to improve. It's the actual fulfillment of the service itself. And that's where mobile tools -- where we have an opportunity to revolutionize the delivery of local service. So that's probably the area of largest advance that we have going on these days.

Our next question comes from line of Lloyd Walmsley with Deutsche Bank. Lloyd Walmsley - Deutsche Bank AG, Research Division: Sticking on the Storefront theme. I know there's not a lot you can provide in terms of metrics, like big, across the company metrics, but is your cohort data that you can share with us in terms of perhaps like the number of users who have participated and repeat their participation either end users or service providers? And then kind of as a follow up to that, can you just talk a little bit about the go-to-market strategy around that? Is it market by market? Is it category by category? How should we think about that? William S. Oesterle: Yes, it's not even -- unfortunately, I can provide you almost no clarity on this today, other than all of the operating metrics associated with our eCommerce initiatives are improving. All of them. So I can say that. And then our go-to-market strategy, because in all these independent markets we have the opportunity to run laboratory experiments. So we tried different things in different places. And if something works, we combine it with something else. So the specific order of the rollout to some degree is dependent these days on where -- which service providers are standing up and identifying themselves as willing and able to participate. And if they do, then we start attempting to engage members and we start measuring their progress. And that is a reactive as opposed to very active marketing strategy, it happens to be a nice way to be able to market these days, when we don't have to go out and actively recruit or put the dollars behind that. And so that's how the business is sort of evolving organically. We have a couple of markets where we have much deeper activities associated with acquisitions of service companies and of acquisition of members. But when we develop tools that are useful, then we just start looking for people to opt in to them. And that happens. That happens across market, across categories. And we have a lot of growth that can take place that way before we have to start investing meaningful dollars in the sales side. So there's almost nothing tangible for you to hang onto there. But that's how it exists today. And as time goes on, we'll -- some of these things will become much more apparent just in the resulting revenue numbers. You can start -- you can begin to see that this quarter, that it's -- the renewal rates on -- the quality of revenue that we're driving just in that increase is substantially higher than it was a year ago, both in terms of its recurring nature, its customer satisfaction, the number of service providers that provided the -- and just all of those numbers are substantially better. And just make us very optimistic about how that initiative is building. Lloyd Walmsley - Deutsche Bank AG, Research Division: And just as a follow-up. When you say that it will probably be some time before you have to invest significantly in the sales infrastructure around that, is that because of -- is that on an absolute basis? Or some of this self-service such that on an unit economic standpoint, you don't need to invest a lot to sell this to service providers, that it's more self-service or -- how should we think about that? William S. Oesterle: Yes. You can think of that in terms of -- to some degree, we've done the hard work associated with building a marketplace in that we've already recruited the service providers and we've already recruited the members. So we're getting leverage off of the work we've already done. We have the relationships in place. So it's simply a matter of making both sides aware of the benefits of participation and then letting them engage in it. So we are not having to go out and specifically recruit service companies into the process, nor are we having to go out and specifically market to members outside of what we already do. And that's the big opportunity for us. We've invested years and years and millions and millions of dollars identifying very high quality users and very high quality service providers. And we have a relationship with them, a paid one and we're leveraging that.

[Operator Instructions] Our next question comes from the line of Andre Sequin with RBC Capital Markets. Andre Sequin - RBC Capital Markets, LLC, Research Division: Just a few quick questions. I know you've partnered with Square in the past. Are you considering working with any other payment processors or does this basically take care of that need at the time, or is it even an exclusive partnership? And then secondly, looking forward a little bit more, we know you have a few sites or a few markets in Canada. Any thoughts on when we might see the first foreign-language site? William S. Oesterle: So our relationship with Square is not exclusive. It's very important and it may -- while not exclusive legally, it could workout that it's exclusive in practicality. But we certainly want to maintain the ability to have multiple payment mechanisms that support the marketplace. So whatever the customers, the members and the service providers want to adopt, we're going to have to be in a position to adopt. And then, a foreign language marketplace -- we don't have anything -- any news that's going to be in the next couple of quarters. We've got a lot going on. We are very focused on building the core -- the assets of the core business, members and service providers and then enabling them to have great experiences. And that's consuming -- that's a big project that's consuming all of our attention. We've got a lot of investment going into it. We're making a lot of progress and that -- if anything, that would push out moving into a foreign language market. It just adds a layer of complexity that we'll address at some point. But we're going to do it when the opportunities here aren't as large as they are in front of us right now. Andre Sequin - RBC Capital Markets, LLC, Research Division: Fair enough. And I guess if I could follow up one more modeling-related question. Can you give any kind of cash flow guidance or even just on the service provider backlog, how should we think about the timing that, that will be collected? Is that based just over the course of the year? Or is that any longer there, 90 days payable? Or any kind of color we can get around that would be great. William S. Oesterle: From the backlog, well, the backlog -- you can think of this in term -- Chuck, step in if I start to completely screw this up. But the backlog, you can think of it in terms of the average term of the contract that goes in there. And our average contract term is about 12 months right now. So that's a pretty decent proxy for -- there are some shorter and some longer contracts, but that's pretty decent proxy for it.

Our next question comes from the line of Kerry Rice with Needham. Kerry K. Rice - Needham & Company, LLC, Research Division: Most of my questions have been answered. So maybe as I think about the acceleration with service providers and growing ARPU related to that, can you talk maybe in relation to lifetime value per member, what you think that trajectory is there? And I mean, in a qualitative sense, because I don't assume you can do it quantitatively, but is it accelerating, would you say, at this point? William S. Oesterle: It's increasing. So we're adding members at a record rate. And our impressions of the LTV of those members, taking into account all the revenue streams, they're increasing. So we're getting the compound impact of -- if you think of that in terms of the value of Angie's List, which is how we think about the value of Angie's List, we're getting a compounding growth in the value. Kerry K. Rice - Needham & Company, LLC, Research Division: And you have, I think, previously given some framework for thinking about service provider churn. Can you give any update or can you frame -- is that improving? Is it about the same? At any kind of qualitative sense of service provider churn? William S. Oesterle: Yes. So we think of it in terms of dollars and individual service companies. And both of those numbers have been very, very good this last quarter. There was improvement actually in both of those numbers.

Our next question comes from the line of Darren Aftahi with Northland Securities. Darren Aftahi - Northland Capital Markets, Research Division: Most of my stuff has been answered. So just a couple here and then a housekeeping on the model. Can you give us any update on your scheduling tool, if anything? And then, how important really that is to what I'll call prototype [ph] services part of your business longer term? William S. Oesterle: Yes. So we're getting -- so, the scheduling would be a sort of a narrow description of that entire tool set, which involves, really, contact management, booking, job quote and scheduling. And we've made advanced-- scheduling for both appointment and scheduling for work. And the tools that we built to some degree, they're working. We're getting uptick on them. And we're applying them to all the pieces of that initial phase of the transaction management. And I will say they're working sort of in spite of how simple they are. So it's amazing how just a few minor tools can make such as a material difference in outcomes. And that's the thing that we're finding that's so encouraging to us, is that you can bring the most modest functionality to these transactions, you can improve them dramatically. And so we're attempting to do that across all of the steps of the transaction. And because the outcomes work so well, it drives adoption. And that is far and away, the most encouraging aspect of this whole process. Darren Aftahi - Northland Capital Markets, Research Division: Great, and then 2 more. Has adverse weather in parts of the country and in the beginning of April, has that impacted or had any impact on your marketing spend or guidance for 2Q? And then I just have one last one. Angela R. Hicks Bowman: Not particularly. I mean, generally speaking, kind of bad weather can help the service, but it's not a major move of the dial, like what we're seeing in kind of these rains and things that we're seeing. I mean, this is kind of in the normal course of business. So it hasn't really changed our projection. Darren Aftahi - Northland Capital Markets, Research Division: Great. And then, is your -- so your CapEx of about $1.5 million in the quarter. Is that a fair assumption as sort of a run rate for the remainder of the year? William S. Oesterle: That's probably a fair assumption for the run rate.

Our next question comes from the line of Gene Munster from Piper Jaffray. Charles Eugene Munster - Piper Jaffray Companies, Research Division: We've talked a lot about kind of leverage in the sales and marketing line and the flywheel. How about just on the operations side? Do you feel that there is any of movement there? And then I have a follow-up question -- movement in terms of potential leverage. William S. Oesterle: Yes. You can see in the income statement that we've improved margins. And some of that was through marketing but some of it was through efficiencies in the cost of fulfillment for members and service providers. And we just did a lot of things incrementally better. And the good news in that is there is this flywheel and this flywheel begins to produce cash in the business, which we did this quarter to the tune of $10 million. $5 million of that came from the income statement, just better margins. And the good news there is in spite of the fact that in the second quarter, where we will make investments, that we're now projecting that we're going to come in with positive cash flow for the year. And so we've got a $10 million head start. We've got an investment phase to go through. But we believe we're going to end the year with total positive cash flow. Charles Eugene Munster - Piper Jaffray Companies, Research Division: So, I guess, as we kind of -- the bottom line is that it's still more leverage, I guess, to go just on the operations line. One just really high level, very basic question. When we call your service providers which is like shooting fish in the barrel because you just provide us the contact information for all of that, we find obviously the ones that aren't paying love your service. They run a lot of times predominantly on Angie's for lead gen, but don't ever see a reason why they would pay for the service. And you talked a lot on the call about different things that you're adding, different tools, modest tools that improved service provider uptake. Is there 1 or 2 things that, really, can get those non-paying to pay, number one, and number two, just -- are there other levers that you guys can come out with that you're working on it right now that you can just talk about from a high level that could improve that conversion from free to pay? William S. Oesterle: Yes. Well, see, this is where -- this is a great synergy. The great leverage point of what we're doing is that, if we're developing tools that allow the service companies to provide better service, then we have something to attract members to those service companies. So if we're giving them tools that enable them to do a better job for the members, then we can attract the members to those service companies. And that's where -- so in fact, what we start to do, we're going to begin to raise the bar for performance through our tool sets, and the service providers that you mentioned, they are either going to have to keep up or join in. And we're happy with either solution. But we have the opportunity to provide a solution set that makes their job a lot easier. So we want to provide both business and tools to fulfill that business better. And if we can do that, then we'll start recruiting significantly more service companies into that flow.

Our next question comes from the line of Peter Stabler with Wells Fargo Securities. Peter Stabler - Wells Fargo Securities, LLC, Research Division: A couple of quick ones. I think you mentioned earlier on, Bill, in your comments that the mix shift from monthly to annual continues. Could you give us an update on that? My impression is about 90% is annual. And is it going to go much higher than that? Do you think it could go much higher than that? And then I got a couple of real quick follow-ups. William S. Oesterle: Yes. Angie -- those -- Angie made the comment. That's roughly where we're running, right? Angela R. Hicks Bowman: That's about where we're running. I mean, the key to understanding it is what's happening on the new members' side. So when we're acquiring new members, is where we really saw the shift. And so that doesn't -- the total member base you don't see as big of a shift between monthlies and annuals as it's harder to move that number because the member base is obviously [indiscernible] than the new member base. So, the key here is you could potentially see a shifts. What I wanted to kind of basically let folks know is like, hey, these are a couple of our operating metrics that we point to quite a bit. And because of this shift, which is a really positive shift for the business in that overall, annual members stick around a lot longer than monthly members and there's obviously great cash characteristics from an annual membership. The key here is it's certainly changing the mix of that first year annual renewal bucket. And so the point was, hey, you need to just kind of be aware. There is potential downward pressure on that first year annual renewal rate because we're changing the composition of that bucket. Peter Stabler - Wells Fargo Securities, LLC, Research Division: That's helpful. Quick question on Band of Neighbors. I'm wondering whether you could provide a little color on the take-up of that service. We find it pretty interesting, and whether that is actually part of your SEO strategy to build out more local content that which could continue to fuel your SEO progress. William S. Oesterle: We're not talking about Band of Neighbors too much, other than to say it exists and we're rolling it out across-- particularly targeted neighborhoods. We have -- we've spent all these years, it kind of goes to my earlier comments, investing and building networks in neighborhoods. And so we have thousands of neighborhoods with very high penetration rates. And so we're trying to supply additional tool sets into those neighborhoods. And that helps us with SEO, that helps us with marketing, it helps us with word of mouth. It helps us with service provider -- with our marketplace initiatives. So it's an additional way for people to collectively consume services in a productized manner, and potentially, is an effective way for service providers to deliver service in a more efficient manner because they can leverage the activity across 1 neighborhood. Very powerful stuff for us. So, many of the tool sets that we're developing today are specifically -- we're rolling them out because they leverage existing relationships that we already have. And Band of Neighbors is a classic example of that. Peter Stabler - Wells Fargo Securities, LLC, Research Division: Can you give us a sense of how widely deployed Band of Neighbors is at this point? William S. Oesterle: We're still -- well, let's see. It's deployed -- I mean, again, we're sort of pursuing this opt-in strategy. So I think technically now we -- you can opt-in anywhere. And we're -- but our -- we're only marketing externally, sort of in a very small number of places to make sure we've got the laboratories right. Angela R. Hicks Bowman: Right.

Our next question comes from the line of Todd Van Fleet with First Analysis. Todd Van Fleet - First Analysis Securities Corporation, Research Division: The member churn in the quarter by my calcs here anyway dropped to the lowest level, I think you've seen in multiple years. I'm just wondering if that's your observation as well and if there's any relation between that and the kind of verticalization, I guess, of the membership fees that the folks are paying year in, year out. That's on the member side. Then I have one on the service provider side. Angela R. Hicks Bowman: So I think as we've talked about, we look at the renewal rates versus the calculations. So our first year renewal rates were steady with last year. Our average -- keep in mind, our average annual renewal rate is dependent on the mix of the age of the members. So that number can move around. And so, for example, in this quarter, because we were seeing some heavier weight to that first year bucket, you see some movement there. And then the other positive that we end up picking up in the renewals, as we just talked about, was a shift away from monthly members. So it's been -- overall, which would play into, probably, your churn calculation is if there -- if monthlies are a smaller percentage of the total member base, then that will help improve retention. Todd Van Fleet - First Analysis Securities Corporation, Research Division: Yes. And then, I guess, Angie, the monthly membership becomes a smaller percentage because in part, I guess, because of the verticalization. Is that your view? Angela R. Hicks Bowman: I think we made some -- so your question is why the monthly -- why the shift away from monthly? Is it because of the ability to buy verticals? Is that the... Todd Van Fleet - First Analysis Securities Corporation, Research Division: Yes. Angela R. Hicks Bowman: [indiscernible] the question. I think that is essentially part of it. We also just made some improvements on our joint bundle that actually helped deliver some of that as well. Just testing and optimization. Todd Van Fleet - First Analysis Securities Corporation, Research Division: Okay. And then on the service provider side, a lot of talk about the kind of the commerce system I, guess, that's in the tools. I mean, do we have launch dates for some of these? Or are some of these already in practice, Bill? Or I'm just wondering kind of when we're going to see kind of the rollout of these tools. William S. Oesterle: Yes. We -- well, we have lots of these tools in the field today. And that process -- the process of rolling them out and experimenting with them in the field really started kind of in the last half of last year, and we're just iterating constantly. So we've very intentionally -- to some degree, a launch date implies a big thing. And what we're doing is applying lots of incremental improvement to small things. We've got the transactions already. They are already working. It's a matter of just improving them. It's very much a yield management and continuous improvement exercise for us. And so we want this to -- it should feel very organic and very persistent. That's how it feels to us right now and we want that to continue. Todd Van Fleet - First Analysis Securities Corporation, Research Division: Yes. And then the revenue model for the tools, I imagined that you can charge, and you have been charging separately kind of on a monthly basis to the service providers for these tools as opposed to maybe, you could have some advertisers or maybe someone you don't want to advertise necessarily but to have access to the tools, it's kind of a monthly fee? Or is -- what's the revenue model there? William S. Oesterle: Yes. The tool adoption is free. It's just that the transactions that we start sending through -- by definition, those tools are there to fulfill transactions. And so if you're adopting the fulfillment tools, then whatever transactions that we're sending down the pipe to run through those, we're charging a per transaction fee or a per -- effectively, a commission on those. So we -- we're diverting transactions into a system that is by -- I wouldn't even say diverting. We're recruiting transactions into a system that provides better service. And one of the advantages of recruiting them into that service is that we can reward the service companies that are adopting the tools and meeting the performance criteria that we establish. And we're getting better and better at that. So we got -- we have a river of transactions that are flowing past as and we started off by just diverting a little bit to build a water wheel. Well, we're going to build that into a giant hydroelectric plant because the river is big enough and because our tool sets are getting better and better and better. Todd Van Fleet - First Analysis Securities Corporation, Research Division: Right. So just to be clear though, Bill, you guys are selecting the service providers that are -- that you want to try all these tools with and presumably, those service providers are advertising on Angie's List at this point? William S. Oesterle: Well, it's a self -- it is a self-reinforcing -- once we-- effectively -- we establish the criteria by which they have to perform one of the criteria that we have to be able to measure it. And so they have to opt-in to the system in order to participate in the system. And to some degree, it's -- we're recruiting but to some degree, they're applying. So we're -- the whole exercise here is to identify service companies that are both willing and able to engage in a process of providing better service. And if they're willing to do that, we've got tools that we'll give them and they'll get more business. And that's the water wheel that we're building.

Our final question comes from line of Jeff Houston with Barrington Research. Jeffrey L. Houston - Barrington Research Associates, Inc., Research Division: Two quick ones. First, following up on an earlier question. How are you encouraging members to become annual members rather than monthly? Angela R. Hicks Bowman: Starting with that, some of the tasks -- we just continually work to make it cleaner and easier for them to select annual memberships in the join funnel. So we made a couple of iterations over the last year or so -- of just making it -- making that the optimal choice in the join funnel and that tests -- those kind of tests we're winning for us. William S. Oesterle: And I will say there's a natural -- there is some level of progression that takes place just as the product. This ties to higher levels of word of mouth that you get as the product gets better in a defined geography. As you get more members and they're more active, the product improves and our percentage of annual memberships goes up. So Angie is refining the edges of that with both pricing and with just kind of construct, A/B iteration. But the overall trend is were building density of memberships faster than we ever have before. Market penetration is growing faster than it ever has before. And a very powerful by-product of that is that you get more annual sales. There is less experimentation, more confirmation of the product. And this is a tangible sign that product satisfaction is going up. Jeffrey L. Houston - Barrington Research Associates, Inc., Research Division: Okay. Then last question for me is, as your business model is proving out, what would you like to see before you begin to provide a quarterly bottom line guidance as well as a full year guidance? William S. Oesterle: What we would like to see? Oh, I don't know. First of all, we have to -- that's a good question, actually. I don't know. I don't know the answer to that. We'll have to talk about that and see what it is you would like to see before we provided something like that. Jeffrey L. Houston - Barrington Research Associates, Inc., Research Division: Yes. I'd vote for a full year guidance and a bottom line quarterly guidance. William S. Oesterle: All right. We will certainly take that under advisement. And we'll check with a few of your colleagues.

At this time, I'd like to turn the call back over to Bill Oesterle for closing remarks. William S. Oesterle: Okay. Well, thank you, everybody. Obviously, we're pleased with cash generation this quarter. That's something that we've known the business could and should do, but it's always nice having it happen in actuality. And I think it's also -- in spite of the fact that we've got some investment quarters coming up, we believe that the business, as I mentioned before on a full year basis for 2013, is going to be cash flow positive. So that effectively, the business has turned the corner, unless we make some major change in investment strategy. So that's a big turning point for us. We're very happy about it and we'll keep you posted on how it's going. Thanks, again, for your time. And we look forward to talking to you individually.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program. And you may all disconnect. Everyone have a great day.