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After a minor turnaround earlier last year, local business reviews site Angie's List (Nasdaq: ANGI) seems to be back in the rough. Recently released dismal financial results continue to spell gloom for the company. And there doesn't seem to be a revival in sight.

Angie's List's Financials
Fourth revenues grew 49% over the year to $68.8 million compared with the Street's projected revenues of $68.5 million. However, EPS of $0.05 was significantly short of the Street's projections of $0.12 per share.

By segment, service provider revenues grew 57% to $51.0 million driven by a 55% growth in advertising revenues to $45.0 million and 72% growth in e-commerce revenues to $6.0 million. Membership revenues in the quarter grew 29% to $17.7 million. Among other operating metrics, total paid memberships grew 39% to 2.48 million while gross paid memberships fell 3% to over 224,700 accounts.

Fiscal year 2013 revenue grew 58% to $245.6 million. Loss per share reduced from $0.92 a year ago to $0.57 during the year. For the current quarter, Angie's projected revenue of $71.5 million-$72.5 million, missing the Street's target of $74.3 million.

Angie's Membership Growth Woes
Analysts are worried about Angie's rising costs associated with their efforts to increase membership. The cost of customer acquisition is rising rapidly as Angie's has had to invest heavily in marketing activities. Last quarter, marketing expenses rose 30% to $36.2 million. Marketing cost per paid member grew 33% to $52 for the quarter. But it has not helped increase their new member sign up rate. During the quarter, new members grew a meager 3%.

Meanwhile, they are investing in brand development exercises using Search Engine marketing and plan to spend $22.5 million-$23.5 million this quarter. They are focused on building their brand through online search optimization to ensure that they own more of the top search results for terms like Angie's List and other related terms. They hope that their investments will ensure that their portal is well-represented in search.

New membership rates are also low because of the availability of free review sites. Other online review sites like Yelp (NYSE:YELP) continue to offer free rating service to help consumers make informed decisions about the service providers. For now, Yelp may be focused on providing restaurant reviews, but they are also expanding their reach in other services.

To help attract paid members, Angie's has been investing in alternative pricing and product offerings. They are currently developing a tiered pricing structure and plan to introduce an e-commerce option as well. They have not disclosed many details of these new offerings, but they are hopeful that if successful, they will introduce them during the current year.

Angie's stock is currently trading at $14.37 with a market capitalization of $839.6 billion. The stock touched a 52-week high of $28.32 in April this year. Given the Internet population's reluctance to pay for services, Angie's List has a tough road ahead. I would recommend reconsidering their entire business model, perhaps taking the company private while doing that kind of experimental surgery.

Disclosure: No positions

Source: Angie's List Struggles, More Woes Ahead