By Subrat Patnaik
(Reuters) - Angie's List Inc (O:ANGI), 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 (N:YELP) and TripAdvisor Inc (O:TRIP), 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.