UPDATE 1-Angie's List posts smaller quarterly loss, shares rise

* Forecasts second-qtr revenue $79.5 mln-$80.5 mln vs est. $79.1 mln

* First-quarter revenue increases 40 pct to $72.7 mln

* Shares rise 10 pct in extended trading

(Adds forecast, details, shares)

April 23 (Reuters) - Angie's List Inc, which operates a website that allows users to review local businesses, posted a smaller quarterly loss as it signed up more paid customers for its services.

Angie's List shares rose nearly 10 percent to $14 in extended trading, after the company also forecast second-quarter revenue above analysts' estimates.

The company said its total paid memberships rose 35 percent to about 2.6 million in the first quarter ended March 31.

Paid members are allowed to access ratings and reviews of local businesses, while unpaid members can only rate them.

Revenue from its service provider business, which includes revenue from advertising contracts and fees from e-commerce transactions, rose 45 percent. The company gets nearly three-quarters of its total revenue from the business.

The company, which is named after its co-founder Angie Hicks, forecast revenue of $79.5 million-$80.5 million for the second quarter ending June.

Analysts on average were expecting $79.1 million, according to Thomson Reuters I/B/E/S.

In February, Angie's List's rival Yelp Inc posted a 72 percent rise in quarterly revenue, helped by strength in its mobile advertising businesses and the addition of more customers.

Angie's List's net loss more than halved to $3.8 million, or 6 cents per share, in the first quarter from $7.9 million, or 14 cents per share, a year earlier.

Revenue rose about 40 percent to $72.7 million.

Analysts on average had expected revenue of $72.3 million.

Angie's List, which went public in November 2011, had come under fire from short seller Citron Research last May.

Citron had said that Angie's List's business model was flawed as reviewers had to use their real names, which discouraged them from giving negative feedback and exposed them to potential harassment from businesses.

Angie's List shares closed at $12.82 on the Nasdaq on Wednesday. The stock has fallen about 44 percent since Citron raised doubts about the company's business model in May last year.

(Reporting by Sampad Patnaik in Bangalore; Editing by Kirti Pandey)