HouseValues, Inc. (NASDAQ: SOLD) today announced results for the
quarter ended September 30, 2008.
Comparisons of Quarterly Results
-- Revenue was $9.3 million in the third quarter compared to $10.1
million in the second quarter of 2008. The decline in sequential quarter
revenue primarily reflected fewer customers in the company's agent direct
business.
-- Net loss of $1.8 million in the third quarter compared to net loss of
$1.3 million in the second quarter.
-- The company generated $0.7 million in Adjusted EBITDA in the third
quarter compared to Adjusted EBITDA of $0.9 million in the second quarter.
-- Cash position remained strong at $62.0 million as the company
generated $0.7 million in cash flow from operations for the quarter.
-- Customer retention was the best in seven quarters and consistent with
the second quarter level. Two-year tenured customers now comprise more than
a third of all customers.
HouseValues believes that truly great companies are built in
down cycles. Throughout 2008 the company has continued to invest in
its customers and its products, while demonstrating disciplined
expense management. HouseValues generated $1.4 million in cash from
operations and $1.5 million in Adjusted EBITDA during the first
nine months of the year.
"We are confident that HouseValues' adjusted EBITDA and cash
flow from operations will both be positive for the full year of
2008, despite market conditions that continue to be worse than most
anticipated," said CEO Ian Morris. The company expects recent
revenue trends to continue in the fourth quarter.
Conference Call
To facilitate communication with investors regarding an upcoming
re-branding initiative as well as third quarter results, the
company has scheduled its regular quarterly conference call at 1:30
p.m. Eastern time, on Monday, November 17, 2008. To listen to the
live conference call, please dial 719-325-4832. A live webcast of
the call will be available from http://investor.housevalues.com. An
audio replay of the call will also be available to investors
beginning at 7:30 p.m. Eastern time through midnight Tuesday,
November 18 by dialing 719-457-0820 and entering the passcode
6472905# (note updated passcode).
Cash Position and Share Repurchase Update
The company believes that its strong cash position is a
strategic asset. Liquidity and safety of principal continue to be
core to the company's investment policy. Since the first quarter of
2008, the company has been invested in cash equivalents consisting
of money market funds that invest in high quality, short-term U.S.
Government obligations and repurchase agreements collateralized by
U.S. Government Obligations. Cash and cash equivalents were $62.0
million on September 30, 2008.
Year-to-date as of October 24, 2008 HouseValues has re-purchased
and retired 671,522 shares at an average cost of $2.44 per share,
and may purchase up to approximately 1.1 million additional shares
under the current share repurchase authorization.
Forward-Looking Statements
This release contains forward-looking statements relating to the
company's anticipated plans, products, services, and financial
performance. The words "believe," "expect," "anticipate," "intend"
and similar expressions identify forward-looking statements, but
their absence does not mean the statement is not forward-looking.
These statements are not guarantees of future performance and are
subject to certain risks, uncertainties and assumptions that could
cause actual results to differ materially from those anticipated in
the forward-looking statements. Factors that could affect the
company's actual results include its ability to retain and increase
its customer base, to respond to competitive threats and real
estate market conditions, to manage lead generation and other
costs, to develop new products, to expand into new lines of
business, and to effectively re-brand and re-launch the company.
Please refer to the company's 2007 Form 10-K filed with the
Securities and Exchange Commission for a more detailed description
of these and other risks that could materially affect actual
results. Given these risks and uncertainties, you should not place
undue reliance on these forward-looking statements. The
forward-looking statements are made as of today's date and the
company assumes no obligation to update any such statements to
reflect events or circumstances after the date hereof.
Non-GAAP Measures
Adjusted EBITDA from continuing operations is a non-GAAP
financial measure provided as a complement to results in accordance
with accounting principles generally accepted in the United States
of America ("GAAP"). The term "Adjusted EBITDA from continuing
operations" refers to a financial measure that we define as
earnings or loss before results of discontinued operations, net
interest, income taxes, depreciation, amortization, impairment of
long-lived assets, equity in loss of investee, stock-based
compensation and gain on sale of fixed assets. Adjusted EBITDA is
not a substitute for measures determined in accordance with GAAP,
and may not be comparable to Adjusted EBITDA from continuing
operations as reported by other companies. We believe Adjusted
EBITDA from continuing operations to be relevant and useful
information to our investors as this measure is an integral part of
our internal management reporting and planning process and is the
primary measure used by our management to evaluate operating
performance. The components of Adjusted EBITDA from continuing
operations include the key revenue and expense items for which our
operating managers are responsible and upon which we evaluate their
performance, and we also use Adjusted EBITDA from continuing
operations for planning purposes and in presentations to our board
of directors. See below for a reconciliation of net loss, the most
comparable GAAP measure, to Adjusted EBITDA from continuing
operations.
HouseValues, Inc.
NON-GAAP FINANCIAL MEASURE AND RECONCILIATION
(In thousands)
(unaudited)
Nine months
Three months ended ended
------------------------------------------- -------------
September 30, June 30, September 30, September 30,
2008 2008 2007 2008
------------- ------------- ------------- -------------
Net loss $ (1,808) $ (1,271) $ (804) $ (4,271)
Adjustments
Interest
income, net (289) (289) (883) (1,097)
Gain on
sale of
fixed assets - - - (791)
Impairment of
long-lived
assets - - 1,200 -
Equity in loss of
unconsolidated
subsidiary 207 185 - 543
Income from
operations of
discontinued
mortgage
segment - - (74) -
Depreciation and
amortization of
property and
equipment from
continuing
operations 1,040 1,015 1,170 3,014
Amortization of
intangible
assets for
continuing
operations 491 492 16 1,475
Stock-based
compensation
from
continuing
operations 1,014 745 646 2,582
Income tax
expense
(benefit) 31 34 (761) 67
------------- ------------- ------------- -------------
Adjusted EBITDA
from
continuing
operations $ 686 $ 911 $ 510 $ 1,522
============= ============= ============= =============
About HouseValues, Inc.
Founded in 1999, HouseValues, Inc. (NASDAQ: SOLD) provides real
estate professionals with the tools and services they need to
manage and grow their real estate businesses. The company's
subscription software products include Realty Generator, a turnkey
advertising and lead management system for real estate brokerage
companies; and MarketLeader CRM, a customer relationship management
and lead management solution for real estate agents. The company
also provides real estate professionals with access to
industry-leading advertising and lead-generation services to help
them attract new clients and promote themselves throughout their
community.
Additionally, HouseValues provides consumers with free access to
the information and tools they need throughout the home buying and
selling process. The company's consumer websites include:
JustListed.com, a service that notifies home buyers as soon as new
homes hit the market; HouseValues.com, a service that provides home
sellers with market valuations of their current home; and
HomePages.com, a real estate portal that enables consumers to see
all the home listings in their area, view detailed neighborhood and
school data, compare recent home sales, find local real estate
agents, and find the value of their own home.
Real estate professionals can learn more about the company's
services at www.realtygenerator.com and www.marketleader.com. For
more information please visit www.housevaluesinc.com.
SOLD: FINANCIAL
FINANCIAL STATEMENTS FOLLOW
HouseValues, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(unaudited)
Three months ended Nine months ended
September 30, September 30,
------------------ ------------------
2008 2007 2008 2007
-------- -------- -------- --------
Revenues $ 9,258 $ 13,797 $ 30,585 $ 47,619
Expenses:
Sales and marketing (1) 5,842 8,946 19,514 31,574
Technology and product
development (1) 1,424 2,123 4,873 7,420
General and administrative (1) 2,320 2,864 7,258 9,431
Gain on sale of fixed assets - - (791) -
Impairment of long-lived assets - 1,200 - 1,200
Depreciation and amortization
of property and equipment 1,040 1,170 3,014 4,570
Amortization of intangible
assets 491 16 1,475 427
-------- -------- -------- --------
Total expenses 11,117 16,319 35,343 54,622
-------- -------- -------- --------
Loss from operations (1,859) (2,522) (4,758) (7,003)
Equity in loss of unconsolidated
subsidiary (207) - (543) -
Interest income, net 289 883 1,097 2,220
-------- -------- -------- --------
Loss before income tax expense (1,777) (1,639) (4,204) (4,783)
Income tax expense (benefit) 31 (761) 67 (2,087)
-------- -------- -------- --------
Net loss from continuing
operations (1,808) (878) (4,271) (2,696)
Discontinued operations
Income from operations of
discontinued mortgage segment - 113 - 240
Income tax expense - 39 - 83
-------- -------- -------- --------
Income from discontinued
operations - 74 - 157
-------- -------- -------- --------
Net loss $ (1,808) $ (804) $ (4,271) $ (2,539)
======== ======== ======== ========
Net loss per share:
Basic and diluted:
Continuing operations $ (0.07) $ (0.04) $ (0.18) $ (0.11)
Discontinued operations $ - $ - $ - $ 0.01
-------- -------- -------- --------
Total $ (0.07) $ (0.03) $ (0.18) $ (0.10)
======== ======== ======== ========
Number of shares used in per share
calculations 24,311 24,542 24,357 24,528
======== ======== ======== ========
(1) Stock-based compensation is
included in the expense line items
above in the following amounts:
-------- -------- -------- --------
2008 2007 2008 2007
-------- -------- -------- --------
Sales and marketing $ 302 $ 150 $ 680 $ 502
Technology and product
development 37 49 115 311
General and administrative 675 447 1,787 1,791
Discontinued operations - - - 19
-------- -------- -------- --------
$ 1,014 $ 646 $ 2,582 $ 2,623
======== ======== ======== ========
HouseValues, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(unaudited)
September 30, December 31,
2008 2007
------------- -------------
Assets
Current assets:
Cash and cash equivalents $ 62,020 $ 35,450
Short-term investments - 27,400
Accounts receivable, net of allowance of
$41 and $50 72 128
Prepaid expenses and other assets 1,587 1,764
Prepaid income taxes 878 905
------------- -------------
Total current assets 64,557 65,647
Property and equipment, net of accumulated
depreciation of $12,915 and $11,518 4,766 6,187
Goodwill 4,506 3,833
Intangible assets, net of accumulated
amortization of $4,052 and $2,576 4,855 6,330
Minority investment in unconsolidated
subsidiary 2,045 2,588
Other noncurrent assets - 398
------------- -------------
Total assets $ 80,729 $ 84,983
============= =============
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 970 $ 1,395
Accrued compensation and benefits 1,600 2,084
Accrued expenses and other current
liabilities 1,135 1,809
Deferred rent, current portion 289 289
Deferred revenue 374 373
Note payable 1,970 1,873
------------- -------------
Total current liabilities 6,338 7,823
Deferred rent, less current portion 402 722
Noncurrent deferred tax liabilities 92 -
------------- -------------
Total liabilities 6,832 8,545
Shareholders' equity:
Preferred stock, par value $0.001 per
share, stated at amounts paid in;
authorized 30,000,000 shares; none
issued and outstanding - -
Common stock, par value $0.001 per share,
stated at amounts paid in; authorized
120,000,000 shares; issued and outstanding
24,449,201 and 24,521,139 shares at
September 30, 2008 and December 31, 2007,
respectively 68,105 66,375
Retained earnings 5,792 10,063
------------- -------------
Total shareholders' equity 73,897 76,438
------------- -------------
Total liabilities and shareholders'
equity $ 80,729 $ 84,983
============= =============
HouseValues, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
Nine months ended
September 30,
---------------------------
2008 2007
------------ ------------
Cash flows from operating activities:
Net Loss $ (4,271) $ (2,539)
Adjustments to reconcile net loss to net
cash provided by (used in) operating
activities:
Depreciation and amortization of
property and equipment 3,014 4,570
Amortization of intangible assets 1,475 427
Stock-based compensation 2,582 2,623
Excess tax benefit from exercises of
stock options - (65)
Deferred income tax expense (benefit) 92 (1,282)
Gain on sale of fixed assets (791) -
Impairment to long-lived assets - 1,200
Equity in loss of unconsolidated
subsidiary 543 -
Changes in certain assets and
liabilities
Accounts receivable 56 375
Prepaid expenses and other current
assets 226 (755)
Prepaid income taxes 27 903
Other noncurrent assets 398 (38)
Accounts payable (502) (1,395)
Accrued compensation and benefits (484) (1,307)
Accrued expenses and other current
liabilities (655) (2,449)
Deferred rent (320) (279)
Deferred revenue 1 (707)
------------ ------------
Net cash provided by (used in)
operating activities 1,391 (718)
------------ ------------
Cash flows from investing activities:
Purchases of short-term investments - (22,645)
Sales of short-term investments 27,400 10,785
Purchases of property and equipment (1,816) (2,330)
Proceeds from sale of fixed assets 1,209 (14)
Acquisition of Realty Generator (639) -
------------ ------------
Net cash provided by (used in)
investing activities 26,154 (14,204)
------------ ------------
Cash flows from financing activities:
Purchase and retirement of common stock (1,006) (968)
Proceeds from exercises of stock options
and warrants 259 633
Payment of taxes due upon vesting of
restricted stock (228) -
Excess tax benefit from exercises of stock
options - 65
------------ ------------
Net cash used in financing
activities (975) (270)
------------ ------------
Net increase (decrease) in cash
and cash equivalents 26,570 (15,192)
Cash and cash equivalents at beginning of
period 35,450 49,376
------------ ------------
Cash and cash equivalents at end of period $ 62,020 $ 34,184
============ ============
Investor Contact: Mark Lamb Director of Investor Relations
HouseValues, Inc. 425.952.5801 markl@housevalues.com Press Contact:
Hugh Siler Siler & Company for HouseValues, Inc. 949.646.6966
hugh@silerpr.com
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