Science & Technology
Science and Technology
Science and Technology
Fri, February 27, 2009
Thu, February 26, 2009 Market Leader Inc. : Market Leader Announces 2008 and Fourth Quarter Results
KIRKLAND, WA--(Marketwire - February 26, 2009) - Market Leader Inc. (
2008 Results
-- Revenue of $38.4 million compared to $59.8 million in 2007 -- Net loss of $13.1 million compared to $12.4 million in 2007 -- $1.6 million in positive cash flow from operations compared to a slight use of cash in 2007 -- $1.1 million in Adjusted EBITDA from continuing operations compared to $2.6 million in 2007
"In a year that saw the lowest existing U.S. home sales in the Company's history, Market Leader generated positive cash flow from operations while making significant progress on its strategic objectives," said CEO Ian Morris.
2008 Highlights
Market Leader generated positive cash flow from operations and Adjusted EBITDA despite lower revenues by focusing on customer retention and expense management. The company's customer retention efforts reduced churn by 21 percent in 2008 compared to 2007, a testament to the important role that Market Leader's products play in the lives of its customers. Additionally, the Company's disciplined approach to expense management resulted in a 24 percent increase in revenue per employee in 2008 compared to 2007.
In addition to these operational results, Market Leader demonstrated significant progress against its strategic objectives. The Company leveraged RealtyGenerator's technology platform and business model to develop and launch two new products:
-- Growth Leader - a new marketing solution for real estate agents that integrates a consumer-response generating website with a web-based CRM tool, and -- Team Leader - the first real estate marketing solution designed specifically to address the needs of real estate agent teams.
Both products are built on the Vision contact management solution, the next generation of RealtyGenerator's technology platform. In a shift from traditional lead generation, the Vision approach enables customers to generate a steady stream of prospects on their own, branded websites. Real estate professionals then cultivate these consumer relationships in ways not possible in the past, tapping the real-time insight and powerful functionality of their Vision contact management solution.
Based on experience with RealtyGenerator customers as well as early success with both Growth Leader and Team Leader, the Company believes its Vision solutions deliver higher quality, more engaged prospects than typical lead generation products, and that these solutions will positively impact the Company's customer retention and lifetime customer value.
Strong customer success helped drive annual sales growth of the RealtyGenerator product that was acquired in November 2007 and contributed significantly to Market Leader's positive cash from operations in 2008. Market Leader expects to unify its RealtyGenerator and Vision platforms later this year while adding new features and scalability to the platform.
Comparisons of Quarterly Results
-- Revenue was $7.8 million in the fourth quarter compared to $9.3 million in the third quarter of 2008. The decline in sequential quarter revenue reflected fewer customers and lower average revenue per customer. New customer sales declined in the fourth quarter amid the lowest existing home sales in the Company's history and prospects' concerns about the economy. -- Net loss was $8.8 million in the fourth quarter, including $6.2 million of non-cash charges, compared to net loss of $1.8 million in the third quarter. The non-cash charges in the fourth quarter net loss consisted of $4.9 million impairment of goodwill and $1.3 million related to an impairment of an equity investment in an unconsolidated subsidiary. -- Adjusted EBITDA from continuing operations was a loss of $0.5 million in the fourth quarter compared to Adjusted EBITDA of $0.7 million in the third quarter, primarily reflecting reduced revenue. -- Market Leader's cash position remained strong with $58.6 million in cash, cash equivalents and short-term investments. The Company generated $0.2 million in cash from operations in the fourth quarter, used $1.0 million to repurchase stock, and paid off all long-term debt with a $1.6 million principal payment under terms of a note that came due in December.
Cash Position Update
The Company believes that its strong cash position is a strategic asset. Liquidity and security of principal continue to be core to the Company's investment policy. The Company invests 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, and direct investments in U.S. Treasury securities. Short-term investments are comprised of U.S. Treasury securities and FDIC-insured certificates of deposit with terms of one year or less. Cash, cash equivalents and short-term investments totaled $58.6 million at year-end.
During 2008, Market Leader re-purchased and retired 821,957 shares at an average cost of $2.44 per share, and may purchase up to approximately 928,043 additional shares under the current share repurchase authorization.
Conference Call
Market Leader will host a conference call and live Webcast to discuss fourth quarter financial results on Thursday, February 26, 2009 at 4:30 p.m. Eastern time. To listen to the live conference call, please dial 719-325-4810. A live webcast of the call will be available from the Investor Relations section of the Company's Web site at [ http://www.marketleader.com ]. An audio replay of the call will also be available to investors beginning at 7:30 p.m. ET on February 26 through 11:59 p.m. on February 27 by dialing 719-457-0820 and entering the passcode 4275682#.
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 including goodwill impairment, equity in loss of unconsolidated subsidiary, stock-based compensation and gain on sale of fixed assets. Adjusted EBITDA from continuing operations 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.
Market Leader Inc. NON-GAAP FINANCIAL MEASURE AND RECONCILIATION (In thousands) (unaudited) Three months ended Twelve months ended ------------------------------- -------------------- December September December December December 31, 2008 30, 2008 31, 2007 31, 2008 31, 2007 --------- --------- --------- --------- --------- Net loss $ (8,848) $ (1,808) $ (9,836) $ (13,119) $ (12,375) Adjustments Interest income, net (128) (289) (762) (1,225) (2,982) Gain on sale of fixed assets - - - (791) - Impairment of goodwill and long-lived assets 4,883 - 4,916 4,883 6,116 Impairment of and equity in loss of unconsolidated subsidiary 1,461 207 162 2,004 162 Income from operations of discontinued mortgage segment - - (37) - (194) Depreciation and amortization of property and equipment from continuing operations 1,032 1,040 1,064 4,046 5,634 Amortization of intangible assets for continuing operations 454 491 333 1,929 760 Stock-based compensation from continuing operations 743 1,014 940 3,325 3,544 Income tax expense (benefit) (58) 31 4,041 9 1,954 --------- --------- --------- --------- --------- Adjusted EBITDA from continuing operations $ (461) $ 686 $ 821 $ 1,061 $ 2,619 ========= ========= ========= ========= =========
About Market Leader Inc.
Market Leader (
With a long history of innovation, Market Leader pioneered online lead generation for real estate professionals a decade ago and today is the leading marketing partner to the real estate industry. The Company also provides consumers with free access to the information and tools they need throughout the home buying and selling process through its national consumer real estate sites. These websites enable Market Leader to provide its customers with access to millions of future home buyers and sellers while providing these consumers with free access to the information they seek throughout the home buying and selling process.
For more information on Market Leader visit [ www.MarketLeader.com ].
LEDR: FINANCIAL
Market Leader Inc. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (unaudited) Three months ended Twelve months ended December 31, December 31, -------------------- -------------------- 2008 2007 2008 2007 --------- --------- --------- --------- Revenues $ 7,783 $ 12,189 $ 38,368 $ 59,808 Expenses: Sales and marketing (1) 5,464 7,879 24,978 39,453 Technology and product development (1) 1,536 1,694 6,409 9,114 General and administrative (1) 1,987 2,735 9,245 12,166 Gain on sale of fixed assets - - (791) - Impairment of goodwill and long-lived assets 4,883 4,916 4,883 6,116 Depreciation and amortization of property and equipment 1,032 1,064 4,046 5,634 Amortization of intangible assets 454 333 1,929 760 --------- --------- --------- --------- Total expenses 15,356 18,621 50,699 73,243 --------- --------- --------- --------- Loss from operations (7,573) (6,432) (12,331) (13,435) Impairment of and equity in loss of unconsolidated subsidiary (1,461) (162) (2,004) (162) Interest income, net 128 762 1,225 2,982 --------- --------- --------- --------- Loss before income tax expense (8,906) (5,832) (13,110) (10,615) Income tax expense (benefit) (58) 4,041 9 1,954 --------- --------- --------- --------- Net loss from continuing operations (8,848) (9,873) (13,119) (12,569) Discontinued operations Income from operations of discontinued mortgage segment - 57 - 297 Income tax expense - 20 - 103 --------- --------- --------- --------- Income from discontinued operations - 37 - 194 --------- --------- --------- --------- Net loss $ (8,848) $ (9,836) $ (13,119) $ (12,375) ========= ========= ========= ========= Net loss per share: Basic and diluted: Continuing operations $ (0.37) $ (0.40) $ (0.54) $ (0.51) Discontinued operations $ - $ - $ - $ 0.01 --------- --------- --------- --------- Total $ (0.37) $ (0.40) $ (0.54) $ (0.50) ========= ========= ========= ========= Number of shares used in per share calculations 24,105 24,498 24,293 24,520 ========= ========= ========= ========= (1) Stock-based compensation is included in the expense line items above in the following amounts: --------- --------- --------- --------- 2008 2007 2008 2007 --------- --------- --------- --------- Sales and marketing $ 290 $ 302 $ 970 $ 804 Technology and product development 85 93 200 404 General and administrative 368 545 2,155 2,336 Discontinued operations - - - 19 --------- --------- --------- --------- $ 743 $ 940 $ 3,325 $ 3,563 ========= ========= ========= ========= Market Leader Inc. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share data) (unaudited) December December 31, 2008 31, 2007 -------- --------- Assets Current assets: Cash and cash equivalents $ 47,668 $ 35,450 Short-term investments 10,980 27,400 Accounts receivable, net of allowance of $29 and $50 79 128 Prepaid expenses and other assets 1,480 1,764 Prepaid income taxes 2 905 -------- --------- Total current assets 60,209 65,647 Property and equipment, net of accumulated depreciation of $13,859 and $11,518 4,452 6,187 Goodwill - 3,833 Intangible assets, net of accumulated amortization of $4,506 and $2,576 4,179 6,330 Minority investment in unconsolidated subsidiary 584 2,588 Other noncurrent assets - 398 -------- --------- Total assets $ 69,424 $ 84,983 ======== ========= Liabilities and Shareholders' Equity Current liabilities: Accounts payable $ 736 $ 1,395 Accrued compensation and benefits 1,767 2,084 Accrued expenses and other current liabilities 1,111 1,809 Deferred rent, current portion 289 289 Deferred revenue 374 373 Note payable - 1,873 -------- --------- Total current liabilities 4,277 7,823 Deferred rent, less current portion 303 722 -------- --------- Total liabilities 4,580 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 24,035,074 and 24,521,139 shares at December 31, 2008 and 2007, respectively 67,900 66,375 (Accumulated deficit) retained earnings (3,056) 10,063 -------- --------- Total shareholders' equity 64,844 76,438 -------- --------- Total liabilities and shareholders' equity $ 69,424 $ 84,983 ======== ========= Market Leader Inc. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (unaudited) Twelve months ended December 31, -------------------- 2008 2007 --------- --------- Cash flows from operating activities: Net Loss $ (13,119) $ (12,375) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization of property and equipment 4,046 5,634 Amortization of intangible assets 1,929 760 Stock-based compensation 3,325 3,563 Excess tax benefit from exercises of stock options - (83) Deferred income tax expense (benefit) - 3,060 Gain on sale of fixed assets (791) - Impairment of goodwill and long-lived assets 4,883 6,116 Impairment of and equity in loss of unconsolidated subsidiary 2,004 162 Changes in certain assets and liabilities Accounts receivable 49 300 Prepaid expenses and other current assets 284 (773) Prepaid income taxes 903 995 Other noncurrent assets 398 11 Accounts payable (659) (1,373) Accrued compensation and benefits (317) (1,101) Accrued expenses and other current liabilities (908) (3,699) Deferred rent (419) (372) Deferred revenue 1 (864) --------- --------- Net cash provided by (used in) operating activities 1,609 (39) --------- --------- Cash flows from investing activities: Purchases of short-term investments (10,980) (39,145) Sales of short-term investments 27,400 40,145 Purchases of property and equipment (2,549) (2,808) Proceeds from sale of fixed assets 1,209 (14) Acquisition of Realty Generator (901) (9,225) Investment in ActiveRain - (2,750) --------- --------- Net cash provided by (used in) investing activities 14,179 (13,797) --------- --------- Cash flows from financing activities: Purchase and retirement of common stock (2,008) (968) Payment of principal on note payable (1,590) - Proceeds from exercises of stock options and warrants 260 795 Payment of taxes due upon vesting of restricted stock (232) - Excess tax benefit from exercises of stock options - 83 --------- --------- Net cash used in financing activities (3,570) (90) --------- --------- Net increase (decrease) in cash and cash equivalents 12,218 (13,926) Cash and cash equivalents at beginning of period 35,450 49,376 --------- --------- Cash and cash equivalents at end of period $ 47,668 $ 35,450 ========= =========
