KIRKLAND, WA today announced results for the quarter ended March
31, 2008.
Comparisons of Quarterly Results
-- Revenue was $11.2 million in the first quarter compared to $12.2
million in the fourth quarter of 2007. The decline in sequential quarter
revenue primarily reflected fewer customers in the company's agent-direct
business that was partially offset by a full quarter of revenue from the
Realty Generator business acquired in November 2007.
-- Net loss was $1.2 million in the first quarter, compared to a net loss
of $9.8 million in the fourth quarter, which included charges of $9.3
million to reduce the carrying value of goodwill and long-lived assets and
to record a valuation allowance against deferred tax assets.
-- The Adjusted EBITDA loss of less than $0.1 million in the first
quarter included $0.6 million of cash severance expense. The first quarter
result compared to positive Adjusted EBITDA from continuing operations of
$0.8 million in the fourth quarter of 2007. The first quarter result is
consistent with HouseValues' previously stated forecast of modest Adjusted
EBITDA losses in for the first half of 2008.
-- Cash position remained strong at $63.0 million, up modestly from year-
end.
"Despite a severe deterioration of the housing market in the
first quarter, HouseValues made important progress towards the
company's strategic objectives, while at the same time reducing
shares outstanding and strengthening our cash position," said CEO
Ian Morris.
"While many real estate markets are in turmoil today, consumers
will continue to buy and sell homes, they are increasingly going
online to do so and the majority will continue to seek the
expertise of real estate professionals," Morris noted. "By
supporting our customers and enhancing our offerings as we ride out
the cycle, we are positioning HouseValues for long-term leadership
in a category still ripe with opportunity."
Realty Generator Benefits Have Broad Business Impact
Brokerage firms need to have an effective business solution and
internet strategy to attract agents, boost their productivity and
drive success. Realty Generator has achieved strong retention of
its brokerage customers by providing them with a turn-key, full
service lead management solution. HouseValues is investing in
continued enhancement of the Realty Generator platform for its
brokerage company customers while also incorporating many of its
key features into upcoming releases of its agent products.
As a result of these efforts, HouseValues expects to grow its
Realty Generator business while at the same time introducing new
features that are expected to improve the retention rate and unit
economics of its agent-direct customers that are currently
responsible for the significant majority of the company's revenue.
In the second half of this year the company expects to deliver
significant enhancements to the consumer experience, further
automation of key agent tasks, and intelligence and follow up tools
that notify customers when their prospects are most likely to
become ready to transact.
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. Early in the first quarter
the company successfully liquidated short-term investments,
including all auction rate securities without any loss of capital
and in advance of the issues that have affected investors in those
markets. The company is currently 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 $63.0 million on March 31, 2008, representing a
slight increase from the year-end level.
Year-to-date HouseValues has re-purchased and retired 397,175
shares at an average cost of $2.51, and may purchase up to
approximately 1.4 million additional shares under the current share
repurchase authorization.
Conference Call
HouseValues will host a conference call and live Webcast to
discuss fourth quarter financial results today 4:30 p.m. Eastern
time. To listen to the live conference call, please dial
719-325-4888. A live webcast of the call will be available from the
Investor Relations section of the company's Web site at
http://www.housevaluesinc.com. An audio replay of the call will
also be available to investors beginning at 7:30 p.m. Eastern time
through midnight Wednesday, May 7th by dialing 719-457-0820 and
entering the passcode 6994715#.
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, and to expand into new lines of business. 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, gain on sale of fixed assets, income taxes, depreciation,
amortization, impairment of long-lived assets, equity in loss of
investee and stock-based compensation. Gain on sale of fixed assets
is a new element in our Adjusted EBITDA calculation in the first
quarter, effective with the sale of our purchase option for our
Yakima, WA facility and its remaining assets. Adjusted EBITDA is
not a substitute for measures determined in accordance with GAAP,
and may not be comparable to Adjusted EBITDA as reported by other
companies. We believe Adjusted EBITDA 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 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 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)
Three months ended
-------------------------------------
March 31, December 31, March 31,
2008 2007 2007
----------- ----------- -----------
Net loss $ (1,192) $ (9,836) $ (1,616)
Less
Interest income, net (519) (762) (586)
Add
Gain on sale of fixed assets (791) - -
Loss on impairment of long-lived
assets - 4,916 -
Equity in loss of unconsolidated
subsidiary 151 162 -
(Gain) loss on discontinued
operations - (37) 36
Depreciation and amortization of
property and equipment
from continuing operations 959 1,064 2,155
Amortization of intangible assets
for continuing operations 492 333 395
Stock-based compensation from
continuing operations 823 940 1,234
Income tax expense (benefit) 2 4,041 (1,275)
----------- ----------- -----------
Adjusted EBITDA from continuing
operations $ (75) $ 821 $ 343
=========== =========== ===========
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
lead generation and lead management system for real estate
brokerage companies; and MarketLeader, a customer relationship
management and lead management solution for real estate agents. The
company also provides real estate professionals with access to
industry-leading media buying 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
HouseValues, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(unaudited)
Three months ended
March 31,
------------------------
2008 2007
----------- -----------
Revenues $ 11,196 $ 17,838
Expenses:
Sales and marketing (1) 7,430 12,387
Technology and product development (1) 1,958 2,790
General and administrative (1) 2,706 3,552
Gain on sale of fixed assets (791) -
Depreciation and amortization of property and
equipment 959 2,155
Amortization of intangible assets 492 395
----------- -----------
Total expenses 12,754 21,279
----------- -----------
Loss from operations (1,558) (3,441)
Equity in loss of unconsolidated subsidiary (151) -
Interest income, net 519 586
----------- -----------
Loss before income tax expense (1,190) (2,855)
Income tax expense (benefit) 2 (1,275)
----------- -----------
Net loss from continuing operations (1,192) (1,580)
Discontinued operations
Loss from operations of discontinued mortgage
segment - (56)
Income tax benefit - (20)
----------- -----------
Loss on discontinued operations - (36)
----------- -----------
Net loss $ (1,192) $ (1,616)
=========== ===========
Net (loss) income per share:
Basic:
Continuing operations $ (0.05) $ (0.06)
Discontinued operations $ - $ -
----------- -----------
Total $ (0.05) $ (0.07)
=========== ===========
Diluted:
Continuing operations $ (0.05) $ (0.06)
Discontinued operations $ - $ -
----------- -----------
Total $ (0.05) $ (0.07)
=========== ===========
Number of shares used in per share calculations:
Basic 24,523 24,428
=========== ===========
Diluted 24,523 24,428
=========== ===========
(1) Stock-based compensation is included in the
expense line items above in the following
amounts:
----------- -----------
2008 2007
----------- -----------
Sales and marketing $ 153 $ 230
Technology and product development 70 115
General and administrative 600 889
Discontinued operations - 19
----------- -----------
$ 823 $ 1,253
=========== ===========
HouseValues, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(unaudited)
March 31, December 31,
2008 2007
------------ ------------
Assets
Current assets:
Cash and cash equivalents $ 63,013 $ 35,450
Short-term investments - 27,400
Accounts receivable, net of allowance
of $152 and $50 125 128
Prepaid expenses and other assets 1,721 1,764
Prepaid income taxes 916 905
------------ ------------
Total current assets 65,775 65,647
Property and equipment, net of accumulated
depreciation of $11,232 and $11,518 5,310 6,187
Goodwill 3,987 3,833
Intangible assets, net of accumulated
amortization of $3,068 and $2,576 5,838 6,330
Minority investment in unconsolidated subsidiary 2,437 2,588
Other noncurrent assets - 398
------------ ------------
Total assets $ 83,347 $ 84,983
============ ============
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 1,037 $ 1,395
Accrued compensation and benefits 1,862 2,084
Accrued expenses and other current liabilities 1,778 1,809
Deferred rent, current portion 289 289
Deferred revenue 394 373
Note payable 1,905 1,873
------------ ------------
Total current liabilities 7,265 7,823
Deferred rent, less current portion 600 722
------------ ------------
Total liabilities 7,865 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 at March 31, 2008 and
December 31, 2007, respectively - -
Common stock, par value $0.001 per share,
stated at amounts paid in; authorized
120,000,000 shares; issued and
outstanding 24,311,388 and
24,521,139 shares at March 31, 2008 and
December 31, 2007, respectively 66,611 66,375
Retained earnings 8,871 10,063
------------ ------------
Total shareholders' equity 75,482 76,438
------------ ------------
Total liabilities and shareholders' equity $ 83,347 $ 84,983
============ ============
HouseValues, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
Three months ended
March 31,
-----------------------
2008 2007
----------- -----------
Cash flows from operating activities:
Net Loss $ (1,192) $ (1,616)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization of property
and equipment 959 2,155
Amortization of intangible assets 492 396
Stock-based compensation 823 1,253
Tax benefit deficiency from exercises of
stock options - (74)
Deferred income tax benefit - (849)
Gain on sale of fixed assets (791) -
Equity in loss of unconsolidated subsidiary 151 -
Changes in certain assets and liabilities
Accounts receivable 3 316
Prepaid expenses and other assets 441 (45)
Prepaid income taxes (11) 1,237
Accounts payable (473) (1,601)
Accrued compensation and benefits (222) (764)
Accrued expenses and other current
liabilities (205) (1,812)
Deferred rent (122) (93)
Deferred revenue 21 (430)
----------- -----------
Net cash used in operating activities (126) (1,927)
----------- -----------
Cash flows from investing activities:
Purchases of short-term investments - (16,645)
Sales of short-term investments 27,400 9,760
Purchases of property and equipment (376) (611)
Proceeds from sale of fixed assets 1,209 -
Acquisition of Realty Generator (228) -
----------- -----------
Net cash provided by (used in)
investing activities 28,005 (7,496)
----------- -----------
Cash flows from financing activities:
Purchase and retirement of common stock (342) -
Proceeds from exercises of stock options and
warrants 26 142
Tax benefit from exercises of stock options - 29
----------- -----------
Net cash (used in) provided by financing
activities (316) 171
----------- -----------
Net increase (decrease) in cash and cash
equivalents 27,563 (9,252)
Cash and cash equivalents at beginning of period 35,450 49,376
----------- -----------
Cash and cash equivalents at end of period $ 63,013 $ 40,124
=========== ===========
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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