Market Leader, Inc. (NASDAQ: LEDR) today announced results for the
first quarter ended March 31, 2009.
Comparisons of Quarterly Results
-- Revenue was $6.5 million in the first quarter compared to $7.8 million
in the fourth quarter of 2008. The decline in sequential quarter revenue
reflected fewer customers and lower average revenue per customer.
-- Net loss of $2.9 million compared to net loss of $8.8 million in the
fourth quarter, which included $6.2 million of non-cash charges.
-- Adjusted EBITDA was a loss of $0.9 million in the first quarter
compared to Adjusted EBITDA loss of $0.5 million in the fourth quarter.
-- Market Leader's cash position remained strong with $57.1 million in
cash, cash equivalents and short-term investments.
Enterprise-level Partnership Announced
Market Leader recently announced a strategic partnership with
Realty Executives International that has already led to dozens of
RealtyGenerator(TM) trials by brokerage companies in their
franchise network. Realty Executives is launching a comprehensive
local lead generation strategy to drive buyers directly to its
local brokers' Web sites. To support this initiative, Realty
Executives is providing its franchisees with co-marketing funds to
help them promote their company and generate leads online. In
addition, Realty Executives is also offering its franchisees Market
Leader's advanced lead generation and lead management solution --
RealtyGenerator -- to help them cultivate all of their consumer
relationships and convert those relationships into closed sales.
Realty Executives has nearly 15,000 sales associates and more than
700 franchises.
Lease Amendment Yields Savings
The Company continues to take a disciplined approach to expense
management and to reducing non-strategic uses of cash. As a result
of a recent lease renegotiation, Market Leader will maintain its
offices in its existing location under an extended term while
eliminating excess capacity and avoiding any fees for early lease
termination. Starting in the second quarter, Market Leader expects
$600,000 in annualized savings compared to the prior lease.
Business Outlook
Market Leader believes that its Vision based products --
RealtyGenerator, Team Leader and Growth Leader(TM) -- drive
stronger customer success and retention than traditional lead
generation products, and should result in stronger retention. The
Company expects that these products will account for the majority
of its revenue by year-end. Market Leader also expects that the
revenue declines seen in recent quarters will moderate
significantly starting in the second half of this year.
"We are pleased with the success that customers are seeing with
Growth Leader, and with all of our Vision based products. Our
products are helping many of our real estate agent and broker
customers grow their business despite very challenging market
conditions," said Market Leader CEO Ian Morris.
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
money market funds that hold high quality, short-term U.S.
government obligations and repurchase agreements collateralized by
U.S. government obligations, 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
$57.1 million at the end of the first quarter.
Conference Call
Market Leader will host a conference call and live Webcast to
discuss first quarter financial results on Tuesday, April 28, 2009
at 4:30 p.m. Eastern time. To listen to the live conference call,
please dial 913-312-0855. 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
April 28 through 11:59 p.m. on April 29 by dialing 719-457-0820 and
entering the passcode 2914103#.
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 2008 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 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" refers to a financial measure that we define
as earnings or loss before 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 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.
Market Leader, Inc.
NON-GAAP FINANCIAL MEASURE AND RECONCILIATION
(In thousands)
(unaudited)
Three months ended
-------------------------------------------------------
March 31, 2009 December 31, 2008 March 31, 2008
----------------- ----------------- -----------------
Net loss $ (2,875) $ (8,848) $ (1,192)
Adjustments
Interest income
and expenses, net (95) (128) (519)
Gain on sale of
fixed assets - - (791)
Impairment of
goodwill and
long-lived assets - 4,883 -
Impairment of
and equity in
loss of
unconsolidated
subsidiary 94 1,461 151
Depreciation
and amortization
of property
and equipment 803 1,032 959
Amortization
of acquired
intangible
assets 482 454 492
Stock-based
compensation 711 743 823
Income tax expense
(benefit) 2 (58) 2
----------------- ----------------- -----------------
Adjusted EBITDA $ (878) $ (461) $ (75)
================= ================= =================
About Market Leader, Inc.
Market Leader (NASDAQ: LEDR) provides real estate professionals
with innovative marketing and technology solutions that enable them
to grow and manage their business. Founded in 1999 by a
second-generation real estate agent, Market Leader provides real
estate agents, agent teams, and brokerage companies with
subscription software and advertising products that enable them to
generate a steady stream of prospects, as well as the tools and
training they need to convert these prospects into clients.
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 March 31,
------------------------------
2009 2008
-------------- --------------
Revenues $ 6,529 $ 11,196
Expenses:
Sales and marketing (1) 4,742 7,430
Technology and product development (1) 1,407 1,958
General and administrative (1) 1,969 2,706
Gain on sale of fixed assets - (791)
Depreciation and amortization of
property and equipment 803 959
Amortization of acquired intangible
assets 482 492
-------------- --------------
Total expenses 9,403 12,754
-------------- --------------
Loss from operations (2,874) (1,558)
Equity in loss of unconsolidated subsidiary (94) (151)
Interest income and expenses, net 95 519
-------------- --------------
Loss before income tax expense (2,873) (1,190)
Income tax expense 2 2
-------------- --------------
Net loss $ (2,875) $ (1,192)
============== ==============
Net loss per share - basic and diluted: $ (0.12) $ (0.05)
============== ==============
Number of shares used in per share
calculations 24,057 24,523
============== ==============
(1) Stock-based compensation is included in
the expense line items above in the
following amounts:
-------------- --------------
2009 2008
-------------- --------------
Sales and marketing $ 204 $ 153
Technology and product development 83 70
General and administrative 424 600
-------------- --------------
$ 711 $ 823
============== ==============
Market Leader, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(unaudited)
March 31, December 31,
2009 2008
------------- -------------
Assets
Current assets:
Cash and cash equivalents $ 31,126 $ 47,668
Short-term investments 25,982 10,980
Trade accounts receivable, net of
allowance of $26 and $29 49 79
Prepaid expenses and other current assets 875 1,482
------------- -------------
Total current assets 58,032 60,209
Property and equipment, net of accumulated
depreciation of $14,457 and $13,859 4,242 4,452
Acquired intangible assets, net of
accumulated amortization of $4,987 and
$4,506 3,697 4,179
Minority investment in unconsolidated
subsidiary 490 584
------------- -------------
Total assets $ 66,461 $ 69,424
============= =============
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 715 $ 736
Accrued compensation and benefits 1,131 1,767
Accrued expenses and other current
liabilities 820 1,111
Deferred rent, current portion 289 289
Deferred revenue 470 374
------------- -------------
Total current liabilities 3,425 4,277
Deferred rent, less current portion 343 303
------------- -------------
Total liabilities 3,768 4,580
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 24,090,760 and
24,035,074 shares at March 31, 2009 and
December 31, 2008, respectively 68,624 67,900
Accumulated deficit (5,931) (3,056)
------------- -------------
Total shareholders' equity 62,693 64,844
------------- -------------
Total liabilities and shareholders'
equity $ 66,461 $ 69,424
============= =============
Market Leader, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
Three months ended March 31,
----------------------------
2009 2008
------------- -------------
Cash flows from operating activities:
Net loss $ (2,875) $ (1,192)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization of
property and equipment 803 959
Amortization of acquired intangible
assets 482 492
Stock-based compensation 711 823
Gain on sale of fixed assets 0 (791)
Equity in loss of unconsolidated
subsidiary 94 151
Changes in certain assets and
liabilities
Trade accounts receivable 30 3
Prepaid expenses and other
current assets 610 32
Other noncurrent assets - 398
Accounts payable (49) (473)
Accrued compensation and benefits (636) (222)
Accrued expenses and other
current liabilities (136) (205)
Deferred rent 40 (122)
Deferred revenue 96 21
------------- -------------
Net cash used in operating
activities (830) (126)
------------- -------------
Cash flows from investing activities:
Purchases of short-term investments (14,987) -
Sales of short-term investments - 27,400
Proceeds from sale of fixed assets - 1,209
Purchases of property and equipment (529) (376)
Payments related to the Realty Generator
acquisition (155) (228)
------------- -------------
Net cash (used in) provided by
investing activities (15,671) 28,005
------------- -------------
Cash flows from financing activities:
Payment of taxes due upon vesting of
restricted stock (41) -
Purchase and retirement of common stock - (342)
Proceeds from exercises of stock options - 26
------------- -------------
Net cash used in financing
activities (41) (316)
------------- -------------
Net (decrease) increase in cash
and cash equivalents (16,542) 27,563
Cash and cash equivalents at beginning of
period 47,668 35,450
------------- -------------
Cash and cash equivalents at end of period $ 31,126 $ 63,013
============= =============
Investor Contact: Mark Lamb Director of Investor Relations
Market Leader, Inc. 425.952.5801 markl@marketleader.com Press
Contact: Hugh Siler Siler & Company for Market Leader, Inc.
949.646.6966 hugh@silerpr.com
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