Market Leader, Inc. (NASDAQ: LEDR) today announced results for the
quarter ended September 30, 2010.The company reported revenue
growth during the third quarter despite some of the slowest
existing home sales on record. Market Leader's growth was driven by
the strength of its Software-as-a-Service (SaaS) Vision products
that continue to deliver strong results for agents, brokerage
companies, and some of the nation's leading real estate franchise
networks.
Strong Traction with Real Estate Franchise
Partners Continues Market Leader's marketing partnerships with
several leading real estate franchise networks have emerged as a
significant new source of business for the company. During the
third quarter alone, Market Leader added more than 200
RealtyGenerator® customers via this channel, beating the previous
record of more than 100 signed during the previous quarter.
"Our team continues to be very pleased by the powerful customer
accolades for RealtyGenerator and the strong momentum this has
created with some of the real estate industry's leading franchise
networks," said Market Leader CEO Ian Morris.
Financial Highlights:
- Revenue increased to $6.0 million compared to $5.8 million in
the second quarter, primarily reflecting strong adoption of the
company's Vision products.
- Third quarter net loss of $3.4 million, which included a
$750,000 gain on valuation, compared to a net loss of $3.1 million
in the second quarter.
- Adjusted EBITDA loss of $2.5 million in the third quarter
compared to $1.6 million in the second quarter, primarily
reflecting increased customer acquisition activities and increased
advertising spend on behalf of its customers.
Vision Product Growth Continues to Drive
Business Transformation Revenue from the company's SaaS-based
Vision products, including RealtyGenerator for brokers and teams
and Growth Leader for agents, is driving Market Leader's renewed
growth. Third quarter Vision revenue was more than forty percent
higher than a year ago.
Additionally, Vision drove an increase in average revenue per
customer to the highest level in thirteen quarters, while customer
retention was again among the highest levels achieved in recent
years. Based upon this positive impact to customer unit economics
and customer lifetime value, Market Leader has confidently
increased investment to acquire Vision customers that are expected
to drive improvement in long term revenue and margins.
Business Outlook Market Leader expects
double-digit revenue growth in the fourth quarter driven by a
combination of increased organic growth as well as revenue
contribution from a newly consolidated investment. The related
expenses, together with continued investment to acquire and support
Vision customers, as well as seasonally higher advertising costs,
are expected to contribute to an adjusted EBITDA loss that isn't
likely to improve in the fourth quarter compared to the third.
Conference Call Market Leader will host a
conference call and live Webcast to discuss third quarter results
on Thursday, October 28, 2010 at 4:30 p.m. Eastern time. To listen
to the live conference call, please dial (719) 325-2470. 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 on October 28 at 7:30 PM Eastern time and ending on
November 2 at 7:30 PM Eastern time by dialing (719) 457-0820 and
entering the passcode 4091474#.
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 continue to grow revenues from Vision products,
to continue to maintain current customer retention levels, to
respond to competitive threats and real estate market conditions,
to manage lead generation and other costs, to develop new products,
and to expand into new lines of business. Please refer to the
company's most recent 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 Measure 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"). 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. Our use of the term "Adjusted EBITDA" refers to a
financial measure defined as earnings or loss before net interest,
income taxes, depreciation, amortization, equity in loss of an
unconsolidated subsidiary, gain on valuation of investment in
subsidiary and stock-based compensation. 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. 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
-------------------------------
September June 30, September
30, 2010 2010 30, 2009
--------- --------- ---------
Net loss $ (3,409) $ (3,128) $ (2,919)
Adjustments
Interest income and expenses, net (40) (90) (45)
Gain on valuation of investment in
subsidiary (750) - -
Equity in loss of unconsolidated
subsidiary 63 55 97
Depreciation and amortization of property
and equipment 646 619 593
Amortization of acquired intangible assets 480 479 481
Stock-based compensation 476 451 638
Income tax expense 3 1 2
--------- --------- ---------
Adjusted EBITDA $ (2,531) $ (1,613) $ (1,153)
========= ========= =========
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.
Market Leader, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(unaudited)
Three months ended Nine months ended
September 30, September 30,
-------------------- --------------------
2010 2009 2010 2009
--------- --------- --------- ---------
Revenues $ 5,975 $ 5,816 $ 17,586 $ 18,292
Expenses:
Sales and marketing (1) 6,179 4,795 16,320 14,213
Technology and product
development (1) 1,402 1,174 4,070 3,859
General and administrative (1) 1,401 1,638 4,471 5,351
Depreciation and amortization
of property and equipment 646 593 1,929 2,176
Amortization of acquired
intangible assets 480 481 1,438 1,443
--------- --------- --------- ---------
Total expenses 10,108 8,681 28,228 27,042
--------- --------- --------- ---------
Loss from operations (4,133) (2,865) (10,642) (8,750)
Gain on valuation of investment
in subsidiary 750 - 750 -
Equity in loss of unconsolidated
subsidiary (63) (97) (254) (252)
Interest income and expenses,
net 40 45 167 199
--------- --------- --------- ---------
Loss before income tax expense (3,406) (2,917) (9,979) (8,803)
Income tax expense 3 2 7 6
--------- --------- --------- ---------
Net loss $ (3,409) $ (2,919) $ (9,986) $ (8,809)
========= ========= ========= =========
Net loss per share - basic and
diluted: $ (0.14) $ (0.12) $ (0.41) $ (0.37)
========= ========= ========= =========
Number of shares used in per
share calculations 24,678 24,184 24,606 24,118
========= ========= ========= =========
(1) Stock-based compensation is included in the expense line items above in
the following amounts:
------------------------------------------
2010 2009 2010 2009
--------- --------- --------- ---------
Sales and marketing $ 128 $ 189 $ 372 $ 577
Technology and product
development 62 37 163 70
General and administrative 286 412 888 1,237
--------- --------- --------- ---------
$ 476 $ 638 $ 1,423 $ 1,884
========= ========= ========= =========
Market Leader, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(unaudited)
September December
30, 31,
2010 2009
---------- ----------
Assets
Current assets:
Cash and cash equivalents $ 21,844 $ 25,434
Short-term investments 27,113 25,999
Trade accounts receivable, net of allowance of $9
and $29 40 39
Income tax receivable - 4,920
Prepaid expenses and other current assets 883 918
---------- ----------
Total current assets 49,880 57,310
Property and equipment, net of accumulated
depreciation of $16,499 and $14,433 3,957 4,472
Goodwill and acquired intangible assets, net of
accumulated amortization of $7,865 and $6,427 3,605 2,265
Investment in unconsolidated subsidiary - 340
Other noncurrent assets 43 -
---------- ----------
Total assets $ 57,485 $ 64,387
========== ==========
Liabilities, Shareholders' Equity and
Noncontrolling Interest
Current liabilities:
Accounts payable $ 1,254 $ 916
Accrued compensation and benefits 1,728 1,494
Accrued expenses and other current liabilities 951 812
Deferred rent, current portion 214 214
Deferred revenue 444 405
Notes payable 72 -
---------- ----------
Total current liabilities 4,663 3,841
Deferred rent, less current portion 596 753
---------- ----------
Total liabilities 5,259 4,594
Shareholders' equity and noncontrolling interest:
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 24,801,797 and
24,409,431 shares at September 30, 2010 and
December 31, 2009, respectively 71,417 70,220
Accumulated deficit (20,413) (10,427)
---------- ----------
Total Market Leader, Inc. shareholders' equity 51,004 59,793
Noncontrolling interest in subsidiary 1,222 -
---------- ----------
Total shareholders' equity 52,226 59,793
---------- ----------
Total liabilities, shareholders' equity and
controlling interest $ 57,485 $ 64,387
========== ==========
Market Leader, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
Nine months ended
September 30,
-----------------------
2010 2009
---------- ----------
Cash flows from operating activities:
Net loss $ (9,986) $ (8,809)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization of property and
equipment 1,929 2,176
Amortization of acquired intangible assets 1,438 1,443
Stock-based compensation 1,423 1,884
Gain on valuation of investment in subsidiary (750) -
Equity in loss of unconsolidated subsidiary 254 252
Changes in certain assets and liabilities
Trade accounts receivable 22 33
Income tax receivable 4,916 (1)
Prepaid expenses and other current assets 81 681
Accounts payable 86 (635)
Accrued compensation and benefits 91 (671)
Accrued expenses and other current
liabilities 260 418
Deferred rent (157) 419
Deferred revenue 22 111
---------- ----------
Net cash used in operating activities (371) (2,699)
---------- ----------
Cash flows from investing activities:
Purchases of short-term investments (27,876) (29,964)
Sales of short-term investments 26,800 20,000
Purchases of property and equipment (1,399) (2,210)
Purchases of intangible assets (55) -
Investment in ActiveRain, net of cash acquired (394) -
Payments related to the Realty Generator
acquisition - (155)
---------- ----------
Net cash used in investing activities (2,924) (12,329)
---------- ----------
Cash flows from financing activities:
Payment of taxes due upon vesting of restricted
stock (324) (275)
Proceeds from exercises of stock options 29 45
---------- ----------
Net cash used in financing activities (295) (230)
---------- ----------
Net decrease in cash and cash equivalents (3,590) (15,258)
Cash and cash equivalents at beginning of period 25,434 47,668
---------- ----------
Cash and cash equivalents at end of period $ 21,844 $ 32,410
========== ==========
Investor Contact: Mark Lamb Director of Investor
Relations Market Leader, Inc. 425.952.5801 markl@marketleader.com
Press Contact: Matt Heinz Heinz Marketing for Market Leader,
Inc. 425.894.3387 matt@heinzmarketing.com
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