Market Leader, Inc. (NASDAQ: LEDR) today announced results for the
quarter and year ended December 31, 2010.
Fourth Quarter Financial Highlights:
-- Revenue of $6.8 million was up 15% over $6.0 million in the third
quarter, reflecting continued growth of the company's
software-as-a-service based products, including the revenue
contribution from a newly consolidated subsidiary
-- Net loss of $4.3 million compared to net loss of $3.4 million in the
third quarter that included a $750,000 gain on valuation of investment
in subsidiary
-- Adjusted EBITDA loss of $3.1 million compared to an adjusted EBITDA
loss of $2.5 million in the third quarter, driven primarily by
increased customer acquisition
"2010 was an inflection point for Market Leader with revenue
growth that was driven by the continued success of our
rapidly-growing, software-as-a-service based products," said CEO,
Ian Morris.
Powerful Software-as-a-Service Platform for the Entire Real
Estate Industry
Market Leader's core software-as-a-service platform now provides
real estate agents, brokerage companies, and even entire franchise
systems tools to help them grow and manage their real estate
business.
This comprehensive platform enables real estate professionals to
create and operate their websites, including complete MLS
integration; generate traffic and leads; manage and engage with
their prospects and clients; and design, create, and manage all of
their marketing campaigns. All of this is provided on one
seamlessly integrated, easy-to-use business system.
Market Leader's platform also provides franchise networks and
leading brokerage companies with the ability to create exclusive,
customer-branded business solutions that can also be integrated
with third party applications.
Keller Williams Signs the Largest Deal in Market Leader
History
On January 10, 2011, Market Leader announced that it was
selected by Keller Williams Realty International, the nation's
third-largest real estate franchisor, to provide a franchise-wide
real estate marketing and business platform under a five year
agreement that represents the largest deal in the company's
history.
In February, Market Leader successfully fulfilled the first
phase of this agreement by making its platform available to nearly
80,000 Keller Williams agents across the United States and Canada.
As a result, Market Leader significantly increased its user base
and its ability to upsell premium software and services in the
future.
During a four-day franchise event last month, more than 2,000
Keller Williams agents signed up for a promotional offer for the
company's Market Leader Professional Edition product, a new premium
offering for real estate agents. This strong response validates the
company's confidence in its ability to generate high margin revenue
from premium offerings. This revenue coupled with the guaranteed
payments set out in the agreement is expected to significantly
contribute to revenue growth starting in the second half of
2011.
Record Signings of New High Value Broker and Team Customers
Market Leader had record signings in the fourth quarter of more
than two hundred new broker and team customers.
While initial revenue from these offers only partially offsets
the cost of customer acquisition, the experience with similar
customers acquired during 2009 and 2010 validates the company's
investment to acquire these high value customers.
Successful Mobile Software-as-a-Service Company Acquired
Market Leader announced in January 2011 the acquisition of
KWKLY, LLC ("kwkly") -- a mobile software-as-a-service lead
generation platform that provides home buyers with real-time access
to property information on their mobile phones, while at the same
time connecting real estate professional companies and their agents
with those home buyers. Kwkly has grown rapidly and is now being
used by some of the real estate industry's largest and most
prominent brokerage companies including RE/MAX, Long & Foster
Real Estate, Inc., Baird & Warner, Century 21, Prudential,
Intero Real Estate and more.
Business Outlook
Market Leader expects to build upon its four quarters of
consecutive revenue growth with continued quarterly revenue growth
throughout 2011.
The company believes that this revenue growth, as well as an
increasing shift to high-margin software-as-a-service revenue, will
lead to significantly diminished adjusted EBITDA losses in the
second half of 2011.
Conference Call
The company will host a conference call and live Webcast to
discuss fourth quarter and 2010 results on Tuesday, March 8, 2011
at 4:30 p.m. Eastern time. To listen to the live conference call,
please dial (719) 325-2158. A live Webcast of the call will be
available from the Investor Relations section of the company's Web
site at http://www.investor.marketleader.com. An audio replay of
the call will also be available to investors beginning on March 8
at 7:30 PM Eastern time and ending on March 12 at 7:30 PM Eastern
time by dialing (719) 457-0820 and entering the passcode
1095120#.
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 the company's
software-as-a-service products, to continue to maintain current
customer retention levels, to maintain conversion rates of
customers acquired through promotional offers, 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 Twelve months ended
------------------------------- --------------------
December September December December December
31, 2010 30, 2010 31, 2009 31, 2010 31, 2009
--------- --------- --------- --------- ---------
Net loss
attributable to
Market Leader $ (4,297) $ (3,409) $ 1,438 $ (14,283) $ (7,371)
Adjustments
Interest income
and expenses, net (35) (40) (42) (202) (241)
Net loss
attributable to
noncontrolling
interest (79) (79) -
Gain on valuation
of investment in
subsidiary - (750) - (750) -
Equity in (income)
loss of
unconsolidated
subsidiary - 63 (8) 254 244
Depreciation and
amortization of
property and
equipment 593 646 661 2,522 2,837
Amortization of
acquired
intangible assets 334 480 479 1,772 1,922
Stock-based
compensation 382 476 479 1,805 2,363
Income tax
(benefit) expense 3 3 (4,788) 10 (4,782)
--------- --------- --------- --------- ---------
Adjusted EBITDA $ (3,099) $ (2,531) $ (1,781) $ (8,951) $ (5,028)
========= ========= ========= ========= =========
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-based real estate marketing 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, such as determining house values by address, and
providing access to real estate listings, 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 Twelve months ended
December 31, December 31,
-------------------- --------------------
2010 2009 2010 2009
--------- --------- --------- ---------
Revenues $ 6,844 $ 5,643 $ 24,430 $ 23,935
Expenses:
Sales and marketing (1) 7,588 5,084 23,908 19,297
Technology and product
development (1) 1,288 1,255 5,358 5,114
General and administrative
(1) 1,449 1,564 5,920 6,915
Depreciation and
amortization of property
and equipment 593 661 2,522 2,837
Amortization of acquired
intangible assets 334 479 1,772 1,922
--------- --------- --------- ---------
Total expenses 11,252 9,043 39,480 36,085
--------- --------- --------- ---------
Loss from operations (4,408) (3,400) (15,050) (12,150)
Gain on valuation of investment
in subsidiary - - 750 -
Equity in (income) loss of
unconsolidated subsidiary - 8 (254) (244)
Interest income and expenses,
net 35 42 202 241
--------- --------- --------- ---------
Loss before income tax expense (4,373) (3,350) (14,352) (12,153)
Income tax (benefit) expense 3 (4,788) 10 (4,782)
--------- --------- --------- ---------
Net loss (4,376) 1,438 (14,362) (7,371)
Net loss attributable to
noncontrolling interest (79) - (79) -
--------- --------- --------- ---------
Net income (loss) attributable
to Market Leader $ (4,297) $ 1,438 $ (14,283) $ (7,371)
========= ========= ========= =========
Net income (loss) per share
attributable to Market Leader
- basic and diluted: $ (0.17) $ 0.06 $ (0.58) $ (0.30)
========= ========= ========= =========
Number of shares used in per
share calculations 24,823 24,767 24,661 24,189
========= ========= ========= =========
(1) Stock-based compensation is included in the expense line items above
in the following amounts:
-------------------- --------------------
2010 2009 2010 2009
-------------------- --------------------
Sales and marketing $ 158 $ 137 $ 529 $ 714
Technology and product
development 30 39 193 109
General and administrative 194 303 1,083 1,540
--------- --------- --------- ---------
$ 382 $ 479 $ 1,805 $ 2,363
========= ========= ========= =========
Market Leader, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(unaudited)
December 31, December 31,
2010 2009
----------- -----------
Assets
Current assets:
Cash and cash equivalents $ 16,687 $ 25,434
Short-term investments 28,628 25,999
Trade accounts receivable, net of allowance of
$12 and $29 30 39
Income tax receivable - 4,920
Prepaid expenses and other current assets 1,249 918
----------- -----------
Total current assets 46,594 57,310
Property and equipment, net of accumulated
depreciation of $17,047 and $14,433 3,856 4,472
Goodwill 954 -
Intangible assets, net of accumulated
amortization of $8,199 and $6,427 2,326 2,265
Investment in unconsolidated subsidiary - 340
----------- -----------
Total assets $ 53,730 $ 64,387
=========== ===========
Liabilities, Shareholders' Equity and
Noncontrolling Interest
Current liabilities:
Accounts payable $ 1,157 $ 916
Accrued compensation and benefits 1,809 1,494
Accrued expenses and other current liabilities 1,175 812
Deferred rent, current portion 214 214
Deferred revenue 517 405
----------- -----------
Total current liabilities 4,872 3,841
Deferred rent, less current portion 527 753
----------- -----------
Total liabilities 5,399 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
24,873,120 and 24,409,431 shares at
December 31, 2010 and 2009, respectively 71,889 70,220
Accumulated deficit (24,710) (10,427)
----------- -----------
Total Market Leader, Inc. shareholders'
equity 47,179 59,793
Noncontrolling interest in subsidiary 1,152 -
----------- -----------
Total shareholders' equity 48,331 59,793
----------- -----------
Total liabilities, shareholders' equity
and noncontrolling interest $ 53,730 $ 64,387
=========== ===========
Market Leader, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
Twelve months ended
December 31,
--------------------
2010 2009
--------- ---------
Cash flows from operating activities:
Net loss $ (14,362) $ (7,371)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization of property and
equipment 2,522 2,837
Amortization of acquired intangible assets 1,772 1,922
Stock-based compensation 1,805 2,363
Gain on valuation of investment in subsidiary (750) -
Equity in loss of unconsolidated subsidiary 254 244
Changes in certain assets and liabilities
Trade accounts receivable 26 40
Income tax receivable 4,918 (4,918)
Prepaid expenses and other current assets (318) 560
Other noncurrent assets 43 -
Accounts payable 35 130
Accrued compensation and benefits 172 (273)
Accrued expenses and other current liabilities 413 (278)
Deferred rent (226) 375
Deferred revenue 101 31
--------- ---------
Net cash used in operating activities (3,595) (4,338)
--------- ---------
Cash flows from investing activities:
Purchases of short-term investments (40,107) (41,169)
Sales of short-term investments 37,528 26,200
Purchases of property and equipment (1,933) (2,569)
Investment in ActiveRain, net of cash acquired (394) -
Payments related to the Realty Generator
acquisition - (155)
--------- ---------
Net cash used in investing activities (4,906) (17,693)
--------- ---------
Cash flows from financing activities:
Payment of taxes due upon vesting of restricted
stock (343) (275)
Proceeds from exercises of stock options 97 72
--------- ---------
Net cash used in financing activities (246) (203)
--------- ---------
Net decrease in cash and cash equivalents (8,747) (22,234)
Cash and cash equivalents at beginning of period 25,434 47,668
Cash and cash equivalents at end of period $ 16,687 $ 25,434
========= =========
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.
877.291.0006 matt@heinzmarketing.com
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