KIRKLAND, WA today announced results for the quarter ended June
30, 2008.
Comparisons of Quarterly Results
-- Revenue was $10.1 million in the second quarter compared to $11.2
million in the first quarter of 2008. The decline in sequential quarter
revenue primarily reflected fewer customers in the company's agent direct
business.
-- Net loss was $1.3 million in the second quarter compared to a net loss
of $1.2 million in the first quarter.
-- Adjusted EBITDA was $0.9 million in the second quarter compared to an
Adjusted EBITDA loss of $0.1 million in the first quarter. The first
quarter result included $0.6 million in cash severance expense.
-- Cash position remained strong at $62.7 million as the company
generated $0.9 million in cash flow from operations for the quarter.
"In a quarter that saw existing home sales reach their lowest
level in a decade, HouseValues improved its Adjusted EBITDA
performance as a result of strong sales productivity, disciplined
expense control, and the highest customer retention rate we have
seen in more than eighteen months," said CEO Ian Morris. "Our team
is doing an excellent job of delivering value to our customers in
an environment where our services are more important to their
business than ever," Morris added.
Enhancements to Agent Direct Business
The fourth quarter acquisition of Realty Generator expanded
HouseValues' addressable market through a product expressly
designed for real estate brokerages and agent teams. Realty
Generator's solution efficiently attracts consumer interest,
effectively converts that interest into leads and cultivates
contacts into closed transactions. While HouseValues grows its
Realty Generator broker services business, the company also plans
to leverage the acquired technology to enhance its agent direct
business.
With the launch of a next generation agent direct product
anticipated for later this year, HouseValues will offer its agent
customers a more powerful combination of lead generation and
contact management. The new product will include key features built
to provide real time insight into consumer behavior and
intelligence that alerts agents when their prospects are most
likely to become ready to transact. It is designed to help agents
be more productive while delivering an enhanced online experience
to home buyers and sellers.
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. 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 $62.7 million on June
30, 2008.
Year-to-date HouseValues has re-purchased and retired 397,175
shares at an average cost of $2.51 per share, 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 first quarter financial results today 4:30 p.m. Eastern
time. To listen to the live conference call, please dial
719-325-4847. 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 Friday, August 1 by dialing 719-457-0820 and
entering the passcode 4806409#.
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 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 from continuing operations
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 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.
HouseValues, Inc.
NON-GAAP FINANCIAL MEASURE AND RECONCILIATION
(In thousands)
(unaudited)
Three months ended
----------------------------
June 30, March 31, June 30,
2008 2008 2007
-------- -------- --------
Net loss $ (1,271) $ (1,192) $ (119)
Adjustments
Interest income, net (289) (519) (751)
Gain on sale of fixed assets - (791) -
Equity in loss of unconsolidated
subsidiary 185 151 -
Income from operations of discontinued
mortgage segment - - (119)
Depreciation and amortization of property
and equipment from continuing operations 1,015 959 1,245
Amortization of intangible assets for
continuing operations 492 492 16
Stock-based compensation from continuing
operations 745 823 724
Income tax expense (benefit) 34 2 (51)
-------- -------- --------
Adjusted EBITDA from continuing operations $ 911 $ (75) $ 945
======== ======== ========
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 Six months ended
June 30, June 30,
------------------ ------------------
2008 2007 2008 2007
-------- -------- -------- --------
Revenues $ 10,131 $ 15,984 $ 21,327 $ 33,822
Expenses:
Sales and marketing (1) 6,242 10,241 13,672 22,628
Technology and product
development (1) 1,491 2,507 3,449 5,297
General and administrative (1) 2,232 3,015 4,938 6,567
Gain on sale of fixed assets - - (791) -
Depreciation and amortization of
property and equipment 1,015 1,245 1,974 3,400
Amortization of intangible
assets 492 16 984 411
-------- -------- -------- --------
Total expenses 11,472 17,024 24,226 38,303
-------- -------- -------- --------
Loss from operations (1,341) (1,040) (2,899) (4,481)
Equity in loss of unconsolidated
subsidiary (185) - (336) -
Interest income, net 289 751 808 1,337
-------- -------- -------- --------
Loss before income tax expense (1,237) (289) (2,427) (3,144)
Income tax expense (benefit) 34 (51) 36 (1,326)
-------- -------- -------- --------
Net loss from continuing
operations (1,271) (238) (2,463) (1,818)
Discontinued operations
Income from operations of
discontinued mortgage segment - 183 - 127
Income tax expense - 64 - 44
-------- -------- -------- --------
Income from discontinued
operations - 119 - 83
-------- -------- -------- --------
Net loss $ (1,271) $ (119) $ (2,463) $ (1,735)
======== ======== ======== ========
Net loss per share:
Basic:
Continuing operations $ (0.05) $ (0.01) $ (0.10) $ (0.07)
Discontinued operations $ - $ - $ - $ -
-------- -------- -------- --------
Total $ (0.05) $ - $ (0.10) $ (0.07)
======== ======== ======== ========
Diluted:
Continuing operations $ (0.05) $ (0.01) $ (0.10) $ (0.07)
Discontinued operations $ - $ - $ - $ -
-------- -------- -------- --------
Total $ (0.05) $ - $ (0.10) $ (0.07)
======== ======== ======== ========
Number of shares used in per share
calculations:
Basic 24,235 24,607 24,379 24,518
======== ======== ======== ========
Diluted 24,235 24,607 24,379 24,518
======== ======== ======== ========
(1) Stock-based compensation is
included in the expense line items
above in the following amounts:
-------- -------- -------- --------
2008 2007 2008 2007
-------- -------- -------- --------
Sales and marketing $ 225 $ 122 $ 378 $ 352
Technology and product
development 8 147 78 262
General and administrative 512 455 1,112 1,344
Discontinued operations - - - 19
-------- -------- -------- --------
$ 745 $ 724 $ 1,568 $ 1,977
======== ======== ======== ========
HouseValues, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(unaudited)
June 30, December 31,
2008 2007
------------ ------------
Assets
Current assets:
Cash and cash equivalents $ 62,652 $ 35,450
Short-term investments - 27,400
Accounts receivable, net of allowance of $61
and $50 92 128
Prepaid expenses and other assets 1,894 1,764
Prepaid income taxes 941 905
------------ ------------
Total current assets 65,579 65,647
Property and equipment, net of accumulated
depreciation of $11,875 and $11,518 4,833 6,187
Goodwill 4,244 3,833
Intangible assets, net of accumulated
amortization of $3,560 and $2,576 5,346 6,330
Minority investment in unconsolidated subsidiary 2,252 2,588
Other noncurrent assets - 398
------------ ------------
Total assets $ 82,254 $ 84,983
============ ============
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 974 $ 1,395
Accrued compensation and benefits 1,927 2,084
Accrued expenses and other current liabilities 1,326 1,809
Deferred rent, current portion 289 289
Deferred revenue 418 373
Note payable 1,938 1,873
------------ ------------
Total current liabilities 6,872 7,823
Deferred rent, less current portion 501 722
Noncurrent deferred tax liabilities 59 -
------------ ------------
Total liabilities 7,432 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
24,271,164 and 24,521,139 shares at
June 30, 2008 and December 31, 2007,
respectively 67,222 66,375
Retained earnings 7,600 10,063
------------ ------------
Total shareholders' equity 74,822 76,438
------------ ------------
Total liabilities and shareholders' equity $ 82,254 $ 84,983
============ ============
HouseValues, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
Six months ended
June 30,
------------------
2008 2007
-------- --------
Cash flows from operating activities:
Net Loss $ (2,463) $ (1,735)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization of property and
equipment 1,974 3,400
Amortization of intangible assets 984 411
Stock-based compensation 1,568 1,977
Tax benefit deficiency from exercises of stock
options - (48)
Deferred income tax benefit 59 (461)
Gain on sale of fixed assets (791) -
Equity in loss of unconsolidated subsidiary 336 -
Changes in certain assets and liabilities
Accounts receivable 36 379
Prepaid expenses and other current assets (45) (1,278)
Prepaid income taxes (36) 817
Other noncurrent assets 398 (88)
Accounts payable (505) (1,981)
Accrued compensation and benefits (157) (969)
Accrued expenses and other current
liabilities (447) (2,397)
Deferred rent (221) (186)
Deferred revenue 45 (531)
-------- --------
Net cash provided by (used in) operating
activities 735 (2,690)
-------- --------
Cash flows from investing activities:
Purchases of short-term investments - (16,645)
Sales of short-term investments 27,400 9,910
Purchases of property and equipment (970) (1,688)
Proceeds from sale of fixed assets 1,209 -
Acquisition of Realty Generator (382) -
-------- --------
Net cash provided by (used in) investing
activities 27,257 (8,423)
-------- --------
Cash flows from financing activities:
Purchase and retirement of common stock (997) -
Proceeds from exercises of stock options and
warrants 207 510
Tax benefit from exercises of stock options - 48
-------- --------
Net cash (used in) provided by financing
activities (790) 558
-------- --------
Net increase (decrease) in cash and cash
equivalents 27,202 (10,555)
Cash and cash equivalents at beginning of period 35,450 49,376
-------- --------
Cash and cash equivalents at end of period $ 62,652 $ 38,821
======== ========
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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