Market Leader sees profits ahead

Partnerships with franchisors, brokerages expected to boost upsales to agents

Market Leader Inc. says it’s on track to post positive adjusted earnings this year, after boosting revenue for the ninth quarter in a row and trimming losses during the first three months of 2012.

First-quarter revenue was up 41 percent from a year ago, to $10.2 million, helping the Kirkland, Wash.-based provider of lead management and marketing tools for real estate professionals cut its net loss for the quarter to $2.5 million, down from $4.3 million a year ago.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) added up to an adjusted loss of $400,000 for the quarter, down from $3.3 million a year ago.

In announcing first-quarter results, Market Leader said it expects to achieve profitability on an adjusted EBITDA basis by the end of the first half of 2012 and for the full year, thanks in part to new strategic partnerships with real estate franchisors Century 21 Real Estate LLC and Better Homes and Gardens Real Estate LLC.

Last year, Market Leader boosted the number of agents using its software platform from 19,000 to more than 100,000, thanks largely to the company’s lead role in powering Keller Williams Realty International’s eEdge lead management and marketing platform for 80,000 agents.

Market Leader also bought RealEstate.com and its network of more than 250 real estate broker customers from two subsidiaries of Tree.com for $8.25 million, and acquired Denver-based SharperAgent and its 30,000-strong customer base in August for $1.75 million.

This year, Market Leader signed a two-year contract worth at least $2.55 million to provide a marketing and customer relationship management (CRM) platform for 60,000 agents affiliated with Century 21.

The company also signed a deal to provide a branded technology platform to Better Homes and Gardens Real Estate’s 7,000 agents, including CRM websites.

Market Leader’s new strategic partnerships and RealEstate.com acquisition "are expected to drive further revenue growth in the second half of 2012, and serve as catalysts for continued revenue and EBITDA growth in 2013 and beyond," the company said.

As it provides services to franchisors and brokerages, Market Leader can "upsell" premium software and services to their agents.

Market Leader expects to earn a minimum of $10 million from Keller Williams during the initial five-year term of its eEdge agreement, with Keller Williams agents paying $15 a month for the base-level eEdge product.

"Strong sales of premium upgrades" to Keller Williams agents, combined with the contractual revenues from the eEdge deal, are expected to generate more than $10 million in revenue for the company in 2012 alone, Market Leader said in its most recent annual report to investors.

In announcing first-quarter results, Market Leader said it is now partnering with leading brokerages to drive broad adoption of its software platform.

In March, the company announced that HomeServices of America Inc. brokerage Huff Realty would provide more than 500 agents in Ohio and Kentucky with access to its SharperAgent platform. A dozen HomeServices of America brokerages employing more than 7,000 agents are SharperAgent clients, Market Leader said.

Market Leader sees itself as being at "the forefront of the trend towards enterprise-level deployment," reducing "the need for individual agents to deploy their own technology solutions."

The company says its success with this approach enables it "to market additional value-added services to these sales professionals without incurring the traditional costs of new customer acquisition."


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