ZipRealty narrows losses

ZipRealty Inc. edged closer to profitability during the third quarter, as transactions grew 30.6 percent and revenue by 12.8 percent from a year ago, the company said.

The Emeryville, Calif.-based brokerage's $779,000 net loss for the quarter ending Sept. 30 was less than half the $1.69 million loss for the same period a year ago.

Excluding $923,000 in stock-based compensation of employees, ZipRealty eked out a gain of $144,000 for the quarter, the company said in a regulatory filing.

ZipRealty President and Chief Executive Officer Pat Lashinksy said in a statement that agent productivity was the highest in two years, and that tight cost controls helped the company reach "pro forma" profitability.

But ZipRealty's net loss for the year to date -- $10.76 million -- was still slightly ahead of last year's pace, when the company was $10.62 million in the red at the end of September.

ZipRealty Inc. finished 2008 with a $13.3 million loss, even though agents boosted transactions by 23 percent and the company achieved a 10th consecutive year of revenue growth (see story).

The story for the third quarter of 2009 was much the same, with an increase in transactions (to 6,557) and revenue (to $35.4 million) not enough to cancel out expenses, which also continued to grow.

For the second quarter in a row, ZipRealty also saw a slight increase in average transaction revenue per close. But at $5,284, average transaction revenue per close was still down 13.8 percent from a year ago.

In addition, operating expenses were up 7.9 percent from a year ago, to $36.3 million, as ZipRealty boosted spending on product development, sales and marketing, and general administrative expenses. During that time, the company also grew by 391 agents, to 3,205 -- a 13.9 percent increase from a year ago.

ZipRealty won't add any new markets this year other than Portland, Ore., which opened in April, and will instead focus resources on increasing the return on investment in the 36 markets it's now in, the company said.

Factoring out a legal settlement in which ZipRealty netted $1.3 million last year, the brokerage's 2008 net loss was closer to $14.7 million. The company said it expects its net loss for 2009 to be smaller than that.

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