ZipRealty Inc., a real estate brokerage company, today announced that its agents closed about 25 percent more real estate transactions representing about 25 percent more transaction volume in fourth-quarter 2005 compared to fourth-quarter 2004.
But the company’s business in California has suffered in a softening market, company officials said during an earnings announcement Tuesday, and California represented about 47 percent of net transaction revenues for the quarter compared to 61 percent for the same quarter a year ago. About half of the company’s agents are in California.
Net revenues reached $21.6 million for the fourth quarter, which ended Dec. 31. This represents a 23 percent increase over the $17.5 million net revenue reported in fourth-quarter 2004, ZipRealty announced. The company’s stock skidded down about 3.83 percent from the close of trading Monday to the close of trading Tuesday – from $9.40 to $9.04.
Excluding a one-time, non-cash benefit of $16.8 million, net income for the fourth quarter was $1.1 million compared to $900,000 in fourth-quarter 2004. Net income per diluted share for the quarter was 73 cents including the income tax benefit. Excluding this effect, net income per diluted share was 4 cents for fourth-quarter 2005 and 1 cent for fourth-quarter 2004.
Gary Beasley, ZipRealty’s executive vice president and chief financial officer, said during the earnings presentation Tuesday that the company’s goal is to diversify its geographic presence so that it is less subject to regional market trends. Because the company now has a substantial presence in California, the company can be “disproportionately affected” by market changes in California.
Eric Danziger, ZipRealty CEO, announced company plans to expand into four to six new markets this year, including Tampa, Orlando and Minneapolis. ZipRealty recently opened offices in Las Vegas, Miami and Houston.
Average net revenue per real estate transaction dropped from about $7,308 in fourth-quarter 2004 to $7,203 in fourth-quarter 2005, ZipRealty reported, while the number of transactions closed increased from about 2,337 in fourth-quarter 2004 to 2,910 in fourth-quarter 2005.
The total value of real estate transactions closed for fiscal year 2005 increased about 47 percent to $4.4 billion over fiscal year 2004, while the number of transactions closed increased 45 percent to 12,317 and the average net revenue per transaction increased 3 percent year-over-year, to $7,395.
The company had about 1,366 agents operating at the end of fourth-quarter 2005, an increase of about 50 percent over the number of agents at the close of fourth-quarter 2005.
Danziger said that traffic to the ZipRealty Web site has been strong despite a general softening in the real estate market, adding that the company’s buyer-centric business model should fare well in an easing market. He used a retail analogy:
“We have eager buyers in our store. It’s just that they’re waiting for items to go on sale before they head to the checkout counter.” In the Phoenix market, the company’s agents showed about 780 homes and that led to only about 47 offers, he said.
“We are battling a tough market. We have got tons of buyers – they’re not buying at the prices sellers are selling for. This transition market is still not settled in and I don’t know when it will stop,” Danziger said.
Beasley said that about 40 percent of ZipRealty’s Web site visitors are generated by affiliates, while about 30 percent of visitors go directly to the Web site and about 18 percent are primarily related to paid Google search results. Danziger added that ZipRealty has seen a 40 percent increase in registered site users in fourth-quarter 2005 compared to fourth-quarter 2004.
Company officials expect revenues to range between $16.5 million to $18.5 million for the first quarter. At this revenue level, reported net loss per outstanding share is expected to be between 17 cents and 22 cents with a corresponding pro forma loss per outstanding share range of 15 cents to 20 cents.
For the full year ended Dec. 31, 2006, management expects revenues to range from $105 million to $115 million, the company announced. ZipRealty officials also expect reported earnings per fully diluted share for fiscal 2006 to be between 2 cents and 8 cents, with corresponding pro forma earnings per fully diluted share range of 15 cents to 25 cents.
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