An unexpected surge in customer cancellations hurt House Values (NASDAQ: SOLD) earnings in the fourth quarter, company CEO Ian Morris said Thursday.

The company, which offers marketing tools and services for real estate professionals, announced a net loss of $5.34 million for the quarter ended Dec. 31, 2006, or 22 cents per diluted share, compared with net income of $4.01 million for the same quarter in 2005.

Fourth-quarter 2006 revenue rose 15 percent to $21.5 million compared to the prior year’s quarter. The company also reported that adjusted earnings before interest, taxes, depreciation and amortization in the fourth quarter were a loss of $492,000 compared with adjusted earnings of $6.62 million in fourth-quarter 2005.

For the full year in 2006 the company reported a net loss of $3.14 million, or 12 cents per diluted share, compared with net income of $14.98 million in 2005.

Revenue increased 13 percent in 2006 to $98.2 million. The company’s adjusted earnings before interest, taxes, depreciation and amortization were $7.7 million in 2006 compared with $24.1 million in 2005. Cash flow from operations was $11.2 million in 2006 compared with $24 million in 2005.

The company reported that it lost more customers than it gained in the fourth quarter — with about 4,300 canceling customers and 2,700 new customers.

“This nonrenewal rate is unacceptable,” Morris said during the company’s earnings announcement Thursday. The company ended the fourth quarter with about 14,600 customers, Morris said. “There’s no doubt the market conditions have made the last couple of quarters more challenging than we expected.”

The company’s revenue decline, due in part to fewer real estate customers, also reflects lower average revenue per real estate customer and a decline in revenue from the mortgage business that the company has exited, the company announced.

In January, HouseValues officials announced that the company was cutting 60 employees — or about 12 percent of its overall workforce, in a move to leave the mortgage lead-generation business and to refocus its operations on its real estate agent customers.

The company also announced that it would scale back or eliminate other initiatives that are not vital to supporting its real estate agent customers.

Morris said Thursday that the company intends to focus its efforts to retain and attract successful agents who tend to be the most profitable for the company. “Focusing on the right customer is an integral part of our goals for 2007,” he said, noting that the company now has the highest number of customers who have been using the company’s services for two years or more.

Morris also said that the company will continue to support its property-search Web site, HomePages.com, with enhancements.

The company’s stock price per share rose 8 cents Thursday to close at $5.89.

An audio replay of the company’s earnings conference call is available through 11:59 p.m. ET on Friday, Feb. 23, by dialing (719) 457-0820 and entering the passcode: 4168400#.

Show Comments Hide Comments

Comments

Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Success!
Thank you for subscribing to Morning Headlines.
Back to top
×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription