Wall Street analysts had anticipated a net loss of 10 cents per share for the quarter, Thompson Financial Network reported. ZipRealty’s stock hit an all-time low this month, closing at $5.45 per share on Nov. 2. The company went public in November 2004.
The quarterly loss included a one-time charge of $3.55 million that relates to the proposed settlement of a lawsuit that alleges employment-related violations.
Specifically, the lawsuit challenges a “customer acquisition offset” assessed by ZipRealty on unproductive agents and company policies “under which commissions are not earned unless a transaction closes while an agent is still employed,” according to court documents. The lawsuit was filed on May 4 in U.S. District Court for the Central District of California.
For the full year, the company expects a net loss of $14 million to $17 million, or between 61 cents to 74 percents per share.
The company’s net loss of $4.8 million for the third quarter compares with net earnings of $600,000 and 3 cents per share in third-quarter 2006.
Company revenue grew 7 percent, from $26.2 million in third-quarter 2006 to $28 million in third-quarter 2007.
Last month, the company announced that it was taking steps to reduce operating expenses by about $4 million per year, and was eliminating about 40 jobs in its corporate headquarters and field offices.
Pat Lashinsky, ZipRealty president and CEO, said in the earnings announcement, “Despite the cuts we have made in connection with this cost rationalization plan, we are executing on our key strategies of national expansion, hiring the right teams in the right markets, and equipping our agents and customers with the best tools available.”
The company is moving ahead with expansion plans and expects to grow revenue by 12 percent to 18 percent next year and may open shop in two to four new markets next year.
Lashinsky also stated that the company is facing the “toughest residential real estate market in well over a decade, a market condition that was exacerbated by changing credit conditions.”
Despite market conditions, the ZipRealty Web site is receiving record traffic and activity, Lashinsky also reported.
The company had 2,262 agents employed as of Sept. 30, up 29.6 percent compared with 1,747 agents on that date last year.
Also, the total number of transactions closed by ZipRealty agents increased 10.4 percent in the third quarter to 3,829, compared with 3,467 transactions in third-quarter 2006. The average net revenue per transaction fell 3 percent year-over-year, from $7,332 in third-quarter 2006 to $7,110 in third-quarter 2007.
The company’s stock price closed the day on Wednesday at $5.74 per share, up 7 percent compared to the previous day’s closing price.
ZipRealty has operations in 32 markets in 18 states and Washington, D.C.