Realtor.com operator Move Inc. said in a regulatory filing Thursday that third-quarter revenue fell 15.7 percent from a year ago, and warned of further declines in the final three months of the year.
Revenue totaled $52.9 million for the third quarter, down from $61.2 million a year ago, and is projected to total between $47 million and $48 million in the final three months of the year — a level Move executives expect to stay, on average, next year.
Move’s management team blamed the decline in revenue on discontinued operations that formerly generated about $10 million a year in revenue, and a 15 percent decline in the number of for-sale listings on Realtor.com in the last year.
Move publishes basic listings on Realtor.com, the most popular real estate portal on the Internet, for free. But fewer listings means less revenue for Move because agents and brokerages who purchase "showcase listing enhancements" are charged subscription fees that are based on the size of their market and the number of listings they had in the last 12 months.
Enhanced listings, which include more photos, virtual tours, video and personal branding, accounted for 39 percent of Realtor.com’s revenue last year, according to the company’s most recent annual report. "Featured home" display ads, which put listings on top of some search results on the site, accounted for another 11 percent of revenue.
Move’s chief exeuctive officer, Steve Berkowitz, said the listings picture could turn around if a "shadow inventory" of bank-owned properties and homes whose owners are waiting for markets to stabilize goes on the market.
Many homeowners, especially in the mid to upper price tiers, aren’t putting their homes on the market because they don’t think they will sell, and because they can’t get a mortgage to trade up to a better home, Berkowitz said.
"We believe there is a pent-up demand … that will come back into the market once people are comfortable prices have bottomed out in the real estate market," Berkowitz said in a conference call with investment analysts. …CONTINUED
To achieve growth, the company must also deliver new products and services that meet the needs of Realtors in a changing marketplace, he said.
The former Ask.com CEO took over leadership of Move in January, and has vowed to transform Realtor.com into a destination site for consumers through the entire "homeownership life cycle" by offering more information on individual properties and housing market conditions in addition to for-sale listings.
Move hasn’t provided guidance about the company’s expectations for the future in some time. But the company’s new management team, which also includes Chief Financial Officer Rob Krolik, warned investors Thursday not to expect a quick turnaround in 2010. The company expects revenue to range between $184 million and $192 million, Krolik said.
Thanks to cost-cutting measures, Move narrowed its loss for the third quarter to $758,000, down from $22.7 million a year ago. The company also boosted a key measurement of earnings before taxes and other expenses to 11 percent of revenue, up from 9 percent a year ago.
Move expects adjusted EBITDA (earnings from continuing operations before interest, taxes, stock-based compensation and charges, depreciation, amortization and other nonrecurring charges) to average between 9 and 10 percent of revenue in 2010.
Move sold its Welcome Wagon subsidiary to South Florida Media Group for $2 million in a deal that closed June 22, and last month said it expects to save about $1 million a year by vacating nearly half of the office space it has leased at its headquarters in Westlake Village, Calif. (See story.)
The company employed the equivalent of 1,181 full-time workers at the end of 2008 (including 166 Welcome Wagon employees), down from 2,800 at the close of 2001, when the company was known as Homestore.
Asked if Move will be required to cut additional costs, Krolik said expenses are "probably at the right level," although there may be continued redeployment of resources within the company.
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