News Corp. — the parent company of real estate portal realtor.com’s operator, Move Inc. — reported declining year-over-year revenue in the first quarter of 2016 (the third quarter of News Corp.’s fiscal year).
Total company revenues of $1.9 billion were down from $2.0 billion last year. The company reported a loss of $149 million overall in the quarter.
What happened?
“The third quarter results were materially affected by a $280 million pre-tax charge at News America Marketing to resolve a legacy lawsuit and related claims, and continued currency headwinds, which impacted revenues by $72 million and EBITDA [earnings before interest, taxes, deductions and amortization] by $9 million,” said News Corp.’s CEO, Robert Thomson, in a statement. “We believe, however, that the company is on track to see improvements in the fourth quarter, with the expansion of our digital real estate business, foreign currency comparisons hopefully beginning to ease, and cost saving initiatives taking firmer root.
“Traffic and revenue growth remained robust at REA and realtor.com,” Thomson added. “We are particularly focused on driving mobile revenue growth, and are pleased with the results at realtor.com, where the mobile audience grew close to 50 percent this quarter, and now represents 60 percent of page views and the majority of leads.”
The lawsuit involving the alleged theft of Move’s trade secrets by Zillow executives was mentioned a couple of times in passing: “Higher legal expenses at Move, Inc. (“Move”), as well as transaction costs related to the acquisition of iProperty Group Limited (“iProperty”), also contributed to the decline,” said Thomson in the statement.
Digital real estate segment — and realtor.com
“News Corp.’s digital real estate business is continuing is rapid expansion,” noted Thomson in the investor call. The acquisition of Diakrit by REA would help “differentiate News Corp.’s digital real estate services worldwide,” he said.
Thomson reported “a record 1.5 billion views” on realtor.com in Q1, with minutes spent on the portal also increasing 30 percent year-over-year, and the average user accessing 20 pages per visit.
“We have momentum and the strongest engagement in the U.S. housing market, a market we believe is yet to recover from the financial crisis and is still at a relatively early phase of its digital evolution,” Thomson said.
“We are continuing to enhance our product line” for both Realtors and users, he added. A “turbo” option for listings and more software available for Realtors were mentioned as continuing initiatives for News Corp.
News Corp.’s digital real estate services segment showed a $3 million decrease in EBITDA, or 7 percent year-over-year, “primarily due to $11 million of higher legal expenses at Move, $7 million of transaction costs related to the acquisition of iProperty and negative foreign currency fluctuations,” said News Corp. in its release.
However, Move’s revenues increased by 20 percent, “primarily due to the continued strength in its Connection for Co-Brokerage product and non-listing Media revenues,” said News Corp.
“Based on Move’s internal data, average monthly unique users of realtor.com’s web and mobile sites for the quarter grew 30 percent year-over-year to 50 million; traffic in April grew 25 percent year-over-year to 55 million monthly unique users,” reported News Corp.
“In Q3, there was positive EBITDA” at Move despite the higher legal expenses, noted Bedi Singh, News Corp’s CFO, in response to a question about whether Move could be profitable with the litigation continuing. Strong traffic performance and improving products would continue to have a positive impact on the bottom line.
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