HouseValues Announces Record Financial Results for Second Quarter
Quarterly Revenue Increases 85 Percent Over Prior Year, Expands Addressable Market with Launch of New Product for Mortgage Professionals
KIRKLAND, Wash., Aug 04, 2005 (BUSINESS WIRE) -- HouseValues, Inc. (NASDAQ:SOLD) today announced results for the quarter ended June 30, 2005.
For the quarter, HouseValues reported revenue of $20.6 million, an increase of 85 percent from the comparable quarter last year. Second quarter 2005 net income was $3.7 million, or $0.14 per diluted share, compared to net income of $2.3 million, or $0.11 per diluted share, in the second quarter of 2004.
"Our customers are some of the most successful real estate and mortgage professionals in North America, and we are proud to be helping a growing number of HouseValues subscribers win more business by exceeding the expectations of Internet enabled consumers," said Ian Morris, chief executive officer of HouseValues, Inc.
Chief Financial Officer John Zdanowski added, "The second quarter capped off our 17th consecutive quarter of profitability. Net income grew 27 percent over the first quarter even as we continued to invest aggressively in new services that will benefit both real estate professionals and consumers."
New Service for Mortgage Professionals Launched
In the quarter, HouseValues announced a new service specifically designed to help mortgage professionals write more business by enabling them to build strong relationships with both prospective home buyers and local real estate agents. The new mortgage marketing service from HouseValues is already in use by more than 500 mortgage companies across North America. Borrell Associates expects online mortgage advertising will grow from $2 billion dollars last year to over $4.3 billion in 2009 -- more money than will be spent by mortgage professionals on direct mail, newspapers or television.
Business Outlook
The company expects third quarter revenue in the range of $22.5 to $23.5 million, EBITDA between $5.5 and $6.0 million and GAAP diluted earnings per share of $0.11 to $0.13.
HouseValues also increased the minimum revenue, EBITDA and EPS values of its expected ranges for the full year. HouseValues expects 2005 revenue in the range of $85 million to $88 million. The company expects full-year EBITDA in the range of $22 million to $23 million and GAAP earnings per share of $0.46 to $0.50.
The company believes its new product development activities will drive incremental revenue in 2006.
The HouseValues Solution
HouseValues solves the marketing challenges facing the real estate and mortgage professionals by helping them capture, cultivate, and convert leads into closed business. They do this by generating hundreds of thousands of consumer requests each month and providing those requests to real estate and mortgage professionals on an exclusive basis, along with a Web based customer relationship management tool and a personal coach dedicated to helping every customer succeed.
HouseValues has built relationships with nearly 14,000 real estate and mortgage professionals representing every major real estate franchise brand and brokerage company, serving about 55,000 North American neighborhoods.
"HouseValues offers these real estate and mortgage professionals a far better value proposition than newspapers and other print classified offerings," Morris said. "That's why we expect to continue to grow our share of real estate and mortgage marketing spend at the expense of other media."
Conference Call
HouseValues, Inc. will host a conference call to discuss these financial results today at 2:00 p.m. PT/5:00 p.m. ET. A live Web cast of the call will be available from the Investor Relations section of the company's Web site at http://www.housevaluesinc.com and via replay beginning three hours after the completion of the call. The call will be available via live audio at 1-800-218-0204. An audio replay of the call will also be available to investors beginning at 8 p.m. ET today, through August 18, 2005, by dialing 1-303-590-3000 and entering the passcode 11033023#.
Forward-Looking Statements
This release contains forward-looking statements relating to the Company's anticipated plans, products, services, and financial performance. The words "believe," "expect," "anticipate," "intend" and similar expressions identify forward-looking statements, but their absence does not mean the statement is not forward looking. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that could cause actual results to differ materially from those anticipated in the forward looking statements. Factors that could affect the Company's actual results include its ability to retain and increase its customer base, to respond to competitive threats, to manage costs, and to expand into new lines of business. Please refer to the company's recent filings with the Securities and Exchange Commission on Form 10-Q and 10-K for a more detailed description of these and other risks that could materially affect actual results. Given these risks and uncertainties, you should not place undue reliance on these forward-looking statements. The forward-looking statements are made as of today's date and the Company assumes no obligation to update any such statements to reflect events or circumstances after the date hereof.
Non GAAP Measures
This press release includes a discussion of EBITDA, which is a non GAAP financial measure provided as a complement to results provided in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The term "EBITDA" refers to a financial measure that is defined as earnings before net interest, income taxes, depreciation and amortization. EBITDA is not a substitute for measures determined in accordance with GAAP, and may not be comparable to EBITDA as reported by other companies. We believe EBITDA to be relevant and useful information to our investors as this measure is an integral part of our internal management reporting and planning process and is the primary measure used by our management to evaluate the operating performance of our operations. The components of EBITDA include the key revenue and expense items for which our operating managers are responsible and upon which we evaluate their performance, and we also use EBITDA for planning purposes and in presentations to our board of directors. See below for a reconciliation of net income, the most comparable GAAP measure, to EBITDA.
About HouseValues, Inc.
HouseValues, Inc. (NASDAQ: SOLD) provides innovative marketing services that enable residential real estate professionals to capture and cultivate leads, and convert these leads into closed transactions. HouseValues' integrated offering provides real estate professionals with leads generated from its HouseValues.com and JustListed.com Web sites, together with its online prospect management system and personalized coaching and training to help them increase lead conversion. More information about the company can be found at http://www.housevaluesinc.com
HouseValues, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(unaudited)
Quarter ended Six months ended
June 30, June 30,
2005 2004 2005 2004
Revenues $20,577 $11,150 $38,196 $20,473
Expenses:
Sales and marketing 10,276 5,037 18,898 9,352
Technology and product
development 1,607 783 2,841 1,506
General and
administrative 3,043 1,376 5,813 2,699
Depreciation and
amortization of property
and equipment 402 191 756 389
Amortization of intangible
assets 151 218 303 381
Stock-based compensation 258 55 555 76
----------------- ----------------
Total expenses 15,737 7,660 29,166 14,403
----------------- ----------------
Income from operations 4,840 3,490 9,030 6,070
Interest income 486 24 804 41
----------------- ----------------
Income before income tax
expense 5,326 3,514 9,834 6,111
Income tax expense 1,618 1,235 3,196 2,148
----------------- ----------------
Net income $3,708 $2,279 $6,638 $3,963
================= ================
Net income per share:
Basic $0.15 $0.12 $0.26 $0.21
================= ================
Diluted $0.14 $0.11 $0.24 $0.19
================= ================
HouseValues, Inc.
NON-GAAP FINANCIAL MEASURE AND RECONCILIATION
(In thousands, except per share data)
(unaudited)
Net income $3,708 $2,279 $6,638 $3,963
Less Interest income 486 24 804 41
Add
Depreciation and amortization of property and
equipment 402 191 756 389
Amortization of intangible
assets 151 218 303 381
Stock-based compensation 258 55 555 76
Income tax expense 1,618 1,235 3,196 2,148
----------------- ----------------
EBITDA $5,651 $3,954 $10,644 $6,916
================= ================
HouseValues, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(unaudited)
June 30, December 31,
2005 2004
Assets
Current assets:
Cash and cash equivalents $57,658 $57,562
Short-term investments 23,815 17,316
Accounts receivable, net of
allowance of $274 and $95 393 84
Prepaid expenses and other
assets 1,232 1,245
Deferred income taxes 796 222
Prepaid income taxes 1,212 -
Other current assets 538 1,605
---------- --------------------
Total current assets 85,644 78,034
Property and equipment, net of
accumulated depreciation of $2,800
and $2,051 6,257 3,702
Goodwill 1,815 948
Intangible assets, net of accumulated
amortization of $1,529 and
$1,226 1,326 1,430
Other noncurrent assets 389 450
---------- --------------------
Total assets $95,431 $84,564
========== ====================
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $1,151 $1,167
Accrued compensation and
benefits 2,781 2,407
Accrued expenses and other current
liabilities 4,928 3,706
Deferred rent, current portion 261 261
Deferred revenue 1,336 1,014
Income taxes payable - 103
---------- --------------------
Total current liabilities 10,457 8,658
Deferred rent, less current
portion 1,416 1,306
---------- --------------------
Total liabilities 11,873 9,964
Shareholders' equity:
Common stock, par value $0.001 per
share, stated at amounts paid
in; authorized 120,000,000 shares;
issued and outstanding 25,508,376 and
24,935,000 shares at June 30, 2005
and December 31, 2004 69,943 68,631
Deferred stock-based
compensation (3,616) (4,624)
Retained earnings 17,231 10,593
---------- --------------------
Total shareholders' equity 83,558 74,600
---------- --------------------
Total liabilities and
shareholders' equity $95,431 $84,564
========== ====================
HouseValues, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
Six months ended June 30,
2005 2004
Cash flows from operating activities:
Net income $6,638 $3,963
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization of
property and equipment 756 389
Amortization of intangible assets 303 381
Stock-based compensation 555 76
Deferred income tax benefit (513) (117)
Tax benefit from exercises of stock
options 1,107 -
Changes in certain assets and
liabilities
Accounts receivable (309) 2
Prepaid expenses and
other assets 81 77
Prepaid income taxes (1,212) -
Other current assets 1,067 -
Accounts payable 180 (395)
Accrued compensation and
benefits 374 252
Accrued expenses and other
current liabilities 1,181 607
Deferred rent 110 -
Deferred revenue 322 249
Income taxes payable (103) 140
----------- -----------
Net cash provided by operating
activities 10,537 5,624
----------- -----------
Cash flows from investing activities:
Purchases of short-term investments (10,799) (12,000)
Sales of short-term investments 4,300 -
Change in restricted cash - 125
Purchases of property and equipment (3,402) (281)
Purchases of goodwill and intangible
assets (580) (258)
----------- ------------
Net cash used in investing
activities (10,481) (12,414)
----------- ------------
Cash flows from financing activities:
Issuance costs related to the sale
of common stock (614) -
Cash held for third party common
stock transaction - 750
Proceeds from exercises of stock options 654 19
Proceeds from repayment of shareholder
note receivable - 1
----------- -----------
Net cash provided by
financing activities 40 770
----------- -----------
Net increase (decrease) in cash and cash
equivalents 96 (6,020)
Cash and cash equivalents at beginning
of period 57,562 7,181
----------- -----------
Cash and cash equivalents at
end of period $57,658 $1,161
=========== ===========
SOLD: FINANCIAL
SOURCE: HouseValues, Inc.
HouseValues, Inc. Media Only: Kristin Treat, Public Relations Manager 425-952-6691 kristint@housevalues.com or Investors Only: Mark Lamb, Director of Investor Relations 425-952-5801 markl@housevalues.com
Copyright Business Wire 2005
News Provided by COMTEX