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Online Real Estate: ZipR, Move

Posted on Wednesday, Apr 8th 2009

Here is a quick update on how ZipRealty (NASDAQ:ZIPR) and Move (NASDAQ:MOVE), the key online real estate players, are faring in the troubled US housing market.

The largest player in the online real estate industry, Move did experience sluggishness in the quarter. Revenues for the quarter fell 8% to $57.5 million and non-GAAP earnings fell to $7.3 million from $9.7 million a year ago.

During the year, the company made significant changes to its websites, which helped it improve its presence in the online world. This was evident from the fact that during the quarter, it averaged more than 140 million minutes per month of total user engagement. According to newly appointed CEO Steven H. Berkowitz, “No one else averages even one-third of our engagement and the other big traffic sites, namely the portals like Yahoo! and AOL average around 20 million minutes per month, or one-seventh of our engagement.”

Last quarter, Move decided to continue to invest in the website upgrade despite market conditions. With statistics claiming that the average number of page views for the fourth quarter was more than 600 million pages, which is more than twice the three major portals combined and four times its closest non-portal competitor, it looks as though the decision paid off. Today Move is the leader not only in terms of unique visitors, but also in terms of total minutes spent on site, total pages viewed and total visits to its network.

Its prime property, Realtor.com, continued to do well compared with peers though it did see a slight decline in display advertising in the quarter. But Move has to deal with various senior management changes of late. Not only did President Lorna Bernstein recently quit, but the CFO also announced his plans to move on.

The stock is trading at $1.57 with a market capitalization of just over $240 million, making it still quite an attractive target for an Internet conglomerate like Yahoo!, News Corp or IAC.

For other players wishing to enter the real estate sector with a smaller investment, ZIPR might be a better buy. With a stock price of $2.72, it is trading at a market capitalization of nearly $55.5 million. McClatchy, NYT or Yahoo! could take their chances in this sector with Zip.

ZIPR’s Q4 revenues of $25.1 million recorded 18.3% annual growth and met analysts’ expectations. Loss $0.18 per share was significantly better than the loss of $0.22 per share reported a year ago, but the company missed the Street’s expectations of a loss of $0.01 per share. The most recent results marked the tenth consecutive quarter of revenue growth, which is a significant achievement in the current economy.

For the year, ZIP recorded revenue growth of 3.5% to $107.5 million over the $103.9 million earned a year ago. The loss of $0.52 per share was significantly higher than the loss of $0.34 per share a year ago.

In some of its key operating metrics, Zip closed nearly $1.07 billion worth of transactions from 4,335 transactions in the fourth quarter compared with $921 million from 3,035 transactions closed a year ago. The average net transaction revenue per closed transaction decreased significantly, by 16.5% to $5,690 from $6,818 in the previous year. At the end of the year, the company had 2,816 Zip agents, up from 2,180 agents at the end of the previous year.

For the year 2008, Zip closed nearly 17,150 transactions worth $4.64 billion compared with nearly 14,000 transactions a year ago yielding $4.62 billion of transaction value. The average net transaction revenue per closed transaction for the year was $6,145. This is down from $7,241 in 2007 and highlights the depressed real estate valuations in the current year.

Zip continued to expand into newer markets and launched in Portland earlier this year. In the coming fiscal, the company is looking to expand in just one to markets. It expects 2009 revenues to grow in the mid single to low double digits over 2008 levels with the full-year GAAP net loss to be narrower than the 2008 net loss of $14.7 million excluding legal settlement.

Both companies have good business models, but the severity of the slump is a challenge for even the strongest competitors. Nonetheless, Real Estate as a classified category needs to feature in the portfolio of every major Internet conglomerate, making both companies prime acquisition targets alon with Trulia, which is still private.

This segment is a part in the series : Online Real Estate


. ZipR, Move

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I like all three companies that you mention here for the same reasons that you mention. But am surprised that you didn’t include Zillow in the bunch. I’ve met the Trulia folks and they seem to have a better operation, but Zillow is worthy of a look see as well. It would’ve been nice to have gotten Zillow’s numbers in this comparison as well.

Realtosh Wednesday, April 15, 2009 at 3:40 PM PT