Ziprealty (MM) (NASDAQ:ZIPR)
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ZipRealty, Inc. (Nasdaq: ZIPR) today announced financial results for its
third quarter ended September 30, 2008. For the quarter, net revenues
were $31.4 million, an 11.9% increase from the $28.0 million reported in
the third quarter of 2007. The Company’s net
loss for the period was $1.7 million, or $0.08 per share compared with a
net loss of $4.8 million or $0.21 per share in the year ago period. The
pro forma loss per share, excluding the effect of stock-based
compensation and a one-time item in the third quarter of 2007, was $0.03
for the current quarter compared with $0.02 net loss per share for the
same period a year ago.
Pat Lashinsky, President and CEO of ZipRealty, commented, “Third
quarter closed transactions increased 31%, driving double digit revenue
gains versus the prior period. Credit, especially access to jumbo
mortgages, continued to be restrained and combined with a sharp increase
in non-traditional transactions, average transaction values declined
significantly. That said, volume trends are very encouraging as they
signal the continued turnover of foreclosed properties, something that
is critical for a market turn. Strong volumes also bode well for our
longer term outlook as transaction values ultimately rebound. We believe
recent government actions intended to support the banking system, along
with the Housing and Economic Recovery Act signed into law in July, are
tangible steps in that direction and we look forward to continued
penetration and acceptance of our brand.”
ZipRealty announced the following operating metrics for the third
quarter of 2008:
At September 30, 2008, there were 2,814 ZipAgents employed, up from
2,263 agents at the end of the third quarter 2007. On a sequential
quarterly basis, agent count increased by 255 from June 30, 2008.
The total value of real estate transactions closed increased to
approximately $1.36 billion in the third quarter of 2008 versus $1.24
billion for the same period in 2007.
The total number of transactions closed increased approximately 31.1%
to 5,019, compared to 3,829 in the third quarter last year.
Average net revenue per transaction decreased approximately 13.8% to
$6,130 from $7,110 in the third quarter of 2007.
Balance Sheet & Liquidity
As of September 30, 2008, the Company had approximately $51.9 million of
cash, cash equivalents and short-term investments, with no long-term
debt.
Use of Non-GAAP Financial Measures
To supplement its financial statements presented in accordance with
Generally Accepted Accounting Principles (“GAAP”),
ZipRealty uses a non-GAAP measure of net income (loss) it refers to as “pro
forma net income (loss)” that excludes certain
items including stock-based compensation, non-cash income taxes, and
certain one-time items, if any. A reconciliation of this non-GAAP
measure to GAAP is provided in the attached tables. These non-GAAP
adjustments are provided to enhance the user's overall understanding of
ZipRealty’s current financial performance and
its prospects for the future. ZipRealty believes these non-GAAP results
provide useful information to both management and investors by excluding
certain items it believes are not indicative of its core operating
results and thus presents a more meaningful basis for comparison between
periods. Further, this non-GAAP method involves key information
management uses for planning and forecasting its future operations. The
presentation of this additional information should not be considered in
isolation or as a substitute for results prepared in accordance with
GAAP.
Financial Guidance
The Company’s expectations for the business
have changed from its original guidance communicated in March, and
revised in May 2008 to reflect a stock buy-back. Although the Company
planned expansion to two to four new markets in 2008, expansion will be
limited to the two markets already opened this year, Long Island, New
York and Hartford, Connecticut. Additionally, the Company is refining
the following metrics:
The Company now expects revenues for the full year to be $107.0 to
$109.0 million.
The Company now expects to report a full year GAAP net loss of between
$11.1 and $12.1 million, or $0.53 to $0.58 per basic and diluted
share, based on 20.9 million shares outstanding. This full year GAAP
net loss reflects the effect of a gain to be recognized in the fourth
quarter as the result of settling a lawsuit. The Company reached this
settlement in October, expects to receive payment of $3.2 million
during the fourth quarter, and, net of legal fees, will recognize a
gain in the amount of $1.9 million.
The Company now expects the range of pro forma net loss to be between
$8.5 and $9.5 million, or $0.41 to $0.45 per basic and diluted share
based on 20.9 million shares outstanding.
Conference Call Details
A conference call to discuss third quarter results will be webcast live
on Wednesday, November 5, 2008 at 5:00 p.m. Eastern Time on the investor
relations section of ZipRealty’s website, www.ziprealty.com.
Listeners may also access the call by dialing 877-502-9273. A replay of
the conference call will be available through November 12, 2008 by
dialing 888-203-1112, password 8794608.
About ZipRealty, Inc.
ZipRealty is a full-service residential real estate brokerage firm. The
Company utilizes its user-friendly website and employee real estate
agents to provide homebuyers and sellers with high-quality service and
value. ZipRealty’s website provides users
with access to comprehensive local Multiple Listing Services home
listings data, as well as other relevant market and neighborhood
information. The Company’s proprietary
business management system and technology platform help to reduce costs,
allowing the Company to pass on significant savings to consumers.
Founded in 1999, the company operates in 35 major markets in 20 states
and the District of Columbia. For more information on ZipRealty, visit www.ziprealty.com
or call 1-800-CALL-ZIP.
Cautionary Language
This release contains forward-looking statements within the meaning of
the "safe harbor" provisions of the federal securities laws, including,
without limitation, statements that volume trends are encouraging and
signal the continued turnover of foreclosed properties; that strong
volumes bode well for our longer term outlook; that transaction values
will rebound; that our brand will continue to gain acceptance; and that
recent government actions intended to support the banking system, along
with the Housing and Economic Recovery Act signed into law in July, are
tangible steps in that direction. Forward looking statements also
include the Company’s anticipated revenues,
and GAAP and pro forma net losses for 2008 included under the heading “Financial
Guidance.” Forward-looking statements are
subject to risks and uncertainties that could cause actual results to
differ materially from those projected. The risks and uncertainties
include but are not limited to the current volatility in the United
States, as well as global, financial markets, significant financial
market declines (and reduction in individual net worth), rising
unemployment, and the effectiveness, or lack thereof, of governmental
policies to stabilize such markets, and mitigate the impact on
world-wide economies and increasing unemployment. Additional risk
factors include the Company’s limited
operating history and limited profitability, the Company’s
access to MLS listings and leads from third parties that it does not
control, a continuing decline and volatility in the residential real
estate market, including a decline in the number and/or sales prices of
homes, economic events or trends in housing prices, interest rates, the
newness and scalability of the Company’s
business model, the Company’s ability to
hire, retain and train qualified agents and key personnel, legal
challenges to the Company’s compensation
plans, including expense policies, under federal and state wage and hour
laws, the Company’s ability to manage growth
in terms of personnel, expansion into new markets, information and
control systems and legal restrictions, the Company’s
ability to comply with often complex federal and state laws and
regulations concerning real estate brokerage, other core services such
as insurance, internet content, privacy and other matters as well as
rules of real estate industry organizations, competition, management
transitions, use by Internet service providers and personal computer
users of more restrictive email filters, seasonality, geographic
concentration, and other risk factors set forth in the Company's Form
10-K for fiscal year 2007, and other filings with the SEC including our
quarterly Form 10-Qs and periodic Form 8-Ks. The forward-looking
statements included in this release are made as of today’s
date and, except as otherwise required by law, ZipRealty does not intend
to update these forward-looking statements to reflect events or
circumstances after the date hereof.
ZipRealty, Inc.
Consolidated Statements of Operations (unaudited)
(in thousands, except per share amounts and operating data)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2008
2007
2008
2007
Net transaction revenues
$
30,769
$
27,225
$
80,760
$
80,406
Referral and other revenues
583
804
1,640
2,286
Net revenues
31,352
28,029
82,400
82,692
Operating expenses
Cost of revenues
17,911
15,637
47,409
46,024
Product development
2,217
1,835
6,487
5,329
Sales and marketing
10,341
9,630
30,895
28,306
General and administrative
3,124
3,357
9,744
11,782
Litigation
-
3,550
625
3,550
Total operating expenses
33,593
34,009
95,160
94,991
Loss from operations
(2,241
)
(5,980
)
(12,760
)
(12,299
)
Other income (expense), net
Interest income
546
1,147
2,061
3,329
Other income, net
1
2
75
2
Total other income (expense), net
547
1,149
2,136
3,331
Loss before income taxes
(1,694
)
(4,831
)
(10,624
)
(8,968
)
Provision for income taxes
-
-
-
-
Net loss
$
(1,694
)
$
(4,831
)
$
(10,624
)
$
(8,968
)
Net loss per share:
Basic
$
(0.08
)
$
(0.21
)
$
(0.50
)
$
(0.40
)
Diluted
$
(0.08
)
$
(0.21
)
$
(0.50
)
$
(0.40
)
Weighted average common shares outstanding:
Basic
20,007
22,629
21,185
22,421
Diluted
20,007
22,629
21,185
22,421
Supplemental operating data (unaudited)
Number of ZipAgents at beginning of period
2,559
2,070
2,180
1,794
Number of ZipAgents at end of period
2,814
2,263
2,814
2,263
Total value of real estate transactions closed during period (in
billions)
$
1.36
$
1.24
$
3.57
$
3.69
Number of transactions closed during period (1)
5,019
3,829
12,821
10,927
Average net revenue per transaction during period (2)
$
6,130
$
7,110
$
6,299
$
7,359
(1) The term "transaction" refers to each representation of a buyer
or seller in a real estate purchase or sale.
(2) Average net revenue per transaction equals net transaction
revenues divided by number of transactions with respect to each
period.
Pro forma net income (loss) and pro forma net income (loss)
per share
Pro forma net income (loss) and pro forma net income (loss) per
share have been computed to give effect to excluding stock-based
compensation expense, non-cash income taxes, and certain one-time
items, if any. Management believes that pro forma net income (loss)
for the three and nine months ended September 30, 2008 and 2007
provides useful information to investors because it excludes the
impact of items it believes are not indicative of its core operating
results and thus presents a more consistent basis for comparison
between periods.
Three Months Ended
Nine Months Ended
September 30,
September 30,
2008
2007
2008
2007
GAAP net loss as reported
$
(1,694
)
$
(4,831
)
$
(10,624
)
$
(8,968
)
Stock-based compensation
1,014
867
2,900
2,862
Non-cash income taxes
-
-
-
-
One-time item; litigation settlement
-
3,550
625
3,550
Pro forma net income (loss)
$
(680
)
$
(414
)
$
(7,099
)
$
(2,556
)
Pro forma net income (loss) per share:
Basic
$
(0.03
)
$
(0.02
)
$
(0.34
)
$
(0.11
)
Diluted
$
(0.03
)
$
(0.02
)
$
(0.34
)
$
(0.11
)
Pro forma weighted average common shares outstanding:
Basic
20,007
22,629
21,185
22,421
Diluted
20,007
22,629
21,185
22,421
ZipRealty, Inc.
Consolidated Balance Sheets (unaudited)
(in thousands)
September 30,
December 31,
2008
2007
Assets
Current assets:
Cash and cash equivalents
$
12,458
$
7,818
Short-term investments
39,467
72,649
Accounts receivable, net of allowance
2,588
1,170
Prepaid expenses and other current assets
3,029
3,267
Total current assets
57,542
84,904
Restricted cash
130
90
Property and equipment, net
4,771
5,366
Intangible assets, net
96
119
Other assets
681
340
Total assets
$
63,220
$
90,819
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable
$
2,558
$
2,095
Accrued expenses and other current liabilities
7,884
10,495
Total current liabilities
10,442
12,590
Other long-term liabilities
456
503
Total liabilities
10,898
13,093
Stockholders' equity:
Common stock: $0.001 par value; 23,683 and 23,651 shares issued and
20,176
and 23,641 outstanding, respectively
24
24
Additional paid-in capital
147,665
144,499
Common stock warrants
4
209
Deferred stock-based compensation
-
(3
)
Accumulated other comprehensive income (loss)
(79
)
188
Accumulated deficit
(77,765
)
(67,141
)
Treasury stock at cost: 3,506 and 10 shares, respectively
(17,527
)
(50
)
Total stockholders' equity
52,322
77,726
Total liabilities and stockholders' equity
$
63,220
$
90,819