7/19...HOMS.., Inc. Reports 252% Growth in Second Quarter Revenue
Leading Online Home and Real Estate Network Narrows Cash Net Loss to $2.8 million and Announces it Expects To Reach Cash Profitability in the Fourth Quarter
THOUSAND OAKS, Calif., July 19 /PRNewswire/ -- Homestore.com, Inc. (Nasdaq: HOMS - news) today reported increased revenue, operating results, and professional subscribers and visitors to the company's web-based home and real estate network for its second quarter ended June 30, 2000.
Revenues for the quarter increased 252% to $50.2 million over pro forma revenues of $14.2 million for the second quarter of 1999 and 30% over revenues of $38.6 million for the first quarter of 2000. The company's gross profit margin improved to 74% for the quarter, up from 63%, on a pro forma basis, for the second quarter of 1999 and from 73% for the first quarter of 2000. Pro forma net loss for the quarter was $2.8 million, or $0.03 per share. That compares to a pro forma net loss of $20.9 million, or $0.36 per share, for the second quarter of 1999 and $10.0 million, or $0.14 per share, for the first quarter of 2000.
Pro forma net losses exclude the effects of non-cash charges for: (i) stock-based charges and (ii) amortization of intangible assets. To enhance comparability, pro forma operating results assume that the acquisitions of SpringStreet.com(TM) and HomeFair.com(TM), as well as the reorganization of the company's corporate structure, occurred on January 1, 1999.
On a GAAP basis, the company's revenues for the quarter were $50.2 million, compared to $11.0 million for the second quarter of 1999 and $38.6 million for the first quarter of 2000. Net loss for the quarter was $24.7 million, or $0.31 per share, compared to $18.3 million, or $0.75 per share, for the second quarter of 1999, and $29.2 million, or $0.39 per share, for the first quarter of 2000.
Increased revenue from both professional subscriptions and advertising drove overall revenue growth in the second quarter. Revenue growth from professional subscriptions was primarily due to an increase in the number of professionals on the Homestore.com(TM) family of web sites. Professional subscriptions rose to almost 122,000 at June 30, 2000, representing increases of 64% and 14%, compared to totals at June 30, 1999 and March 31, 2000, respectively. The increase in professional subscriptions included the Realty Executives International, Inc. corporate sponsorship agreement signed in May. Growth in advertising revenue was primarily driven by an expansion in sponsorships and strategic alliances during the quarter.
Site usage also grew substantially during the second quarter. For April and May 2000, the monthly average number of unique users visiting the Homestore.com network rose to 3.6 million, a 51% increase over the second quarter of 1999 and a 25% increase over the first quarter of 2000.(1) During April and May 2000, each unique user spent an average of 26.1 minutes per month on the network, a 17% increase over the second quarter of 1999 and consistent with the first quarter of 2000.(1) Page views were 626 million for the quarter and 1.2 billion homes were viewed on the Homestore.com network during the quarter, bringing the cumulative number of homes viewed since the company's inception to 5.9 billion.
``Another excellent quarter of execution by our team,'' said Stuart Wolff, the company's chairman and chief executive officer. ``We are furthering our leadership position to both consumers and professionals as we build out the online home and real estate marketplace.'' Wolff added, ``Based on the strength of our financial performance, we expect the company to reach cash profitability in the fourth quarter of this year, which will place Homestore.com in an elite group of Internet companies.''
Operating Highlights
Vertical Portal - The Consumer Solution
AOL To Develop New Home-Related Channel with Homestore.com Content
America Online, Inc. and Homestore.com, Inc. have established a new five-year content, e-commerce and distribution alliance to provide a comprehensive source of home and real estate content for several key AOL brands. The centerpiece of the alliance will be AOL's newly conceived home-related channel, a content-rich source of home-related information, tools and services for AOL's 22 million online members. Another feature of the alliance establishes Homestore.com as the exclusive national provider of professional home and moving services in home-related areas across AOL, AOL.COM, CompuServe, Netscape Netcenter and Digital City. Homestore.com will also become the exclusive national provider of aggregated apartment inventory and will remain the exclusive national provider of aggregated residential real estate listings across these AOL properties. Homestore.com also will become a premier content provider to AOL in the Home Decorating, Home Security, Hardware, and Lawn & Garden areas, and a prominent content provider in the Commercial Real Estate, Home Finance, Home Technology, Home Office, Senior Housing and Home Appliances areas.
Content Enhancements
Sunset Publishing Corporation, one of the nation's most popular publishers of home and garden books and magazines, has agreed to license portions of its award-winning content on home decorating, remodeling, landscaping and gardening to Homestore.com, providing the cornerstone for the Homestore.com network's 'Lawn & Garden' tab.
Productopia, an award-winning consumer products and shopping resource, has agreed to provide Homestore.com with consumer product information.
Homestore.com signed a content agreement with SMARTpages.com that will incorporate their dynamic neighborhood search functionality into all of Homestore.com's property sites.
Homestore.com and the National Association of Home Builders jointly announced the development of a new seniors housing area on the Homestore.com network of sites, designed to serve the millions of prospective home buyers over the age of 55.
Vertical ASP - The Professional Solution
Expansion of the Real Estate Transaction Initiative
GMAC Real Estate and GMAC Mortgage, Fannie Mae, and VeriSign, Inc., joined Homestore.com and The National Association of Realtors® (NAR) as initial equity investors in the development of the Realtors® Electronic Transaction Platform, an online system to facilitate and streamline the process of closing a home purchase or sale. Prudential Real Estate Network, RE/MAX, and RE FormsNet have agreed to participate in the development of the platform and may expand their role in the future. Designed as an open platform to facilitate communication among all parties to a purchase or sale transaction, the Realtors® Electronic Transaction Platform ultimately will be expanded to include mortgage, title, inspections and data standards.
Top Producer Systems, Inc., which markets North America's top-selling lead management and marketing software for real estate professionals, was acquired by Homestore.com. Some of Top Producer's(TM) groundbreaking technologies will be used in the development of the Realtors® Electronic Transaction Platform. In addition, its lead management and productivity technologies will be integrated with Realtor.com®, part of the Homestore.com family of web sites, as well as with listings management tools acquired in the company's acquisition of WyldFyre in the first quarter, to increase the utility of the Internet's most trafficked real estate site. The integration will produce new electronic linkages between the site and the desktops of agents and brokers, enhancing communication capabilities between real estate professionals and consumers.
Homestore.com and NAR Form Telecommunications Venture
Homestore.com and NAR jointly established a new technology venture, FireTap Communications Inc., to provide telecommunications business solutions specifically designed to meet the heavy bandwidth demands of the real estate industry. FireTap Communications plans to offer an array of broadband products and services, including high-speed Internet access via DSL, wireless, cable modem and fiber network technology; a range of local and long distance phone connectivity; Internet Service Provider (ISP) access and hosting services; and digital television and entertainment services. FireTap was named the exclusive REALTOR Rewards(TM) strategic partner for the majority of telecommunications services provided to NAR members. America Online, Inc. has agreed to partner with FireTap Communications on services, including co-branded ISP access and long distance services.
Alliances
Marriott Vacation Club International, a wholly owned subsidiary of Marriott International, Inc. and global leader in the burgeoning vacation time-share business, inked an alliance with Homestore.com for advertising and custom web development services.
Realty Executives International, Inc. has tapped Homestore.com to provide all of the firm's offices and active agents with i-LEAD(TM) web pages on the Realtor.com® web site under terms of a guaranteed paid corporate sponsorship agreement.
HomeBuilder.com(TM), the new-home web site of the Homestore network, has signed a national agreement with Beazer Homes USA, one of the nation's top ten single-family home builders, to feature all Beazer new home communities, currently in excess of 250, on the HomeBuilder.com site.
Further expanding its relationship with Champion Enterprises, the largest homebuilder in the country, Homestore.com will develop customized web technology solutions, including online marketing and training tools, for Champion's manufactured housing retailers. These tools will enable Champion- owned and independent retailers to market their products online, help generate and process leads, and receive online training in web-based sales and marketing.
CreSenda Wireless agreed to develop and co-market the first product in its Wireless Professional Series (SM) -- WirelessRealty (SM) -- with Homestore.com. The new service, currently in beta testing, consists of a personal handheld device, wireless modem and business-critical content and applications for real estate professionals.
Management Additions
Allan Merrill was appointed president of HomeBuilder.com, the web's most popular resource for new-home buying and building and the engine for Homestore.com's ``New Homes'' site. Merrill joins Homestore.com after 13 years with Warburg Dillon Reed, where he served most recently as co-head of the investment bank's Global Resources Group, overseeing the construction and building materials sectors, among others. Merrill brings strong relationships with many of the leading companies in housing, construction and building materials.
Patrick R. Whelan was appointed president of SpringStreet.com, Homestore.com's full-service apartment rental site. Whelan brings more than 18 years experience in commercial real estate and corporate finance, most recently serving as president of Archstone Communities, Inc. and chief operating officer of Archstone Communities Trust. Whelan also has held senior management positions with Security Capital Group, Trammel Crow Company and General Electric Capital Corporation.
Steve Ozonian was appointed president of Realtor.com®, the number one real estate site on the Internet and the official Internet site of the National Association of Realtors®. Ozonian previously served as chairman and chief executive officer of Prudential Real Estate and Relocation Services, where he led the development of ground-breaking computer systems, software and web-based marketing strategies for the real estate sales and relocation industry.
Jeff Travelstead was appointed chief operating officer of Realtor.com®. Travelstead previously served as senior vice president of information technology for Prudential Real Estate and Relocation Services, where he developed e-business strategies and technology initiatives. While at Prudential, Travelstead crafted new, more efficient methods to tap existing information systems for tech-based information and delivery tools to consumers and corporate clients.
About Homestore.com, Inc.
Homestore.com, Inc. (Nasdaq: HOMS - news) is the leading network of sites on the Internet for home and real estate-related information, products and services. Homestore.com, Inc.'s family of web sites include Homestore.com, Realtor.com®, HomeBuilder.com, SpringStreet.com, Remodel.com(TM) and HomeFair.com web sites. Consumers can view over 1.4 million new and existing homes for sale and find broker and agent services on Realtor.com®, the official Internet site of the National Association of Realtors®. Consumers searching for new homes can find more than 130,000 models, new homes and built to suit plans on HomeBuilder.com, the official new homes site of the National Association of Home Builders. Consumers interested in renting an apartment will find listing information from more than 45,000 properties in more than 6,000 cities on SpringStreet.com. Homestore.com's remodeling area covers home improvement needs for both consumers and remodeling professionals. Comprehensive moving and relocation information on the Internet is available from HomeFair.com. Homestore.com also has content distribution relationships with America Online, Netscape and Excite@Home.
(1) Unique users, and user minutes are based on Media Metrix, 2+.
This press release contains forward-looking statements that are subject to material risks and uncertainties. Actual results may differ materially and reported results should not be considered as an indicator of future performance. Risks and uncertainties that may affect our future results include, but are not limited to, the following: our ability to maintain and manage favorable agreements and relationships with the National Association of Realtors, the National Association of Home Builders and Internet portals; our ability to continue to obtain a large percentage of available real property listings; our ability to obtain such listings on an exclusive basis; our ability to manage rapid growth, both internally and through acquisitions; changes in the real estate markets; seasonality and other fluctuations in the company's financial results, our ability to maintain high reliability for our server-based web services; and uncertainty as to the timing and amount of future Internet-related revenue and profits. The matters discussed in this press release also involve risks and uncertainties described from time to time in our filings with the Securities and Exchange Commission (SEC). In particular, see ``Risk Factors'' in the final prospectus included in our registration statement declared effective by the SEC on January 26, 2000 and also see our Annual Report on Form 10-K for the year ended December 31, 1999. We assume no duty to update the information in this press release if any forward-looking statement later turns out to be inaccurate.
(FINANCIAL STATEMENT TABLES FOLLOW)
Basis of Presentation of Financial Information. Prior to February 4, 1999, the company operated under a complex legal and operating structure in which Homestore.com, Inc. was a holding company whose sole business was managing its investment in the operating entity. Accordingly, through February 4, 1999, this investment was accounted for under the equity method which means Homestore.com, Inc. did not record the results of operations related to the operating entity. In addition, the company completed its acquisitions of SpringStreet.com and HomeFair.com on June 30, 1999 and October 31, 1999, respectively.
Pro forma financial information includes a comparison of the results of operations of Homestore.com, Inc. as if the reorganization of the company's holding company structure on February 4, 1999 and the SpringStreet.com and HomeFair.com acquisitions occurred January 1, 1999. This pro forma information has been presented to assist investors in evaluating our historical performance with current results.
Homestore.com, Inc.
Consolidated Statements of Operations - Pro Forma Basis
(in thousands, except per share amounts)
(unaudited)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
2000 1999 2000 1999
Revenues $50,152 $14,246 $88,751 $24,655
Cost of revenues 13,285 5,321 23,845 9,874
Gross profit 36,867 8,925 64,906 14,781
Operating expenses:
Sales and marketing 30,440 19,760 60,225 34,720
Product development 3,598 1,609 5,438 3,000
General and
administrative 11,859 6,926 22,674 12,026
Amortization of
intangible assets 10,935 7,022 19,327 14,036
Stock-based charges 11,021 4,859 21,835 8,062
Total operating
expenses 67,853 40,176 129,499 71,844
Loss from operations (30,986) (31,251) (64,593) (57,063)
Interest and other
income (expense),
net 6,274 (1,548) 10,669 (3,139)
Net loss $(24,712) $(32,799) $(53,924) $(60,202)
Basic and diluted
net loss per share $(0.31) $(0.56) $(0.70) $(1.06)
Shares used to calculate
basic and diluted net
loss per share 80,153 58,735 77,102 56,662
Net loss, excluding
non-cash charges related
to the amortization of
intangible assets and
stock-based charges $(2,756) $(20,918) $(12,762) $(38,104)
Basic and diluted net
loss per share, excluding
non-cash charges related
to the amortization of
intangible assets and
stock-based charges $(0.03) $(0.36) $(0.17) $(0.67)
Homestore.com, Inc.
Consolidated Statements of Operations - GAAP Basis
(in thousands, except per share amounts)
(unaudited)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
2000 1999 2000 1999
Revenues $50,152 $11,016 $88,751 $16,586
Cost of revenues 13,285 4,361 23,845 7,110
Gross profit 36,867 6,655 64,906 9,476
Operating expenses:
Sales and marketing 30,440 15,604 60,225 24,361
Product development 3,598 1,037 5,438 1,368
General and
administrative 11,859 3,932 22,674 5,918
Amortization of
intangible assets 10,935 789 19,327 1,311
Stock-based charges 11,021 3,610 21,835 5,250
Total operating
expenses 67,853 24,972 129,499 38,208
Loss from operations (30,986) (18,317) (64,593) (28,732)
Interest and other
income (expense),
net 6,274 37 10,669 (34)
Net loss $(24,712) $(18,280) $(53,924) $(28,766)
Basic and diluted
net loss per share $(0.31) $(0.75) $(0.70) $(1.40)
Shares used to calculate
basic and diluted net
loss per share 80,153 24,350 77,102 20,502
Net loss, excluding
non-cash charges related
to the amortization of
intangible assets and
stock-based charges $(2,756) $(13,881) $(12,762) $(22,205)
Basic and diluted net
loss per share, excluding
non-cash charges related
to the amortization of
intangible assets
and stock-based
charges $(0.03) $(0.57) $(0.17) $(1.08)
Homestore.com, Inc.
Consolidated Balance Sheets
(in thousands, except per share amounts)
Assets
June 30, 2000 December 31, 1999
(unaudited)
Current assets:
Cash and cash equivalents $193,938 $90,382
Short term investments 110,927 --
Marketable equity security 3,863 4,230
Accounts receivable, net 29,631 13,428
Current portion of prepaid
distribution expense 42,418 7,868
Other current assets 7,552 5,371
388,329 121,279
Prepaid distribution expense 181,565 6,167
Property and equipment, net 19,315 6,305
Intangible assets, net 190,827 138,612
Restricted cash 90,000 --
Other long-term assets 42,249 4,200
Total assets $912,285 $276,563
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $9,908 $5,349
Accrued liabilities 33,964 23,687
Deferred revenue 27,073 13,478
Notes payable 314 38,576
71,259 81,090
Distribution obligation 185,940 --
Other 10,817 --
Total liabilities 268,016 81,090
Stockholders' equity:
Convertible preferred stock,
$.001 par value
Common stock,
$.001 par value 81 70
Additional paid-in capital 996,858 413,244
Treasury stock, at cost (13,676) (13,676)
Notes receivable from
stockholders (13,334) (13,350)
Deferred stock-based charges (119,303) (38,947)
Accumulated other
comprehensive income 3,300 3,865
Accumulated deficit (209,657) (155,733)
Total stockholders' equity 644,269 195,473
Total liabilities and
stockholders' equity $912,285 $276,563
SOURCE: Homestore.com, Inc.
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