LoopNet, Inc. Announces Second Quarter 2008 Financial Results
Year over Year Revenue Growth of 29%
Adjusted EBITDA growth of 26%
Board Approves Increase in Amount of Stock Repurchase Program
SAN FRANCISCO - July 31 2008 - LoopNet, Inc. (NASDAQ:LOOP), today announced financial results for the second quarter ended June 30, 2008.
Revenue for the second quarter of 2008 was $22.0 million, an increase of 29% from $17.0 million in the second quarter of 2007. GAAP net income for the second quarter of 2008 was $4.5 million or $0.12 per diluted share, compared to $5.1 million or $0.13 per diluted share in the second quarter of 2007. Non-GAAP net income (net income before stock-based compensation and litigation related costs) for the second quarter of 2008 was $6.1 million or $0.16 per diluted share, compared to $5.6 million or $0.14 per diluted share in the second quarter of 2007.
LoopNet’s Adjusted EBITDA (earnings before interest, tax, depreciation, amortization, stock-based compensation and litigation related costs) for the second quarter of 2008 was $10.4 million, an increase of 26% from $8.2 million in the second quarter of 2007. The Company has reported Adjusted EBITDA because management uses it to monitor and assess the Company’s performance and believes it is helpful to investors in understanding the Company’s business.
“We are pleased to report another quarter of strong financial results for the second quarter of 2008, as we continue to execute well despite challenging industry conditions,” said LoopNet Chairman and CEO Richard Boyle. “We remain focused on serving our customers by expanding the activity on our marketplaces as well as the services we provide to the industry, and we continue to be well positioned to address the long term opportunities in the industry.”
The number of LoopNet registered members, which includes both basic and premium members, grew to 2,956,556 during the second quarter of 2008, a 33% increase over the second quarter of 2007. The number of LoopNet premium members as of the end of the second quarter of 2008 was 86,627, a 2% decline from the second quarter of 2007. The average monthly price of premium membership increased to $62.13, a 21% increase over the second quarter of 2007. There were 623,000 total commercial real estate listings active on the LoopNet marketplace as of the end of the second quarter, a 20% increase over the second quarter of 2007. In addition, there were 43.2 million profile views of listings on the LoopNet marketplace during the quarter, a 11% increase over the second quarter of 2007. Average monthly unique visitors during the second quarter of 2008, as reported by comScore Media Metrix, were approximately 870,000, an 8% decline over the second quarter of 2007.
Stock Repurchase Program
Since the announcement of the $50.0 million stock repurchase program on February 5, 2008, the Company has repurchased 3,547,130 shares of its common stock for $41.6 million, which represents 9.9% of shares outstanding. The Company’s Board of Directors has authorized an additional $50.0 million for the stock repurchase program.
Balance Sheet and Liquidity
As of June 30, 2008, LoopNet had $69.5 million of cash, cash equivalents and short-term investments and no debt.
Recent Acquisition
The Company also announced today that it has acquired privately-held LandAndFarm.com, a leading online marketplace for rural land, ranch and agricultural property listings. The acquisition is not expected to have a material impact on our 2008 financial results.
2008 Outlook
For the full year of 2008 the Company is reaffirming its previous revenue guidance of $86.3 to $88.3 million, although given current market conditions in the commercial real estate industry the Company expects revenue to be in the lower end of this range. The Company expects Adjusted EBITDA for the full year of 2008 to be in the range of $38.2 to $39.2 million and non-GAAP net income to be in the range of $0.58 to $0.60 per diluted share, assuming an effective tax rate of approximately 41.1%. The company expects revenue for the quarter ending September 30, 2008 to be in the range of $21.8 to $22.0 million, Adjusted EBITDA to be in the range of $9.5 to $9.7 million and non-GAAP net income to be in the range of $0.14 to $0.15 per diluted share, assuming an effective tax rate of approximately 41.1%. The Company expects stock-based compensation to be in the range of $0.10 to $0.11 per share (net of tax benefit) for the full year of 2008 and $0.03 per share (net of tax benefit) for the quarter ending September 30, 2008. The Adjusted EBITDA and non-GAAP net income guidance for the full year of 2008 and quarter ending September 30, 2008 exclude litigation related costs.
Conference Call Information
LoopNet, Inc. will discuss these financial results in a conference call at 1:30 p.m. PDT, 4:30 p.m. EDT, today. To participate in the conference call, please dial 866-227-1607 if you are calling from within the United States or 703-639-1130 if you are calling from outside the United States and enter pass code number 1256051. Investors may also listen to a live web cast of the conference call on the investor relations section of our website at investor.LoopNet.com/events.cfm. For investors unable to participate in the live conference call, an audio replay will be available until Monday, August 4, 2008 at 8:59 p.m. PDT. To access the audio replay, dial 888-266-2081 within the United States or 703-925-2533 internationally and enter pass code number 1256051. A web cast replay of the call will be available on the investor relations section of our website at investor.LoopNet.com/events.cfm approximately two hours after the conclusion of the call and will remain available for 30 calendar days.
Non-GAAP Financial Measures
This press release includes discussions of Adjusted EBITDA, non-GAAP net income and non-GAAP net income per share, which are non-GAAP financial measures provided as a complement to results provided in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The term “Adjusted EBITDA” refers to a financial measure that we define as earnings before net interest, income taxes, depreciation, amortization, stock-based compensation and litigation related costs. The term “non-GAAP net income” refers to a financial measure that we define as net income before stock-based compensation and litigation related costs. Non-GAAP net income is also provided on a per share basis, using shares outstanding at the relevant period of measurement. Adjusted EBITDA, non-GAAP net income and non-GAAP net income per share are not substitutes for measures determined in accordance with GAAP, and may not be comparable to Adjusted EBITDA, non-GAAP net income and non-GAAP net income per share as reported by other companies. We believe Adjusted 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 business. The components of Adjusted 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 Adjusted EBITDA for planning purposes and in presentations to our board of directors. We believe non-GAAP net income and non-GAAP net income per share to be relevant and useful information to our investors as they provide meaningful insight into the Company’s performance while excluding infrequent and non-recurring items that may not be considered directly related to our on-going business operations. We believe that non-GAAP net income and non-GAAP net income per share are also used by companies and investors to evaluate performance in the online marketplace and platform industry. We also believe that Adjusted EBITDA, non-GAAP net income and non-GAAP net income per share allow for a more accurate comparison of our operating results over historical periods. A limitation of Adjusted EBITDA, non-GAAP net income and non-GAAP net income per share is that they do not include all items that impact our net income for the period. Management compensates for this limitation by also relying on the comparable GAAP financial measure of net income, which includes the items that are excluded from Adjusted EBITDA, non-GAAP net income and non-GAAP net income per share. Management believes that these non-GAAP measures should be considered as a complement to, and not as a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP. A reconciliation of these non-GAAP measures to GAAP is provided in the attached tables. Reconciliations of Company expectations for these non-GAAP measures to Company expectations for GAAP net income for the quarter ending September 30, 2008 and the full year of 2008 are not provided, as GAAP net income expectations for these periods are not accessible. GAAP net income expectations are not accessible for these periods due to the uncertain nature of the timing and amount of potential litigation related costs.
About LoopNet, Inc.
LoopNet is the leading online marketplace for commercial real estate and businesses for sale in the United States. Our online marketplace, available at www.LoopNet.com, enables commercial real estate agents, working on behalf of property owners and landlords, to list properties for sale or for lease by submitting detailed property listing information in order to find a buyer or tenant. Commercial real estate brokers, agents, buyers and tenants use the LoopNet online marketplace to search for available property listings that meet their commercial real estate criteria. By connecting the sources of commercial real estate supply and demand in an efficient manner, we believe that LoopNet enables commercial real estate participants to initiate and complete more transactions more cost-effectively than through other means. LoopNet also delivers technology and information services to commercial real estate organizations to manage their online listing presence and optimize property marketing.
LOOPNET, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share data) Dec31 2007 Jun30 2008 (unaudited) Assets Current assets: Cash and cash equivalents $104,564 $66,183 Short-term investments 3,325 3,334 Accounts receivable, net of allowance of $105 and $133, respectively 1,190 1,872 Prepaid expenses and other current assets 796 2,394 Deferred income taxes 298 298 Total current assets 110,173 74,081 Property and equipment, net 2,051 2,292 Goodwill 15,233 22,234 Intangibles, net 2,461 5,177 Deferred income taxes 5,196 4,512 Deposits and other noncurrent assets 2,245 2,761 Total assets $137,359 $111,057 Liabilities and stockholders’ equity Current liabilities: Accounts payable $828 $915 Accrued compensation and benefits 2,479 2,151 Accrued liabilities 1,964 1,555 Income tax payable 698 - Deferred revenue 9,537 10,746 Total current liabilities 15,506 15,367 Commitments and contingencies Stockholders’ equity: Common stock, $.001 par value, 125,000,000 shares authorized; 38,908,302 and 39,083,873 shares issued, respectively; and 38,908,302 and 35,776,024 shares outstanding, respectively 39 39 Additional paid in capital 107,866 111,509 Other comprehensive loss (103) (152) Treasury stock, at cost, 3,306,163 shares - (39,145) Retained earnings 14,051 23,439 Total stockholders’ equity 121,853 95,690 Total liabilities and stockholders’ equity $137,359 $111,057
LOOPNET, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data) (unaudited) Three months ended June 30 Six months ended June 30, 2007 2008 2007 2008 Revenues $17,022 $22,027 $32,537 $42,617 Cost of revenue (1) 1,874 2,704 3,654 5,118 Gross margin 15,148 19,323 28,883 37,499 Operating expenses (1): Sales and marketing 3,577 4,822 6,836 9,664 Technology and product development 1,569 2,355 2,919 4,347 General and administrative 2,849 4,949 5,419 9,005 Total operating expenses 7,995 12,126 15,174 23,016 Income from operations 7,153 7,197 13,709 14,483 Interest and other income, net 1,313 478 2,506 1,454 Income before tax 8,466 7,675 16,215 15,937 Income tax expense 3,367 3,141 6,567 6,549 Net income $5,099 $4,534 $9,648 $9,388 Net income per share Basic $0.13 $0.13 $0.25 $0.26 Diluted $0.13 $0.12 $0.24 $0.25 Weighted average shares Basic 38,144 35,631 37,959 36,582 Diluted 40,682 37,130 40,584 38,128 (1) Stock-based compensation is allocated as follows: Cost of revenue $94 $139 $161 $255 Sales and marketing 351 525 589 1,078 Technology and product development 150 327 241 572 General and administrative 280 515 439 953 Total $875 $1,506 $1,430 $2,858