This is a summary of the second quarter fiscal 2008 earnings call conducted by Move, Inc. (MOVE: chart) on August 8, 2008.
Management:
–
Chief Executive Officer & Director: W. Michael Long
–
President: Lorna M. Borenstein
–
Chief Financial Officer: Lewis R. Belote, III
–
Investor Relations: Todd Friedman
Key Investor Issues:
- The company reported a second-quarter net loss of $2.2 million, or a penny per share vs. net income of $4.4 million, or 3 cents per share a year ago.
- Income from continuing operations was $2.1 million, down from $7.7 million in the year-earlier quarter.
- Revenue declined to $61.4 million from $62.5 million.
- Total operating expenses climbed 7.3% to $49.6 million, due to a 33.8% increase in general and administrative costs to $19.4 million.
- Move has initiated a plan to lower its total operating expenses by more than $20 million by the end of 2008.
Second Quarter Highlights:
Second quarter revenue was $62.4 million compared to $62.5 million in the second quarter of last year.
The decline of revenue was primarily due to the new homes business in Realtor.com. Even though Realtor.com was down for the quarter, the company is seeing substantial increases in new sales in recent months. Through May 2008 sales and renewals, net of cancellations, were flat compared to 2007. However, in June and July the company saw an increase of net sales of $1.2 million, or 11% in each month, compared to 2007.
For the quarter Realtor.com revenue declined 1% and 4% from the first quarter of 2008 for the reasons noted earlier.
- Top Producer grew 5% compared to last year and was flat from last quarter.
- New Homes and Rentals together declined 6% from the same quarter last year, but only 1% from the first quarter. This was primarily due to the continued decline in the new homes market.
The Consumer media business was down 7% compared to 2007 but grew 18% over the first quarter.
This is a result of replacing the sales resources described last quarter and working with advertisers to demonstrate the effectiveness of the reach with consumers.
As a result of the decision to sell Welcome Wagon, it is now reflected as discontinued operations in all periods presented. The 10-Q, which is expected to file tomorrow, will have a summary table of the results of the discontinued operations in Note 5 but will no longer be part of the Consumer Media segment or the company’s ongoing discussions.
Net loss for the quarter was $2.2 million compared to net income of $4.4 million for the same quarter of 2007.
The 2007 net income was influenced by substantially reduced stock-based compensation as the company reversed $6.5 million in previously recognized compensation expense related to the long-term incentive plan. Net loss for the quarter was much improved over the $4.6 million loss in the first quarter of 2008.
EBITDA for the second quarter was $5.7 million, or 9% of revenue, compared to $8.2 million, or 13% of revenue, last year and $3.4 million, or 6% of revenue, in the first quarter of this year.
The sequential improvement in EBITDA over the first quarter 2008 is primarily related to some one-time severance and facilities cost in the first quarter.
Gross margin for the quarter was 82%, which is consistent with last quarter but down slightly from the same quarter last year. Product development expenses were $6.8 million, or $2.4 million lower than the second quarter of last year. Last quarter, the company made substantial changes to this area of its business and are getting much better results. Move will continue to invest in this area, but as with all areas of business, the company will make those investments with a sharp focus on profits and growth.
Sales and marketing expense increased approximately $850,000, or 4%, from the second quarter last year.
