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Move, Inc. (NASDAQ:MOVE)

Q4 2012 Earnings Conference Call

February 12, 2013 16:30 ET

Executives

Marta Nichols - Investor Relations

Steve Berkowitz - Chief Executive Officer

Rachel Glaser - Chief Financial Officer

Analysts

Jason Helfstein - Oppenheimer

Mitch Bartlett - Craig-Hallum

Operator

Good day, ladies and gentlemen, and welcome to the Move Inc. Fourth Quarter 2012 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we’ll have a question-and-answer session and instructions will follow at that time. (Operator Instructions) As a reminder, today’s conference is being recorded for replay purposes.

I would now like to turn the conference over to your host for today, Ms. Marta Nichols, Investor Relations at Move. Ma’am, you may begin.

Marta Nichols - Investor Relations

Thank you, operator. Good afternoon and welcome to Move’s fourth quarter and fiscal year 2012 earnings call. On the call with me today are Steve Berkowitz, Chief Executive Officer and Rachel Glaser, Chief Financial Officer. Today’s call is being webcast from the Investor Relations section of our website, investor.news.com, and will be available for replay shortly after we conclude. A copy of our press release issued earlier this afternoon is also available on the company’s IR website.

Please be advised that some of the comments that will be made today constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act, that involve potential risks and uncertainties concerning Move’s expected financial performance as well as Move’s strategic and operational plans. These potential risks and uncertainties include among others, decreases or delays in advertising spending, market acceptance of new products and services, and our future expected financial results. Additional factors are discussed in the company’s annual and quarterly reports, which are filed with the SEC and are available on our website. All information discussed on this call is as of February 12, 2013 and Move undertakes no duty to update this information.

Results projected on the call today may differ materially from actual results and should not be considered as a guarantee of future performance. On the call today, we will also be discussing non-GAAP financial measures in talking about the company’s performance. Reconciliations of those measures to GAAP measures can be found on papers attached to today’s release.

I will now turn the call over to Steve.

Steve Berkowitz - Chief Executive Officer

Thanks, Marta, and good afternoon, everyone. On today’s call, I will briefly review our financial results, highlight our key accomplishments during 2012, discuss the current state of the real estate market and talk about how we view our business opportunities in 2013 and beyond. Rachel will then discuss our financial results in more detail.

Let me start by reminding you of our primary focus. Move’s strategy is to create the leading marketplace for real estate information and services by connecting people at every stage of the real estate cycle with the content, tools, and professional expertise they need to discover their perfect home. We executed well on our strategic initiatives in 2012 and established a firm growth trajectory in 2013 and beyond. Our financials illustrate the strength of our execution in 2012.

Our revenue growth accelerated throughout the year with Q4 revenue up 12% setting us up for double-digit growth in 2013. For the full year, revenue was $199.2 million, up 4% from the prior year and adjusted EBITDA increased 5% year-over-year to $26.9 million or 14% of revenue. These results reflect the encouraging trends we saw throughout the year within our suite of services, including the continued stability of Showcase and TOP PRODUCER offerings along with the strong growth in our Co-Broke product.

In 2012, we focused on five key strategic goals. One, consumers, we improved the content and experience for consumers with the goal of being top of mind as the best source for real estate information. Two, products, we enhanced our product offerings to ensure we delivered exceptional quality, value, and high ROI. Three, partnerships, we strengthened our role as a key partner to the real estate industry. And four, mobile, we continued to lead and innovate in the rapid consumer migration to mobile devices. And five, company leadership, we built out a strong experienced leadership team adding a new CFO, new CTO, and Head of Marketing, and we have significantly grown our PR and consumer marketing teams.

I will touch on each of these briefly. First, consumers, we focused on improving the content and experience for consumers. Move’s most important goal is to help consumers find their home and we advance that goal in many ways in 2012. We completed the first phase of Realtor.com redesign in October, including numerous enhancements to the user experience, functionality, and feature set. The user interface is subtly different and elegant, navigation is easier, the map experience is better, and ad placements are optimized for higher page yields.

Our for-listing sale content continues to be the highest quality in the industry for the most accurate, reliable, and up-to-date listings available. On the marketing front, we conducted an in-depth consumer survey in Q4 with over 800 respondents beginning a very important effort to better understand our consumer audience and meet their needs even more comprehensively. We already knew that users of Realtor.com generate nearly 70% more page views, and twice as many minutes per unique user than competitor sites, delivering higher quality leads to our customers.

Our survey clearly underscores the reason for that user engagement. Consumers rate Realtor.com as the most credible, comprehensive, trustworthy, and professional site among on full online real estate portals. And the survey provided a wealth of other information that’s informing our product roadmaps and marketing plans for this year and beyond. Our research also informs us about the needs and objectives of adjacent consumer segments, while we continue to grow our offerings including rental, senior housing, new homes and moving.

Turning to our second area of products, we have been enhancing our product offerings to ensure we deliver exceptional quality, value and high ROI, and I will touch on a few. Co-Broke, Co-Broke continue to gain momentum in 2012, and is now our most successful new product launched since Showcase. Co-Broke’s Connections is now available on all mobile platforms and customers who buy the product received leads seamlessly regardless of device. Our growth in traffic continues to feed Co-Broke inventory, and we have continued to open up more zip codes throughout the year and increased the number of slots for sale within many of those zip codes.

We also continued to add better lead attribution capabilities in 2012 to more clearly demonstrate the ROI of our products. For example, we introduced the toll-free number tracking programs to all our agent customers in Q4 with less than no which incoming calls are coming from Realtor.com and track those calls and customer reports. We will extend that program to brokers in 2013.

One of the most important differentiators is our growing suite of software and services that improves the real estate professionals’ ability to take a lead from an initial connection, all the way to quote. TOP PRODUCER, the mainstay of our SaaS platform saw revenue stabilized in Q4. In December, we released the Mac OS version of TOP PRODUCER, which has been in high demand and has been well received. The strategic acquisition of TigerLead in September expanded our SaaS offering with a product that dramatically improves the conversion process for agent and agent team.

TigerLead, helps customers procure and register leads, provides a private IDX search experience and tracks each lead’s click stream data as well as geographic, demographic and behavioral data to provide valuable intelligence to the agent about where the lead is in the buying cycle, enable the agent to respond more strategically. We are very excited to extend the sophisticated product to a much larger mainstream market and provide additional leads to TigerLead customers from Realtor.com.

These are just a few examples of the strong combination of new products and enhancements of our existing offerings that helped us to generate a 70% increase in leads, e-mail and phone call reported and delivered to agents and brokers last year. This lead growth clearly demonstrates that our audience is transaction ready, wants to engage with real estate professionals and is therefore an extremely high value to brokers and agents looking for leads. In fact since historical listing count ended the year at 6.2, down 5% versus the prior year. This means that leads for each for-sale listing effectively increased over 80%, indicating stronger demand for homes in a market that appears to be stabilizing.

Next on our third area of focus, partnership, our strong partnership with the real estate industry really defines who we are and sets us apart from others in the space. There is perhaps no better example of that partnership than our ListHub operation. ListHub is the number one listing syndication platform in the industry with over 70% of the for-sale listings content in the United States sourced from over 450 MLSs. ListHub has distribution agreements in place with over 130 publishers, including most of the top online real estate portals.

We grew the number of unique MLS agreements with ListHub from 405 to 451 last year and added more – 40 more publishers who rely on ListHub for listing content. ListHub plays the role of standard bearer for the real estate industry enabling brokers to control their data right and generating valuable insights about listing traffic and engagement across the comprehensive network of publishers and aggregators.

We also continue to focus on building unique relationships throughout the industry from our partnership with the NAR to our growing engagement with the MLSs as well as our leadership with our key partners, the agents, brokers and franchises. Realtor.com continues to invest in our data aggregation capabilities to ensure the most accurate, reliable and up-to-date content. Realtor.com currently updates listings from 78% of the MLSs every 15 minutes, representing 90% of the listings available at any moment.

Our focus on having the most current content is key to our fourth strategic focus. Mobile, we are innovating aggressively to lead the rapid consumer migration to mobile. Mobile is an unmistakable driver for this industry and will only continue to grow and scale in 2013. Move continues to successfully harness this medium, which is driving a deeper level of consumer engagement and requires the highest level of listings accuracy. In fact, our data is so accurate and current that it is sometimes ahead of what a consumer may see in their local market. We’ve recently added a change in status feature to all of our listings to reinforce our widely acknowledged leadership as the most credible and trustworthy data set out there.

Mobile continues to drive huge lead growth with mobile leads up a 140% in 2012, and our mobile users are significantly more engaged than our web users. Homes for sale viewed on mobile were up 135% compared to 2011 with nearly 50% of all the for-sale homes viewed on mobile devices in Q4. We are working to create a seamless experience across all types of mobile devices from phones to tablets and released several updated version of our mobile apps with new features and functionality last year. This includes our free mobile collaborative search out, which allow agents to get personally connected to a home buyer through proprietary dialog regardless of where the lead was acquired. Products like collaborative search allow our customers to improve their transaction capabilities and optimize their ROI while unlocking the potential to monetize the lead even outside of the Realtor.com platform.

In October, we released the mobile version of our website, which some people refer to as MDA enabling users an app like experience even when searching from our browser on their mobile device. Although it just launched, it is showing great promise as it has already increased our user satisfaction. And finally company leadership. Early last year, we appointed Rachel Glaser as Chief Financial Officer, and John Robison as Chief Technology Officer.

And last summer Barbara O’Connor joined us to lead a significant build out and refresh of our marketing efforts. Each of these very accomplished leaders has bought fresh perspectives focus and discipline and are driving real improvements in our strategy, technology process and consumer presence. Overall, we are very pleased with what we accomplished in 2012, improving our consumer experiences, enhancing our product offerings, strengthening our partnerships with the real-estate industry, innovating to lead the transition to mobile and strengthening our leadership team.

As we look forward to 2013, I know many of you are interested in the current state of the housing market so first, let me touch on what we’re seeing, second, what things we believe the industry needs to be – to do – to be more successful this year and finally, the strength of Move’s current positioning. We clearly see signs of a gradually improving housing market and I believe four key macro factors will drive the market this year.

First, the overall consumer economy including consumer confidence and job growth, two, potential action by Congress, especially with fiscal and monetary policy, three, the availability of credit in the form of mortgages, financing options and rates, and lastly, the supply demand equation which has changed dramatically as we enter 2013. Since the first three macro factor – since the first three are macro factors that we don’t directly influence. Let me speak to the key final point on supply and demand.

U.S. for-sale inventory remains extremely low, having dropped to its lowest point since we began collecting this data with roughly 1.6 million units for sale in December, down 17% from a year ago and about 50% below the levels observed at the height of the housing boom. While inventory is low, we are seeing some very encouraging trends in the pace of turnover in pricing.

In short, homes are selling faster and prices continue to firm. The median average age of housing inventory is now 111 days, approximately 10% below last year. We are also seeing home so closer to and in some markets actually above listing price. The market still has a ways to go, but signs clearly point to continued stabilization and a steady shift from a strictly buyers market to a more balanced one.

Some additional factors in the housing supply equation are continued pricing improvements, access to credit, and any other potential - and any potential increases in interest rates. The rising equity that comes with higher prices should help more potential sellers to the market and potential buyers obviously hope to get into the market at historically low rates. We believe any favorable changes to those factors should drive lifting counts up.

Whatever the market dynamics, brokers and agents will need their leads to become smarter, more manageable, and more actionable. With the quantity and velocity of information continuing to grow, agent productivity will continue to be a strong focus and promoting their customer service capabilities, branding, and advertising their listings as efficiently and effectively as they can, will become more important than ever. All of us at Move are excited by the change in market prospects since we believe we are the company best positioned to take advantage of these improving market conditions, why, because we are uniquely able to help both the realtor and the consumer from content to connections to close. So, let me talk about what we’re doing in 2013 to further strengthen Move’s positioning for growth. The company has made tremendous progress in recent years including improving the Realtor.com experience, investing in our infrastructure to speed innovation and product cycle times and acquiring and building out new tools and capabilities for our customers. We have laid the foundation to become an end-to-end solutions provider serving the whole supply chain from real estate businesses to consumers.

Let me be a bit more specific about what we’re doing now, to build on that foundation. Until recently Move products have generally been focused primarily on what we call unaffiliated real estate consumer. Those potential buyers and sellers who were researching and browsing, but haven’t yet engaged the help of a real estate agent. We provided the most accurate, reliable and up-to-date listings to consumers and help brokers and agents convert those consumers to leads. But once the consumer has affiliated with an agent, our value proposition was less clear.

Our future strategy will go beyond providing the most reliable listings to consumers in generating leads for real estate professionals. Our goal is to continue to facilitate the conversations even once a consumer becomes affiliated with an agent and to provide value in particular for real estate professionals, all the way through to a transaction to close. Our growing suite of SaaS tools and services will increasingly work behind the scenes to make the progress more productive and efficient for both the consumer and their agent. This is the thinking behind the two product groups you see in our release. Consumer advertising products, which are focused on providing unaffiliated real estate consumers with the information they need to make an informed home buying, selling, financing and renting decisions and then connecting them with professional and software and services products, which provide real estate professionals with the tools to work with their customers once they have established an affiliation.

Let me touch on our plans for each of these two product groups. First on the, consumer advertising side, we have a robust product and marketing roadmap for 2013. Our consumer research revealed of where we’re serving the consumer well and also highlighted exciting new opportunities. We are focused on the key areas that matter to our consumers this year, including mobile and website capabilities and offerings for key adjacent markets like financing and rentals. And we are backing those efforts up with a more robust consumer marketing effort.

First on mobile, we have a really exciting consumer mobile plan for 2013, building on our already market leading mobile app. We are very fortunate compared to other online businesses and the fact that our business model very naturally extends to mobile. And even more importantly our monetization model extends to mobile just as naturally allowing us to easily capitalize on the growth we are seeing in mobile leads. We will continue to build on both our mobile and website capabilities this year, by improving collaboration, personalization ease of use and map and visual delivery. And we will launch some really innovative new features and functionality that we will expect will delight our consumers. We’ll talk more about this at our upcoming Analyst Day.

We’re also developing content for adjacent consumer segments such as existing homeowners who maybe surveying the market considering financing options or looking for investment properties. And we’ll continue to expand our offerings in the rental segment, which will help fuel and accelerate growth in the moving business. To tie this all together, we’re making a much more concerted push on consumer marketing this year. By this is historically marketed very well for the trade, we haven’t really focused on marketing to consumer. We are entering 2013 with a new and highly experienced marketing team, which will begin executing a comprehensive integrated marketing campaign involving social media, PR, advertising and brand management. The goal is to attract new consumers segments help grow our audience and maintain our leadership position in engagement and return visitation.

For our software and services products, we have an equally impressive roadmap for 2013. With ListHub, TOP PRODUCER and TigerLead, we now with unmatched suite of products to help the real estate community broaden distribution of their listings, source and cultivate the highest quality lease and organized customer contact information, streamline communication and close more transactions. This year, we’ll focus on products and services that make agents more productive including TOP PRODUCER, TigerLead collaborative search and other applications that drive ROI for our customers.

We also see a unique opportunity to capture rich data and insights from the interactions the homebuyer has with the listing content on our network of sites as well as off-network across the entire online real estate listings marketplace. We believe this data and insights are highly valuable and will all offer us additional ways to help our customers. Longer term, we believe Move is uniquely positioned to become the key hub in a real estate ecosystem delivering value for both the consumer and the real estate professional. Lose combinations of offerings for both consumer and real estate professionals is a real competitive advantage for us. We have an exceptional – we had exceptional consumer assets including millions of users, strong brand awareness and trust, the most accurate, reliable and up-to-date listing content and a breadth of information across multiple adjacent markets like new homes, rental, senior housing, mortgages and moving.

We also have unparalleled offerings for real estate professionals, including our TOP PRODUCER marketing and contact management system. Our TigerLead lead management system and ListHub which not only syndicate listings but also deliver some of the best agent and seller reports from the industry. In 2013 and beyond, we will continue to work to address both ends of this spectrum by finding ways to monetize the consumer, whether they are affiliated with the realtor or remain not affiliated. To wrap up our Q4 results show that we’re moving in a very positive direction and were expected to continue this momentum this year.

As the overall real estate environment improves, we expect marketing dollars will continue to move online and Move is in a great position to add value, providing the most accurate listings and the best productivity tools to generate and demonstrate ROI for our real estate customers. We are very confident our vision of the future. We have put the building blocks in place to grow and expand profitability in 2013 and beyond. I would like to take a moment to thank our dedicated employees for their steadfast execution against our strategic initiatives over the past year. We look forward to an exciting year ahead as we continue to leverage the opportunities we have created throughout the Move ecosystem.

With that, I’ll turn the call over to Rachel to walk you through our financial results.

Rachel Glaser - Chief Financial Officer

Thank you, Steve. As Steve said, we are very pleased to report that Move ended 2012 strong, and we’re excited about our strategic plans for 2013 and beyond. As I discuss our financials today, I want to explain four moving parts that impact our financial statements and the related analysis of our performance. These are one, the way we’re categorizing revenue in two distinct product groups going forward; two, the shift in our revenue mix towards new vibrant higher growth revenue lines; three, the impact of acquisitions and investments on our margin profile; and fourth, the macroeconomic factors that are beginning to impact our business in a favorable way.

So first, I will outline our fourth quarter financials. Total revenue in the fourth quarter was $52.7 million, an increase of $5.5 million or 12% from the fourth quarter last year, and up 7% on a sequential basis. In the past, we divided our revenue into three product groups for you, for this released, we’re moving to two. Consumer advertising, and software and services which more accurately reflects our operating model and strategies going forward.

This is the first of the four moving parts I mentioned, so breaking that revenue down into those two groups. Our Consumer advertising revenue was up 6% versus the fourth quarter last year, increasing $2.4 million and representing 78% of total sales. The solid results in our consumer advertising products are due to the sustained strength of our Showcase product revenue, along with continued growth in our Co-Broke Connections product. The tremendous growth in traffic in connections coming from our very successful mobile applications, fuels Co-Broke results by creating leads, which in turn allows us to open up more as it goes and more slots for sale and higher demand zips. Our media revenue was also a contributing factor to the quarter reflecting the volume and growth in page views some are highly active and engaged user base.

Our software and services products, which includes TOP PRODUCER, TigerLead and ListHub were up $3.1 million or 37% versus the fourth quarter last year. TOP PRODUCER stabilized in the fourth quarter, with virtually flat month-over-month revenue and subscriber count. Note that Q4 includes a full quarter of TigerLead, which we acquired in September of 2012. Software and services represented 22% of sales in the fourth quarter.

Turning now to how our revenue looked on a full year basis 2012 revenue was $199.2 million, up 4% or $7.5 million over 2011. The majority of that growth is coming from continued momentum in our consumer advertising products, which represented 81% of total revenue on a full year basis going $6.3 million or 4% versus last year. Our software and services business grew $1.3 million or 3.5%.

Let me pause a moment to highlight the second moving part I want to explain, our revenue mix shift. We have discussed this on prior calls, but it’s worth punctuating again as we finish the year. We have worked hard this year to invest in and bring to market, new products that have higher growth potential than some of our older legacy products. These new revenue streams coming from Co-Broke Connections from our moving business, from a new page design which repositions and optimizes CPM based media revenue and from the addition of new software and services offerings like TigerLead, all positioned the company for accelerating revenue growth. We have grown revenue every single quarter for the past five quarters, and as you will see in a few moments when we share our guidance for 2013, we expect that sure and steady top line growth to continue.

Turning to profit, I will touch on the third moving part I want to clarify for you on this call, specifically how our acquisitions and investments influence our margin profile. First, we acquired two businesses in 2012, both were accretive to our operating profits with margins that roughly matched or slightly exceeded our existing margins. As we have said on prior calls, we expect that organic revenue growth will generate larger margins given the scalability of our technology and sales infrastructure.

Second, investments we made in 2012 and we will continue to make in 2013, are influencing our near-term margins. As we have discussed on this and on prior calls, we are modestly increasing our investment in consumer marketing. As Steve noted, we have added an entirely new marketing team. We have invested in consumer research. And we have built a brand strategy, including creative elements that we will extend to our website.

In addition to marketing, we have been investing in an enterprise-wide back office and customer relationship management system, which will enable us to bring our products to market with higher yield and higher profit. We continue to develop scalable platforms for managing the massive amount of data we ingest and are working on integrating and streamlining those platforms to reduce overhead and speed time to market. We have made and will continue to make high ROI investments were needed in order to achieve our long-term goals, anticipate well ahead of competitors in the marketplace. Therefore, we expect to continue to expand margins, but the margin growth maybe tempered somewhat by the investments we make today, which we will expect to generate benefits in the future.

With that as context, let me discuss our profit performance. Adjusted EBITDA in the fourth quarter was $7.8 million or 15% of revenue, in line with our guidance. For the full year, adjusted EBITDA was $26.9 million or 14% of revenue up 5% from the prior year. In total, core operating expenses defined by the four major expense categories minus stock-based compensation and non-recurring charges were $48.2 million for the fourth quarter and $183.9 million for the full year.

Net income was $1.6 million or $0.04 per share on a diluted basis compared to $3.4 million or $0.09 per share in the fourth quarter of 2011. For the year, net income was $4.7 million or $0.12 per diluted share. This is up from $3.2 million or $0.08 per diluted share in 2011. Net income applicable to common stockholders was reduced by $0.02 per diluted share as a result of incremental amortization related to the two acquisitions we made in 2012.

Cash flow from operations was $10.3 million for the quarter and $29.1 million for the year. We ended the year with cash of $27.1 million after investing approximately $32 million in the TigerLead and Relocation.com acquisitions. We expect to continue producing positive cash flow in 2013 and are always evaluating the most effective capital allocation strategies.

Before giving guidance for 2013, I want to describe the fourth moving part I mentioned regarding macroeconomic factors and having that used to consider Move’s growth potential. Historical listing count ended the year at 6.2 million listings, down 5% year-over-year and down less than 1% versus Q3. Though still declining, you can see that listing counts are declining at a decelerating rate indicating a slow reversal in the market. We believe the trajectory of listing cap is a potentially helpful metric for our business, especially when considered relative to revenue.

Revenue per for-sale listing clearly illustrates the value of our investments in areas that we can influence, specifically consumer audience we attract, the accuracy and breadth of the content they engage with, and the experience we provide, which impacts page views and visitation to our site. Ultimately, we are focused on how the elements we can influence convert into ROI for the agent. Revenue per for-sale listing was approximately $26 for our consumer advertising products in 2012.

As I discussed a few minutes ago, listing counts have continued to decline, but revenue from each for-sale listing continues to grow, and in fact it was up 10% in 2012 versus the prior year. Said another way if the 2012 listing count had been flat with 2011 that would equate to an additional $10 million in revenue just from the product performance itself. We believe this metric is a good barometer for tracking our business and measuring how our investments and audience both size and engagement and high-value products that improve their yields convert to positive operating results.

I will now turn to guidance. We currently expect revenue for the first quarter of 2013 to be approximately $53.5 million to $54 million. This represents approximately 13% year-over-year revenue growth at the midpoint or an increase of $6 million. Our first quarter adjusted EBITDA margin will be approximately 11% to 12% reflecting the seasonality of our expense structure. Revenue in the first quarter for our consumer advertising products is expected to be $42 million to $42.5 million, approximately 7% growth over the same period last year. We expect our software and services revenue in Q1 to be $11.5 million to $12 million, up approximately 40% over Q1 2012. For the full year, we expect revenue to be in the range of $222 million to $226 million. This would equate to growth of approximately 12% at the midpoint for total revenue.

Looking at our two revenue categories, we expect consumer advertising revenues to grow approximately 7% to 10% for the full year and software and services revenues to grow approximately 30% to 35% for the full year. Our full year adjusted EBITDA margin target is approximately 15% based on the revenue mix and investment dynamics I mentioned earlier.

Lastly, in order to provide more detail into our profitability guidance for 2013, I will outline a few items for you. We expect depreciation to range between $10 million and $11 million, amortization of intangibles to be approximately $4 million, up from 2012, due to our two acquisitions, stock-based compensation to range between $10 million and $12 million and CapEx to be approximately $10 million to $12 million.

Again, as we close out 2012 and look forward to 2013, we are very pleased to have moved for the super – solid revenue and cash flow growth. We are looking forward to sharing more with you about our recent accomplishments and our future plans at our upcoming Analyst Day on March 12 in New York City.

With that, we will open the call up for questions.

Question-and-Answer Session

Operator

(Operator Instructions) Our first question comes from Jason Helfstein from Oppenheimer. Your line is open.

Jason Helfstein - Oppenheimer

Thanks. Few questions, so we can’t help notice that we are continuing to see a widening difference obviously between even on a pro forma basis, stripping out the acquisitions, a widening spread within the revenue growth and the historical listings count, and historical listing count continues to get better. Can you tell us what type of assumption you are making for historical listings count in the guidance? That will be question one. Number two, if I said that stripping out the acquisitions the revenue growth was about 10% in the quarter, would that be roughly accurate? And then number three, see if just go into a little more about did the call tracking that we are seeing this kind of everywhere I mean, Google, it’s been a big focus. Just, what type of lift are you assuming from that? Thanks.

Steve Berkowitz

Sure. So, in terms of historical listing counts, we expect them to stay right now we are thinking about just flat for next year. We haven’t really – it’s really more going to be as we see the velocity of sales. Hopefully, we will start to see some growth in the current listing counts, but we don’t see historical listing counts. Right now on our forecast for kind of flat for next year in terms of – in terms of what we see. We don’t strip out the acquisition partly because one of the things we have already started to do with the acquisitions is actually integrate very aggressively those acquisitions. So, I will give you one example. So, we have excess leads that come to our Co-Broke product, leads for which we have not sold to an agent today. What we are doing with some of those leads right now, we are routing them directly to TigerLead customers. So, what we are able to do was actually we are starting the process of actually synergizing those businesses. So, even though TigerLead sits on the B2B business it’s actually gets a benefit from Realtor.com. So, as we look at our business we see – we saw a very strong quarter in general.

In terms of call tracking I think it’s really interesting actually one of the things that we are seeing in the industry overall is the fact that that because the marketplace is shifting a bit from a buyers market where people could be patient about what home they wanted to buy to becoming a little more impatient about the home they can buy in certain markets. We are actually seeing the volume of phone calls grow. So, for us because of the shift to mobile and even phone calls off of the website itself are increasing. So, what we are seeing is actually kind of a larger sense for urgency across the board on our buyers part today that haven’t happened in the past so that’s a good indicator. But we see phone calls is being an important part of the future growth potential of our ability to connect consumers with the professionals they need whether it be in the moving business, senior housing business or even and even the homes for sale business.

Jason Helfstein - Oppenheimer

And just a little more detail, I mean how do you plan to monetize that I mean is that an additional service to use that to push pricing increases, how do you monetize that?

Steve Berkowitz

I think one way you do it is you – it allows you to increase the ROI, which allows you to revisit at your pricing on a historic listing count overall ROI, it allows you to raise prices there if you are looking at the value – the value relationship. It also allows us the opportunity to in the sense of Co-Broke to start figuring out how we can connect those phone calls on the – on those listings to agents who are informed. So, yes, it gives us opportunity to upside, some of that – some of those phone calls are shift from e-mails, so it’s not all incremental. At the end of the day, there is a mix that goes on, but for us it becomes the nice part of our businesses, because it is we have a branding component of what we sell, but a big part of what we sell is actually the performance. This is actually going to help us continue to open slots in Co-Broke, continue to help us find ways to evolve the Showcase pricing experience and actually help us, I think over time to launch more seller products, more listing agents looking for sellers. We can actually find ways to connect them now, because phones will be an important part of that.

Jason Helfstein - Oppenheimer

Great, thank you.

Steve Berkowitz

Sure, Jason. Thanks.

Operator

Thank you. (Operator Instructions) Our next question comes from Mitch Bartlett from Craig-Hallum. Your line is open.

Mitch Bartlett - Craig-Hallum

Thank you. Rachel went by too fast for me you were talking about revenues on a for-sale listing basis at $26, could you go through that math again it’s up to $10 million and whatnot?

Rachel Glaser

Yeah. So, we took the historical listing count which was $6.2 million.

Mitch Bartlett - Craig-Hallum

Right.

Rachel Glaser

And we said and we took our revenue from all of our consumer business, which in 2012 was 81% to the $161.8 million and that would be numerator the denominator being the number of listings and it comes out to $26. And then if you normalize, you said had the listings been flat, how much additional revenue would you have gotten, because we decreased by, what number did I say we decreased by 5%. So, it works out to additional $10 million. So, that’s just showing you the sort of the power, the effective increase in revenue that we would have had.

Mitch Bartlett - Craig-Hallum

Your revenues would have been up $10 million if you had $6.5 million listings like you did in the fourth quarter of last year?

Rachel Glaser

Right, that’s right.

Mitch Bartlett - Craig-Hallum

Or 35% growth.

Steve Berkowitz

Potentially.

Rachel Glaser

Potentially, yeah.

Steve Berkowitz

Potentially.

Mitch Bartlett - Craig-Hallum

That’s interesting now. And then the investments, Steve maybe you could go over a little bit on the consumer side what is planned?

Steve Berkowitz

Sure. I mean, I think our investments in our business continue to be fairly stable in a sense, I mean, I think the – so the areas that we’ll be continuing to invest in is mobile, I mean, it’s critical. So, we are going to continue to look at different ways to get out so faster or release them all simultaneously to develop more in different areas. So, mobile will be a – continue to be a very large focus of our investment. I think you will see a slight increase in some of our marketing spend as we start to look at ways to build the brand. I think I have always said that when we feel our site is ready and our products are ready, we are going to start looking at ways to increase our audience, not just through word-of-mouth, but word-of-mouth will be an important part of it, but we are not looking at any major investments in marketing per se, but we are looking at ways to allocate a few more dollars, but also reallocate dollars so that we can invest in ways to actually start to differentiate ourselves from the competition and we actually are very excited about it, and – because we hear about it more on March 12 when we get together on Analyst Day, but it’s for us when we look at the business it really is about looking at ways for us to continue finishing off some of the investments we have to do in the back office and really start to hopefully start to see that margin start to move up towards the latter half of the year as we get to 2014, but we feel really good about the plans we have in place. So, we’ll continue to invest a little bit more on the consumer side than we have in the past.

Mitch Bartlett - Craig-Hallum

And that branding messages to come we haven’t seen it yet?

Steve Berkowitz

Correct. You haven’t seen it yet, you’ve seen we are very – we kind of do things in a – we are testing, we go, we test, we go. And I think you will do some hopefully some things that will be fun and exciting and actually start to leverage the brand that we believe can be really differentiated in the marketplace.

Mitch Bartlett - Craig-Hallum

And then finally I got the impression that we will see some more products on the software side more tools for agents, can you expand on that?

Steve Berkowitz

Sure. I mean I think what you’re seeing is with the market recovering and also because the velocity, we see the velocity of home sale changing, we again see that the productivity of the agent needs to continue to improve. And so between products that we offer for free like collaborative search and we offer QR code builder. We offer quite a few free products to agents. We also offer ways to up-sell the agents and to increase productivity tools. So, I am really – for us we’re going to continue to invest I think the investment in TigerLead was a really smart addition because it helps both the B2B business and our consumer business actually helps to lead there. It has one of the highest conversion rates to close we believe, so it’s a great product. So, we’re going to invest in TigerLeads, we are going to invest TOP PRODUCER and of course we are going to continue to invest in ListHub because ListHub we see as a critical asset to our strategy as we go forward.

Rachel Glaser

And all of those will be demoed at the Analyst Day in New York on March 12, if you are going to be there, so you’re going to see a little bit more into the hood.

Mitch Bartlett - Craig-Hallum

Great. TigerLead is there a marketing push for TigerLead maybe you can talk about the number of sales people that are integrated into the TigerLead?

Steve Berkowitz

Sure. Well, I mean TigerLead is kind of I would say a medium to high-end agent product. And historically TigerLead had very few sales people, but it has a very active and strong user community. And what we started to do now is train our sales team as Rachel has always talked about our ability to leverage our sales team. So, the first team we’re training is our events team which is out in the field throwing 100 plus to 200 events for year for agents and teaching them about the product and from there they can order if they like because it’s a decent size investment. And then we’re starting now to build specialists within our existing both TOP PRODUCER team and Realtor.com team to start to help sell their product. So, it really fits perfectly between what Realtor.com does on one side in connecting consumers to real estate professionals. And then there is TOP PRODUCER which is managing the lead when it becomes a little bit warmer. And then TigerLead manage to the lead from the first search all the way through till it hopefully becomes a significant one to one relationship and where both those TigerLeads could be handed off into the TOP PRODUCER system. So, it’s a great thing for us.

Mitch Bartlett - Craig-Hallum

Great. Thank you.

Steve Berkowitz

Okay.

Operator

Thank you. (Operator Instructions)

Steve Berkowitz - Chief Executive Officer

Great. Well, thank you very much for joining us today. We look forward to sharing more with you in New York on March 12 and look forward to nice 2013. Thank you very much.

Operator

Ladies and gentlemen, thank you for your participation in today’s conference. This does conclude the program and you may all disconnect at this time.

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