Move, Inc. Q1 2009 Earnings Call Transcript

| About: Move, Inc. (MOVE)

Move, Inc. (NASDAQ:MOVE)

Q1 2009 Earnings Call

May 7, 2009, 5:00 pm ET


Todd Friedman - The Blueshirt Group

Steven H. Berkowitz - Chief Executive Officer & Director

Lewis R. Belote, III - Chief Financial Officer


Jason Helfstein - Oppenheimer & Co.

Mitch Bartlett - Craig-Hallum Capital Group, LLC

Mark May - Needham & Co.

William Morrison - ThinkEquity


Good day, ladies and gentlemen, and welcome to the first quarter 2009 Move Incorporated earnings conference call. My name is Wayne and I will be your coordinator for today. (Operator Instructions) I would now like to turn the call over to your host for today’s call Mr. Todd Friedman. Please proceed, sr.

Todd Friedman

Thank you, Wayne. Good afternoon, everyone, and welcome to our first quarter 2009 earnings call. On the call today is Steve Berkowitz, our Chief Executive Officer and Lew Belote, our Chief Financial Officer.

Today’s call is being webcast from the Investor Relations section of our website and will be available for replay shortly after we conclude. A copy of our press release issued earlier this afternoon is also available on our 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 other decreases or delays in advertising spending and market acceptance of new products and services.

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 in this call is as of May 7, 2009 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 in the table attached to our press release. I’ll now turn the call over to Steve.

Steven Berkowitz

Thank you. Thank you for joining us today.

As I discussed with you last quarter, I spent the last hundred days completely immersing myself in Move’s people, products, technology, industry relationships in every aspect of our business. I’d like to use most of time for prepared remarks, giving you insight on what I’ve learned, where I believe the company needs to go, and how we plan to get there.

I think the first quarter highlighted both the challenges we face and the opportunities that exist in the market. So we’ll have Lew cover for the first quarter results and then I’ll come back and provide you with a broader business perspective and an outline on our strategic plan. Lew?

Lewis Belote

Thanks, Steve. Let me start by saying that as you are all aware, the real estate market was difficult and credit markets did not improve in the first quarter and we are not making predictions about when those conditions will improve. In that context, our EBITDA and operating cash flow are positive indicators of the underlying strength of our asset base.

At a high level, revenue for the quarter was $54.9 million and our adjusted EBITDA was $6.6 million when you exclude non-recurring severance cost. At a time when the real estate market is in a continued downturn, our revenue only declined slightly and we have successfully managed our cost structure to drive an EBITDA margin greater than 10%.

The Q1 results reflect the benefit of our $20 million in cost reduction that we completed in the second half of last year. Given the changes in our business model and our management team over the past few quarters, we think it’s important to note the changes in our core operating expenses, so you can better understand the underlying cost structure and earnings leverage in our business. We define core operating expenses as the four major expense categories, minus stock base compensation, severance charges, and other non-recurring charges.

In the first quarter, they were $50.9 million, a 14% decline compared to $59.1 million in the first quarter last year and a $2.1 million decline from the fourth quarter of 2008. You can see in our core operating expenses that we have been successfully reducing our costs, to create efficiencies in our organization as well as to free up investment dollars for future opportunities.

Now looking at the quarter more closely, revenue was $54.0 million compared to $61.9 million in the first quarter of last year.

The 11% decrease was a result of a decline in each of our businesses with a Top Producer being down just slightly, but New Homes and Media were down 47% and 30% respectively.

Compared to Q408, revenue was down 4.5%. The sequential declines were impacted heavily by New Homes and Media, but and Top Producer were not able to generate enough new sales to offset customer attrition, as we saw the addressable market of real estate agents continue to contract in the quarter.

While we’ve been successful in marketing primarily to highly productive realtors, those with more than ten listings per year, we’re starting to see a portion of that group in certain markets struggle to maintain their advertising spend. In spite of the bad news in the media about residential real estate, there’s still an expectation that $4.6 million resale transactions will occur in 2009.

In this difficult market, we are confident we can maintain a solid base of loyal customers and we can control our operating expenses.

In my comments about core operating expenses, I suggested that metric would give a clearer picture of our underlying business. For example, when you look at our G&A expenses, operating loss, and a net loss for the quarter, the reported numbers are heavily skewed by non-recurring severance and stock base charges associated with the departure of two senior executives.

In addition, there are additional stock base charges in the quarter associated with upfront vesting of restricted stock and stock options to Steve’s hiring.

It is noteworthy that while the stock base charges for the departing executives were significant, all of the options associated with the charge were significantly under water at that time.

The severance cost impacting our results were $1.9 million and stock base charges associated with those three items totaled $8.7 million dollars.

Our operating loss from continuing operations for the first quarter was $9.1 million compared to $2.9 million loss in the first quarter of 2008. Without those non-recurring charges, we would have reporting approximately $1.5 million in operating income.

Our adjusted EBITDA for the quarter was $6.6 million or 12% of revenue when you exclude the non-recurring severance cost, compared to $7.3 million or 13% of revenue in the fourth quarter of 2008. Excluding similar non-recurring severance cost in the first quarter of 2008, EBITDA would have been $5.5 million or 9% of revenue.

Our net loss applicable to common stockholders for the quarter was $10.6 million compared to $4.6 million loss in the same quarter of 2008. In addition to the one-time charge I just noted, the net loss in the current quarter includes a $1.1 million restructuring charge related to discontinued operations, primarily due to the early termination of the officer at Welcome Wagon headquarters. Without the effect of the non-recurring and restructuring charges, we would have reported net income of $1.1 million in the quarter.

After implementing our restructuring of Welcome Wagon in the fourth quarter, the business was profitable in Q1, though on a much smaller revenue base. We are in discussions with a number of parties who are interested in the Welcome Wagon business and we still expect to have that process completed later this year.

In reviewing our consolidated results, our gross margin for the quarter was 77%. The decline from 81% in Q108 was primarily due to a large fixed cost component that remains, even when revenue declines, as well as higher fulfillment costs in the current quarter.

Product development expense were $6.4 million or $500,000 lower than the first quarter last year, but an increase of $550,000 from last quarter.

Sales and marketing expense declined approximately $3.4 million or 14% from the first quarter last year but declined $1.5 million from the fourth quarter as a result of our cost reduction efforts and the reduced SEM spending.

G&A expense increased by $1.9 million or 8% compared to last year and $8.2 million or 52% from the fourth quarter of 2008. As I mentioned, the current quarter is impacted by the $1.9 million in severance cost and $8.7 million in stock base charges. Absent those non-recurring expenses, G&A expense would have declined by $8.7 million from the first quarter of 2008 and $2.4 million or 16% from the fourth quarter. Most of this reduction was achieved from the overall cost reduction we announced last year, as well as lower legal costs in the current quarter.

In looking at our segments, our real estate service revenue declined 9% from the first quarter of 2008 and 4% from last quarter. The operating margin during the quarter was 25%.

In our consumer media segment, revenue was down 30% from the first quarter of 2008 and 8% from last quarter, as the online advertising market continues to experience declines. The operating margin was a loss of 9%.

Our unallocated costs increased $7.4 million from both the last quarter and the first quarter of 2008. Absent the non-recurring expenses I mentioned earlier, unallocated cost would have declined by $3.2 million from both periods down to $10.5 million or a decline of 23%. Again, from the result of our cost reduction efforts in the second half of 2008 and lower legal costs in the quarter.

Turning to the balance sheet, cash and short term investments at March 31st increased $2.2 million in the quarter $111 million.

We continue to monitor the value of our auction rate securities and did no see any deterioration during the quarter. While we believe we will ultimately recover the full value of our auction rate securities, we will continue to take conservative approach to biding those assets on our balance sheet.

Our $129.4 million in par value securities are reflected on the balance sheet at $11.8 million dollars.

Given the difficult market we are operating in, we are encouraged by our results and are excited about our market leadership position and the changes we plan to implement to improve on that position.

Steve will outline his perspective on the business and the opportunities ahead. Steve?

Steven Berkowitz

Thanks, Lew. The last three months have been very informative for me. When we last talked on our year end earnings call, I’d been on the job only a few weeks and was just beginning to dig into the business.

Since then, I spent virtually all of my time understanding our operations, our obstacles, and our opportunities.

To start, let me say that I’m more excited today than when I first accepted the job. I always said that as a board member I knew about the potential strength of the assets we own and understood the market opportunity. But having spent the last three months traveling to all significant Move offices, talking to employees in every division at every level in sales, marketing, product development, and G&A, and engaging our team to step back, evaluate our business, evaluate our relationships with our customers and consumers, and assess our strategic direction.

I believe that we have a very unique opportunity to not only lead this industry to the next level, but also to capture a significant share of the billions of dollars that we spent in our market over the next decade.

One thing I’ve learned over the past month is that when you ask ten different people in our industry to describe the value chain and the market opportunity, you’re likely to get ten different answers.

So let me start by giving you my view of this critical question. What is the value chain that exists in our industry and what are the opportunities that it creates for Move.

Real estate transactions are large and complex and they entail multiple information sources and usually a large financial consideration. These facts create an important need to have an informed professional helping the consumer through the process. We believe it’s imperative that we play a significant role in sides of this equation for the consumer, the real estate professional, and other advertisers in this chain. In fact, I think one of the most underleveraged aspects of our business and consequently one of our most under-appreciated aspects of our story is our unique ability to assist this value chain in both the B to C and the B to B to C relationship.

Our assets in both our consumer web-facing site, such as and and our web-based application for real estate professionals, Top Producer, can be used together to create a powerful solution for all those involved in the real estate property value chain.

So let me talk about assets. The logical place for me to begin my evaluation of the business was to identify what building blocks are already in place. Some of our key assets are – one, we have a dominant market position in terms of audience, size, and consumer engagement. In March, we led the market with 7 million unique users, 196 million minutes, 284 million page views, and an average of 28 minutes per visit.

Our minutes of engagement in March were more than the combined minutes of Yahoo, AOL, MSN, Tulia, and combined.

Two, while not fully appreciated, we have a very strong marketing and management application for real estate professionals. Top Producer, which is delivered in a fast model and gives us direct connections to the real estate professionals’ desktop.

Three, we have a very special ability to leverage our national scope but to sell locally, which is critical in real estate, where everything is local.

Four, our relationships across the real estate spectrum are unmatched from the important and strategic collaboration with the NAR to our direct relationships with hundreds of thousands of agents and brokerages all over the country. Our 900-plus agreements and other partnerships we have forged over the years.

Five, the substantial brand equity of the website, which is the number one searched website in the industry. We have spent many millions of dollars over the years, along with the NAR, extending this traditional historic brand to become the number one consumer real estate brand on the web.

Six, the technology resources that we have in place to execute against the needs of the marketplace.

And seven, the terabytes of data that should give us greater insight into the real estate marketplace than any other competitor.

And eight, we have a very mature and functional back-office organization.

When you think about the important enterprise level assets that need to be built to create a strategic business, we’ve done many of the extensive and difficult pieces these past ten years. It’s not only a question of money, but one of time, and it would take someone years to replicate all of these assets.

Having listed some of our advantages, there are a number of areas where the organization needs to either a) improve the way we do things, or b) fix the current processes we have in place, or c) in some cases just outright replace areas that are broken.

Some of our challenges are self inflicted, but others are a function of what happens when you build the business over a number of years through both organic means and through acquisition.

For example, I believe that a user experience needs to continue to evolve. The redesign last year was a great start and a dramatically improved user interface, but we need to do more to full engage the consumers who come to our sites. We already have the industry’s leading engagement and that is without taking full advantage of all of our assets. So I think there’s a lot more that can be gained in this regard.

We’ve not integrated our assets the way they should be. Like better integration of Top Producer, our B to B to C offering with our consumer offering. We need to make better use of our ability to sell locally to drive greater national reach. We can roll out a national program and instantly bring it to local markets in a very powerful way at the capability that we’re not fully leveraging today.

Our technology platform is relatively fragmented as we have bolted on new technologies from acquisitions and new initiatives, without always stopping to take the extra step and integrating all the backend pieces in the most efficient manner.

The result is that we’re not only running more hardware database and solutions that are necessary, but we’re not getting the maximum value out of many of them. Similar to our technology challenges, our database needs to be better integrated and we have to identify the data that we’re missing so we can improve the user experience and expand our network.

Lastly, we have a great team, but we have to look at the entire organization to make sure we have the right talent in all the right places.

Now, within this list of assets and challenges, there’s good news and bad news. The bad news is that despite our clear preponderance in assets, we’ve not always been the thought leader in our space and we’ve not taken the market opportunity to its fullest potential.

The good news is that no one else has either. Move has to lead this market. We have to take our current leadership position and define where this market will go and how it will evolve over time.

To do this, we have to transition our business into a more flexible business model. We have to build new technology and platforms that can enable the next wave of growth, and we need to evolve our business from being solely focused on listings for sale to focus on all properties.

Let me elaborate on that last point on what I mean by all properties. We’ve done a good job focusing on the 5 million plus homes that are actually transacted every year and connected to universe of consumers who might be considering buying or selling in the immediate future. But any good marketing person can tell you that the key to successful customer acquisition is to expand your reach further and further up and down the value chain all the way to the consumers who may not need your services today, but might need them in the future.

There are more than 100 million properties in the United States. Home ownership is not a process; it’s a central piece of a person’s life. A person’s home is usually the center of their social sphere. It defines who their neighbors are, where their kids go to school, where they shop or go out to eat, who their friends are, and many, many more daily interactions.

For someone who’s not planning on moving soon, they also care about their property values, taxes, relative news and content, and everything else that impacts their home and their community. Move should be the company to serve all of these consumer needs and by doing so, we should be providing even greater value to our real estate professional and advertising partners.

Again, we occupy this unique position in the middle of a virtuous cycle where we can provide more value to realtors by providing more value to consumers which provides more value to realtors and so on and so on.

At the core of all this, we need to focus on a consistent strategy and then execute on that strategy at the highest level. We have to understand that as the market has evolved over the years, home ownership has also evolved into a cycle with many entry points.

Many consumers discover Move when they’re looking to buy or sell a home. Others find us when they’re just researching neighborhoods. Some enter our sites while looking for information on about the 80+ million properties already in our database and other consumers will just come to us, because they’re looking for real estate content such as market statistics, interesting articles, or expert advice.

Real estate professionals and other advertisers use our products in many ways also. We supply tens of thousands of real estate professionals with Top Producer, our staff solution that helps to mange their business as well as to market to consumers in a better, cheaper, and more productive way.

We also provide both real estate professionals and general advertisers a way to reach a very targeted set of consumers directly with enhanced products that allow them to generate leads and build their brands.

To expand our current business to meet the needs of both our consumer and customers, we need to evolve our strategy around content to understand that a person’s home is the center of their personal network. As I said earlier, all real estate is local and in order for us to increase user engagement, we must provide consumers with all their real estate informational needs, not just listings available for sale, and we must provide the content within the network and multiple entry points from anywhere in the homeowner cycle for consumers to access.

So getting down to specifics. What are we going to do? Well our objectives are simple. We need to engage users with the best of breed online real estate experiences, engage real estate professionals with the best products and services to build their business, engage advertisers with the best advertising platform products and reporting, build new products and technology platforms, and create the most comprehensive databases in the real estate industry.

In the near term, this means we need to be able to focus on current customer needs at the same time we improve our infrastructure. We have to be able to run the existing business successfully and profitably while simultaneously building for the future.

For the current business in the short term, we have to drive revenue where we can, continue to tightly manage our expenses to free up investment capital, stay number one in our industry in traffic, engagement and data, maintain and fix our existing technology platform, and better integrate all of our product lines.

Over the longer term, we have identified some specific areas that we need to address. We should be aggregating all the diverse data available on the web and make it available to consumers and real estate professionals. We need to create a single touch point for our real estate professionals and our advertising customers. We need to create better synergies between our destinations for real estate on the web. We need to create a transition plan to a broader business model and lastly, develop and build our technology solutions to meet the needs of users, realtors, and advertisers concurrently.

We also need to bolster our management and consolidate all of the pieces into one business. We’ve already begun that process. Sitting here today, less than four months into the job, we now know where we need to go and we’ve already taken some major steps to get there.

We’ll be moving the business from an individual business unit focus to one more driven along functional, consumer, and customer lines. Each function will be led by one person across the entire company. We are creating the positions of chief product, chief technology, and chief revenue officer, who will have responsibility for their functions across all of the product lines. Aral Samuelson has been named as our chief revenue officer and will continue to serve as president of We’re now actively recruiting for our chief technology officer and chief product officer.

The whole process is going to take some time. I believe that our next earnings call in early August, we should be able to come back and give you more specifics about what we’re doing and when you should expect initiatives to be completed.

After that, we should be reporting to you every quarter about meaningful, measurable progress against these goals and initiatives. As I said last quarter, we entered 2009 better position strategically and on a significantly stronger financial footing. This is still true. The market continues to change dynamically and the overall economy is still uncertain. We will have to react in real time to those changing market conditions and we will need to continue to preserve our strategic investments in order to extend our market leadership when the real estate markets recover.

We have a lot of work to do, but I’m confident that it will pay off. As we move forward with our strategic initiatives, we will have a better experience for consumers, a better audience for customers and advertisers, and better monetization opportunities to driver greater success.

With that, I’ll open it up for your questions.

Question-and-Answer Session


(Operator Instructions) Your first question comes from William Morrison - ThinkEquity.

William Morrison - ThinkEquity


Our first question comes from the line of Jason Helfstein - Oppenheimer & Co.

Jason Helfstein - Oppenheimer & Co.

Steve, that was a pretty impressive list of things you outlined you wanted to do. So I guess can you accomplish some or all of those things without increasing overall spending?

Two, Lew, would it be fair to say that Top Producer revenue growth in the first quarter was similar to that of the fourth quarter while was perhaps slightly better. So some color you can give us on Top Producer and Realtor.

Question three, Steve, are you considering what do with your cash as you’re strategically thinking about the business or basically are you going to wait for the auction rate situation to resolve before you think about what to do with the cash?

Steven Berkowitz

In terms of the list of things that I talked about here. My current belief, after spending a lot of time on the details of the business is that we can do what we need to do within the existing cost structure that we have. Again, I believe that part of the reorganization that I just finished was to accrete efficiencies and increase productivity, which we in turn can move back into the product lines of the business. Again, I think one of the most important things for us to do is move from what has been historically a very product line, business end to end, building of technology and solutions to more of a functional way of looking at it, which in turn I think will allow us to move from a linear processing environment to more of a parallel processing environment.

Lewis Belote

Jason, as to the revenue question, while we’re not giving specific percentages, sequentially both Top Producer and Realtor were down slightly in the quarter. Year-on-year, Realtor has been down for the past few quarters, primarily because of the one contract we’ve been mentioning. Top Producer had slight growth year-on-year, but as we say, it’s a tough market out there. We’re seeing some people actually want to continue their advertising spend that are cutting back a little bit. We’re hopeful that we can address that going forward and we have combined the management of the sales organizations between Top Producer and Realtor and we believe we’re going to drive some synergies from that.

The cash, we’re committed to getting auction rate security issue resolved as quickly as possible. As you know, we filed an arbitration claim. We don’t have any plans for the cash that we have available to us right now. Steve and I have had lots of discussions about our expense structure and I concur with his comments that we can accomplish what we want to within the current expense structure. There may be some shifts into product development out of some of the other expense structures, but there’s no objective of using up our cash balances at this point.

Jason Helfstein - Oppenheimer & Co.

Steve, do you consider yourself an organic builder or the opportunity avails itself to you, you know, build by acquiring or do you look at an asset and say – wow, this is really cheap. If I can buy it cheaper than I think it’s worth in two years, I want to do that. Just looking for some theoretic guidance on how you think about how you think about how companies should grow value.

Steven Berkowitz

The first one is I believe that we have to organically execute on our business and I believe that there’s a lot of opportunity to organically execute on our business. At the same time, I believe that the marketplace, if the right opportunity came to us and we were in a position where we were executing, then absolutely we would take a look at different things as they shape the marketplace or as opportunities come to us.

Right now, the most important thing the company can do to create value is to solidify its position and to execute against its core objectives, because I think once we do that, once we can start to prove that we can continue to execute than we have and actually execute better than we have in the past, and we can start to see some turnaround in the marketplace. Who knows when that will happen, but when you place those things in, we’ll continue to build on a solid foundation. Then all the other things, opportunities for acquisitions, opportunities to increase value, I think all stem from our ability to be a solid executing business in what is I think a very high value marketplace.


Your next question comes from Mitch Bartlett - Craig-Hallum Capital Group, LLC.

Mitch Bartlett - Craig-Hallum Capital Group, LLC

Maybe you could explain what the vision is around wanting to compile all the available information on all the homes out there, not just the ones that are listed for sale. What is that vision long-term? Do you want to know the history of the transactions, who lives there, about the local real estate market in which it’s playing? How are you going to do that? Is some component of that user generated data?

Steven Berkowitz

I think in every business, the most important thing you can do is emulate the actions that people do in what I call the bricks and mortar world and how people investigate and how people look at information.

So my belief is all of those things that you said. Our goal has to be in a sense give a consumer and a realtor the opportunity to take ownership of either the property or their neighborhood. That connection between the two to me is really important. The ability for us to actually give people a view of what their home is, what’s the history of that home, what did it look at, what did people have to say about it? And at the same time, I look at the relationships that informed professional applies to that value chain, which is with all of that data, there’s still an important part of the interpretation of it, understanding it, and helping actually put it in a form that makes sense and digestible.

If you look at a lot of the complex transactions that exist in the world today, whether it be in the financial business of investing. You have the e-trades of the world, you have people who just want to do their investment on their own, but I think what people realize over time is that information plus somebody who helps you interpret and inform that information and can actually add value by supplying their own information, you bring those two things together, you actually have a much more complete process.

The second piece that I think is really important is that the home ownership is not just an act anymore. I actually don’t believe it was an individual transactional act. It was actually something that becomes part of your life, part of the way you think. From a business point of view and both a consumers and marketers point of view, the fact that we can bring information to consumers before they’re in the market to buy a home, before they’re looking for some of the business services that associated with home ownership, I think that our ability to stay connected with them throughout the lifelong process gives us a much better chance to get more important to that part of the value chain.

So if you look at our products, Top Producer to stay connected, you know, give a realtor the opportunity to stay connected with their consumer for a longer period of time, the opportunity for us to help both sides of those people market to each other in that environment actually I think gives us a much longer relationship with our customer, which I think over time will increase the lifetime value of both.

Jason Helfstein - Oppenheimer & Co.

I was curious about what the tag to the first question would be your comment about the lack of integration of the technology platforms and whatnot. What would be the timeframe of this larger kind of data aggregation that you want to do?

You were talking about Top Producer and the integration with Realtor. What information is in Top Producer that would be beneficial for our consumer on Realtor?

Steven Berkowitz

We’re executing today on those data strategies that I talked about. We had a lot of things going on underneath the surface, but a lot of them haven’t happened necessarily in alignment. There’s a lot of important things that the organization has been doing over time, but they’ve been done in more of a business unit focus rather than as a platform focus. I think we should be able to execute against that as we move forward.

In terms of the relationship, I think really when I talk about this virtuous cycle, it’s the idea that as consumers find information about properties on the web and the fact that we have this application that realtors use to both keep contact and keep track of what they’re doing and actually give them more and more of the ability to actually enter their own information into their system and actually then use it as a way to create the marketing material that will then coincide with the consumers who are looking for properties on

So it really doesn’t come back so much about the fact that these come together in terms of the way you described. It’s really about the idea we can actually help the realtor be more informed about what is happening in their property. They can then add the value to that system and then we can help them create the marketing material and the marketing reach to these consumers we’re seeing on

So it’s the idea that we give both of these people the opportunity to close the loop in a way that there’s value added on both sides.


Your next question comes from Mark May - Needham & Co.

Mark May - Needham & Co.

Maybe if Steve could talk about the branding and marketing strategy. Steve, do you think there is any need to address the branding strategy and do you have any plans in terms of marketing efforts around the brands?

Steven Berkowitz

My belief on the internet is that the product is your brand, because it’s all engagement. Again, you can do a lot of things to drive people to the front door, but if you drive them to the front door and the product doesn’t work, ultimately the only way to get ROI is by having repeat business and engagement. And so for me, the first things that we need to do before we decide on or move forward with our brand strategy of Realtor and Move, which are changing, is the idea that we have to make sure the products execute against those brand value propositions. Most of the marketing that we will do will be marketing that will drive people up through the online mechanisms to our products and services.

So I think for us it really is about making sure that there’s a product proposition that meets the value proposition of the brand, that you have to have the product proposition first and the product deliver first.

So for me it’s going to be and I think for the company right now, it’s going to be about getting the products to deliver the value to our advertisers, to realtors, and to consumers, and then once we do that I think that gives us a tremendous opportunity to increase engagement, get more users to the site, add more value to our customers. And then once we do that, then the ability of what the brand strategy becomes and where we take that and how we market that more in the general media side of the world, comes secondary to that.

Mark May - Needham & Co.

This may also be a bit cart before the horse, but how well do you think the company has done in terms of key partnerships? Are there any major things you need to do or have identified our opportunities in terms of partnerships?

Steven Berkowitz

In terms of partnerships in the real estate industry, I mean I think we’ve done a good job there, because I think we understand the importance of the relationship of all the different parties in the value chain. So we spend a lot of time making sure that we are understanding the needs of both sides. We’re not coming at it from one or the other. It think that’s one of the challenges in some of these vertical market places on the web is that you need to come at it from the “and” word, consumers and your local customers and your national customers.

In terms of our ability to do partnerships in our own industry, I don’t think we’ve executed extremely well and I do believe that if we can accomplish a product where we are becoming one of the stronger destinations or continue to be one of the stronger destinations for real estate on the web, then our opportunities to partner across the board. We have, again, some very strong assets and the ability for us to sell at the local level to realtors. It’s something we have focused an internal way. We haven’t thought about it in terms of how we can do it, maybe do it for other people over time. The same thing with the way we deliver information.

So I think there’s a lot of potential in that way and I think our continued understanding of the relationship with the industry that we’re in and the fact that we’re extremely sensitive to it and understand it and understand the importance of the relationships that we have and that there has to be a value exchange on all sides, I think puts us in a good place.


Our next question comes from William Morrison - Thinkpanmure

William Morrison - Thinkpanmure

This is Rob on the call for Bill. Three quick questions. Going back to the issue of branding. Do you imagine these new product initiatives fitting under Realtor or the brand or both or potentially our brand new brand?

Then also, second question, if you are going to build that home value database, do you currently have everything you need from the MLS connections and the get-go property information database?

Then last one, if you’re able to give any commentary on entry quarter trends, either in terms of consumer interest in various sites or realtor activity.

Steven Berkowitz

I have no plans to launch a new brand and we’re going to put the products and services underneath the place where consumers can get to them. I think, again, one of the interesting parts about our business is we already have a fine home values product that you can get to off It’s not very well integrated. The UX, user experience, is not very good.

I want to be sure. To me, it’s a lot more than home values. I mean to me home values is I describe home values as kind of a vanity search on the web, very similar to what you would do with Google in terms of searching for your name or searching for somebody else’s name. I think it’s more of a singular occurrence and something that you want to look at your home in the context of a neighborhood or in the context of other things and whether those values are right or wrong they’re always subjective.

So to me, home value is a piece of the puzzle, but there’s a lot of information that’s available out there that has to be aggregated both from you creating your own information about your home to other things.

So to me, it’s going to be about how we can develop those relationships and what is available out there in public domain and what is available through relationships in which there needs to be a value exchange.

I’ll let Lew answer the question about the quarter trends.

Lewis Belote

Well we are not publishing the actual stats on growth by business unit other than we did not how far down the media business was and new homes. We don’t see the new homes business improving any time soon. The media business, frankly we think we can execute better in that vertical, which is why we have put all revenue under one person. So now Aral is responsible for all the revenue on the page, not just the realtor associated revenue. We’re hopeful there’ll be benefits from that and we consolidated the sales organizations between the management of sales organizations, between Top Producer and we’re expecting that down the road that will show some improvement.

Steven Berkowitz

Again, our success is going to be about what I call full page relevancy, which means it’s optimizing all of our products and services to meet the needs of consumer end and the people who generate the revenue, or the customers of the people who generate the revenue. So again, our ability to deliver sweeps of services to people in this category is something that I look forward to and actually see as a competitive differentiator. The ability for us to actually combine print campaigns with online campaigns for our realtor customers, some of the things we do in Top Producer, the ability to create mailers and stuff like that.

So there’s a lot of things we do that I’m still learning about, because they’re very interesting from an internet perspective, but they’re actually really interesting from what I call a vertical traditional perspective of how we can tie all these values together.


Thank you, sir. This concludes the Q&A session. I will turn the call back over to Mr. Steven Berkowitz for final remarks

Steven Berkowitz

Thank you very much, everyone, and I look forward to speaking to you again next quarter. So thanks.


This concludes today’s presentation. We thank you for joining, ladies and gentlemen. Have a good day.

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