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Executives

Pete Flint – Co-Founder & Chief Executive Officer

Sean Aggarwal – Chief Financial Officer

Ian Lee – Head of Investor Relations

Analysts

Andre Sequin – RBC Capital Markets

Ralph Schackart – William Blair

Lloyd Walmsley – Deutsche Bank

Douglas Anmouth – JP Morgan

Kerry Rice – Needham & Co.

Trulia (TRLA) Q3 2012 Earnings Call November 7, 2012 5:00 PM ET

Operator

Good day ladies and gentlemen, and thank you for standing by. Welcome to Trulia’s Q3 2012 Earnings Conference Call. (Operator instructions.) As a reminder this conference call is being recorded. I would now like to hand the call over to Mr. Ian Lee, Trulia’s Head of Investor Relations.

Ian Lee

Thank you, Operator. Good afternoon and welcome to Trulia’s Q3 2012 Earnings Call. Joining me today to talk about our Q3 results are Pete Flint, Trulia’s Chief Executive Officer, and Sean Aggarwal, our Chief Financial Officer.

Before we start this call I want to remind all of you that this presentation contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements generally relate to future events relative to our financial or operating performance.

Forward-looking statements in this presentation include but are not limited to statements related to our business and financial performance and expectations for future periods, our expectations regarding our continued focus on our current strategy, our expectations regarding macro trends in the market and expectations for our products. Our expectations and beliefs regarding these matters may not materialize and actual results in future periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected.

These risks include those set forth in the press release that we issued earlier today as well as are more fully described in our filings with the Securities and Exchange Commission. The forward-looking statements in this presentation are based on information available to us as of the date hereof and we disclaim any obligation to update any forward-looking statements except as required by law.

We also remind you that this call includes a discussion of GAAP and non-GAAP financial measures. The non-GAAP financial measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. A discussion of why we present non-GAAP financial measures and a reconciliation of the non-GAAP financial measures discussed in this call to the most directly comparable GAAP financial measures are included in our earnings press release that is available on our website.

This conference call is also being webcast and is available through the Investor Relations section of Trulia’s website. And now I’ll turn the call over to Pete.

Pete Flint

Welcome, and thank you all for joining us for our first quarterly earnings call as a public company. Before I begin, I’d like to say that our thoughts and best wishes are with all the people affected by Hurricane Sandy over the last week. We hope for a quick return to normal for everybody impacted by the disaster.

Today I’ll review some of the highlights from Q3 2012, recap our market opportunity, and also discuss the business strategies that are driving Trulia’s growth. Then I’ll turn the call over to Sean Aggarwal, our Chief Financial Officer, to review our financial performance in more detail.

Turning to our results, we achieved excellent growth in our core business in Q3 2012. The popularity of the Trulia platform continues to grow and we experienced record levels of traffic. We had an average of 24.9 million monthly visitors during the quarter, an increase of 50% year-over-year. We also achieved tremendous growth in our mobile audience, averaging mobile monthly unique visitors at 5.8 million for the quarter, an increase of 129% year-over-year. Roughly one-third of our traffic on weekends came from mobile devices.

Revenue for the quarter was $18.5 million, an increase of 76% over Q3 2011. Adjusted EBITDA was $301,000 or 2% of revenue compared with (-)$400,000 in the year-ago period. This marks our first quarter of positive adjusted EBITDA, a significant milestone for our company. Reach in as first measure of profitability is another marker post in the development of our business, and an indication of the operating leverage we expect to achieve at scale.

Next, as this is our first earnings call let me touch on the market opportunity that looms ahead for Trulia. When I first moved to the US for grad school in the early 2000’s, I needed to find a home. I was amazed by how difficult it was to find information about real estate on the internet. While there are plenty of home listings online there lacked a comprehensive consumer-centric site where you could find information about properties, deeper insights about the community, and agents to work with.

At the same time, I recognized that real estate professionals lacked an effective online platform to market themselves to consumers. Their audience had started migrating to the web, but the way that they marketed and managed their business was mostly offline and for the most part antiquated. And so Trulia was created.

Today we’re making a difference by bringing a simplicity to the complex task of finding a home, and we’re doing it to significant scale within an enormous industry with a differentiated approach that links busy agents with the most transaction-ready consumers using user-generated content and cutting-edge mobile tools. And we’re just getting started. For 2012, projected real estate marketing spend in the US is expected to be $24 billion, according to Borell & Associates. Today, about half of that spend is offline so there’s plenty of room to grow as more marketing dollars migrate online.

Next I’ll outline the five core strategies that are central to our plan to capitalize on this substantial market opportunity. I’ll also discuss some of the initiatives we’ve taken within each of those strategies this quarter. Our strategies include one, making transaction-ready consumers our focal point; two, driving engagement and competitive advantage through user-generated content; three, leading in mobile monetization; four, building our business zip code by zip code; and finally five, expanding our business into adjacent markets.

I’ll talk about each of these in more detail. First, our business focuses on transaction-ready consumers. By “transaction-ready,” we mean consumers who are ready to find a home in the near term. 76% of our consumers are ready to move within six months according to a survey we did earlier this year. Additionally, we believe our audience is largely unique to us, as approximately 55% of our audience did not visit any other competitor in September of this year, according to ComScore.

Today’s consumers want more than just listings and data – they want insights into neighborhoods, schools, properties and agents. We call this the “inside scoop.” Our focus on transaction-ready consumers attracts an audience that is highly sought after by real estate professionals, and in turn creates an attractive return on investment for our paying subscribers.

We are attracting transaction-ready consumers through our relentless focus on building the very best product. We begin with a comprehensive database of real estate listings sourced from brokers, franchisers and MLSes in every state across the country. But our focus is on delivering insights on top of that data to help consumers make informed real estate decisions.

Our Design and Engineering Teams are constantly adding new innovations. A new feature we introduced in Q3 was commute maps. Commute time can be a make or break factor for many people looking for a home. Our maps let you see how long your commute to work would be from all the potential properties for sale or rent that interest you. We also broadened our ability to capture the attention of more consumers across platforms. We’re building up success on iPhone, Android and Kindle, and just expanded our suite with a new Windows 8 app.

Our second strategy is driving engagement and competitive advantage through user-generated content, or UGC. UGC is a unique aspect of our business that attracts transaction-ready consumers and also provides significant exposure for professionals. UGC encompasses the knowledge of the Trulia community and includes Q&A discussions, blogs, agent recommendations and neighborhood ratings. As a reminder, we do not consider things like home edits to be a meaningful user contribution and therefore do not include those in our count of UGC.

Our vision is to take the offline conversations about real estate between consumers and agents, bring them online and make them better. UGC is a powerful tool that drives user engagement and monetization. According to our internal Omniture data, visitors who consume UGC spend almost 40% more time on our site and generate almost 70% more leads per visit.

Our database of UGC is growing at a rapid rate. In Q3 2012, we added 842,000 new pieces of UGC, bringing the total to 6 million cumulative contributions. In Q3, that equates to one new piece of UGC every ten seconds. To provide some context for the speed of our recent growth, when we first started our UGC database in 2007 it took us more than two years to accumulate about 800,000 pieces. We’re now growing our UGC database by more than that in just three months.

Our third strategy is mobile monetization. For both consumers and real estate professionals, mobile really matters. Consumers searching for home information on their mobile phones and tablets are typically highly engaged. They’re out looking at houses and open homes and they want access to detailed home and neighborhood information at all times. They also want to be able to connect to local real estate professionals to perform transactions.

Mobile is the fastest-growing area of our traffic, achieving year-over-year growth of almost 130% this quarter compared to the same period last year. So being able to reap the benefits of that growth is crucial. A significant portion of our engineering resources has been dedicated to mobile. The result is that our smartphone and tablet applications are amongst the highest rated in their categories.

Mobile is equally important to real estate professionals. They need to stay connected with their customers while they’re on the go. We facilitate this connectivity through applications like lightweight CRM tools and a check-in function that lets agents inform their clients when they’re visiting a house or open home. Having top-rated mobile products is great but it’s not enough. Monetizing mobile is a top priority for Trulia.

Given that our mobile consumer audience is likely to be transaction-ready, we believe they are particularly valuable to professionals. Agents are willing to pay more to reach a consumer standing in front of a home, particularly as our tools make it easy for consumers to call an agent with just one touch.

This has translated into a sizable opportunity to monetize our mobile platform. We offer the industry’s only standalone mobile subscription product for professionals and it has experienced tremendous take up rates since we launched it in May of this year. We’ve been able to price the mobile subscription product at approximately a 25% premium to the equivalent web-based subscription product.

In addition, our mobile subscription product enabled us to create new advertising inventory to sell in zip codes where our web-based inventory was sold out. In effect, mobile has not only provided us with a premium product but also increased the overall pool of inventory we’ve been able to sell.

Our strategy is to provide a comprehensive range of valuable products on a subscription basis to our customers. We launched the initial mobile subscription product to our existing base to provide them with the first opportunity to secure their ideal locations. And in Q3, we made the product available to all agents and offered additional subscription lengths.

Our fourth core strategy is building our business zip code by zip code. We’re achieving this by working to convert regular zip codes into what we call “high demand zips.” By that we mean a zip code where 100% of our subscription inventory is sold out and we have agents on a wait list who want to subscribe to our services as soon as inventory becomes available.

We have a repeatable, scalable playbook to grow the number of high demand zips. Through our hyper local consumer traffic driving initiatives, combined with targeted inside sales marketing activities, we’re able to foster consumer traffic growth and agent activity in specific markets and zip codes. When a tipping point is achieved zips become high demand. This is meaningful because subscribers in high demand zips can generate more revenue over a longer period of time compared with our overall subscriber base.

At the end of Q3 we had over 3000 high demand zip codes. There are about 31,000 zip codes with active listings in the US. So we have significant room to grow our pool of high demand zip codes.

Fifth, we will be expanding into adjacent markets in a measured and thoughtful way. In Q3 we launched the Trulia Mortgage Center on the web and with dedicated apps on iPhone and iPad to deliver the inside scoop on financing rates for home buyers and homeowners. Our primary focus is to develop a great experience first by helping consumers find the best financing deal, scale that engagement, and then monetize that experience later.

At launch, our Mortgage Center was powered by one mortgage provider. To lay the groundwork for future growth of our mortgage provider we are engaging with additional partners to expand the number of mortgage providers that consumers are able to access.

We’ll continue to grow our already very popular rental business heading into 2013. We believe we have the leading rental mobile apps in the category and we’re very excited about the opportunity ahead. We’ll also seek to grow internationally and in other areas, like home improvement. at the appropriate time in the coming years.

As we look forward to Q4 and 2013 we’ll continue to focus on these five core strategies to drive our growth. We’re committed to attracting even more transaction-ready consumers, growing our base of user-generated content, continuing our success in monetizing mobile, growing our high demand zip codes, and expanding into adjacent markets.

We built Trulia through a challenging real estate environment over the past seven years, during which we have successfully grown our business. While we are not dependent on a real estate recovery to grow, we believe we are well positioned to benefit as the real estate market in the US improves. With that I’ll pass it to Sean to discuss our financial performance in more detail.

Sean Aggarwal

Thanks, Pete. We are experiencing tremendous momentum in our business. This momentum led to record financial results in Q3. The leadership position we have built in mobile monetization is starting to pay off and our media business is performing strongly. These factors led to record revenues and the first quarter of adjusted EBITDA profitability, two quarters ahead of our expectations.

Today I will cover three items – an overview of key metrics, review of Q3 financial results, and Q4 guidance; key metrics first. The Trulia Management Team is committed to disclosing and discussing a robust set of consumer and agent metrics on a consistent basis. In the appendix of the presentation that accompanies this call you will find comprehensive data for each key metric that I will touch on today.

We focus on three key consumer metrics: total visitors, mobile visitors, and amount of user-generated content. As Pete mentioned, we had an average of 24.9 million monthly unique visitors during the quarter, an increase of 50% year-over-year. Mobile traffic growth remains exceptionally strong with mobile monthly unique visitors of 5.8 million for the quarter, an increase of 129 % year-over-year.

We spent virtually no discretionary marketing dollars during the quarter. Ours is a capital efficient approach, leveraging our leadership in product and engineering to build the very best products in the real estate category. This approach drives organic traffic to our site and virtually 100% of our traffic is free.

Another key customer metric is new contributions of user-generated content. During the quarter we had 842,000 new contributions, a 68% increase over the Q3 2011. We wrapped up the quarter with a total of 6 million user-generated contributions in our database, the single largest database of its kind anywhere and a significant competitive moat around our business.

On the agent side of our marketplace, we focus on two key metrics: number of subscribers and average revenue per user, or ARPU. At end of Q3 there were approximately 380,000 agents that were active on our site. We define an active agent as one that has created a Trulia account and has logged into that account at least once in the prior twelve months. This large pool of active agents is the primary target of our marketplace sales force.

We ended the quarter with approximately 22,800 paying subscribers, an increase of 1300 subscribers over the prior quarter. In Q3 the focus of our Marketplace Team was on selling our new mobile subscription product to existing subscribers versus acquiring new subscribers. Of the total 22,800 subscribers, approximately 3500 subscribers have already purchased a subscription to the mobile product. We expect to continue this focus on upselling existing subscribers versus new subscriber acquisition over the next two quarters.

The benefit of this strategy is evident in our ARPU numbers. ARPU in Q3 averaged $154, up 45% over the prior year. This marks the 11th consecutive quarter in which ARPU has increased year-over-year as well as sequentially. The increase in ARPU was a result of price increases as well as sales of the premium priced mobile subscription product.

The Trulia mobile subscription product is priced at a premium to our web subscription products, and in the Q3 our average selling price for the mobile subscription product was $175, approximately a 25% premium versus the selling price of web products.

Having covered key metrics, I will next turn to a review of Q3 financial results. Revenue for the quarter was $18.5 million, an increase of 76% over Q3 last year. Total revenue further breaks down into two categories: marketplace and media. Marketplace revenue, which is comprised primarily of revenue from our subscription products was $11.9 million for the quarter, a 91% increase year-over-year.

The marketplace is a subscription-based business model. The Marketplace Team sells subscriptions to real estate professionals and these are non-cancelable subscriptions, and cash is generally collected upfront. The subscription that the Team sells is recorded as deferred value on the balance sheet and recognized into revenue over the length of the subscription period, which is six months on average. Our subscription-based business model provides a recurring revenue stream and visibility into future periods.

Media, which includes sales of display ads to national advertisers, also performed strongly with revenues of $6.7 million up 55% year-over-year. Solid execution and rapid growth in our unique visitors contributed to the success of the media business. As the real estate market makes a recovery back to normal levels, we are well positioned to benefit from the uptick in marketing spend. In Q3 we experienced a significant increase in display ad spend from homebuilders that chose Trulia to get in front of our transaction-ready consumers.

I will next discuss earnings, and then walk down the P&L, commenting briefly on each P&L line item. Adjusted EBITDA was $301,000 or 2% of revenue, compared with (-)$400,000 in the year-ago period. This marked Trulia’s first quarter of positive adjusted EBITDA. The top line strength in our marketplace and media categories enabled us to drive significant operating leverage, particularly on the sales and marketing line. This first quarter of adjusted EBITDA profitability is an early indication of the long-term profit potential of our business model.

On a GAAP basis, net loss for the quarter was $1.7 million or $0.19 per share on a basic and diluted basis. In the year-ago period, net loss was $1.5 million or $0.22 per share on a basic and diluted basis. Net loss in Q3 was a sequential improvement from the $3.4 million net loss recorded in Q2 of this year.

Cost of revenue for the quarter was $2.6 million or 14% of revenue compared with $1.6 million or 16% of revenue in Q3 of last year. Sales and marketing expense were $8.4 million in Q3 or 46% of revenue compared with $5 million or 48% of revenue in the prior-year period. The increase in sales and marketing dollars was mainly driven by the continued investment in our sales platform and build out of our inside sales force, particularly with the expansion of our new facility in Denver. Sales and marketing spend as a percent of revenue was lower than prior year and significantly lower than Q2 of this year.

Q3 technology and development costs were $5.2 million or 28% of revenues compared with $3.6 million or 34% of revenue in the same period last year. We continue to build on our strength in this area and bring onboard the very best engineering talent within the real estate category. This investment in product and engineering headcount was more than offset by the top line leverage.

G&A expenses were $3.6 million in Q3 or 20% of revenue compared with $1.7 million or 16% of revenue in the prior-year period. The increase was driven by IPO and public company-related expenses.

Having covered the P&L let me turn next to the balance sheet. We finished the quarter with approximately $102 million of cash and equivalents in short-term investments. This was driven primarily by net proceeds of $89 million we received in our initial public offering in September.

Deferred revenue stood at $13.2 million compared with $4.8 million in the year-ago period. The increase in deferred revenue was driven by the increase in length of average subscription period as was the success of our mobile subscription product, which we started selling in late May. Total debt exiting the quarter was just under $10 million.

Let me close by providing guidance for Q4 performance. We expect the strong momentum in our business to continue into Q4 and based on these strong trends, we now expect revenue outlook for Q4 to be in the range of $18.8 million to $19.2 million. This represents a 62% year-over-year growth at the midpoint of the range. And we expect adjusted EBITDA to be in the range of $400,000 to $600,000 or 2% to 3% of revenue.

I’ll now pass it back to Pete for some final comments before we move to Q&A.

Pete Flint

Thanks, Sean. It’s been a rewarding journey over the past seven years and I suspect our best days are very much ahead of us. A major reason for that is the amazing culture and people we have at Trulia. This year we’ve been recognized as one of the best places to work by the San Francisco Business Times and the Denver Post, the two cities where most of our employees are based. I’ve been extremely fortunate to come to the office every day and work with smart, passionate and innovative colleagues.

I’d like to thank everyone at Trulia for their hard work, dedication, and enthusiasm. We would not be where we are today and would have not achieved a successful IPO in September without you. We look forward to the many future contributions from our Trulia team. With that, Operator, I’d like to open the call up for questions.

Question-and-Answer Session

Operator

(Operator instructions.) Your first question comes from the line of Andre Sequin of RBC Capital Markets. Please proceed.

Andre Sequin – RBC Capital Markets

Thanks for taking my question and terrific quarter, guys. Now clearly your guidance already reflects part of my question here, but I was wondering if you saw any linearity in the quarter that you can talk about, with the beat obviously coming from the display side? Is this an acceleration you were seeing during the quarter, and obviously has that kept going into Q4? And then on the advertising side you’ve mentioned a number of times that you really haven’t spent a lot on discretionary advertising. Would you ever consider a more extensive advertising push in order to build your user numbers? Thanks.

Pete Flint

Let me take the advertising question and then I’ll pass it to Sean to talk a little more about Q4 and guidance in the media business. So as we’ve shared with you, the focus of the company is a product engineering culture. We’re spending on hiring engineers and building the very best product in the country, and that’s driving the organic growth rates. And it’s our expectation that that will continue.

We’re very performance-orientated and we’re trying lots and lots of different marketing initiatives at small scale, and we found that the investment in product offers a superior return investment against paid media.

Sean Aggarwal

And Andre, I’ll comment on your questions with regards to guidance. There are two strong trends that we were seeing in Q3 that drove the strong financial performance. One is the success we’re having with our mobile subscription product and as I mentioned already, 3500 subscribers have signed up with this product at a premium to the web. And that’s driving incremental life, incremental revenue, and we expect that trend to continue into Q4.

The second strong trend we saw was in our media business, and strong execution as well as a benefit from the recovering real estate market. And as we look into our Q4, a little less visibility on the media side. It’s a strong quarter for media in general, however seasonally Q4 is one of the weaker quarters for the overall real estate industry. So given sort of the puts and calls there, there’s a little less visibility into media trends as we go into Q4. So those factors are taken into account in our guidance for Q4.

Andre Sequin – RBC Capital Markets

Great, thank you, and congratulations again.

Sean Aggarwal

Thank you.

Operator

Your next question comes from the line of Ralph Schackart from William Blair. Please proceed.

Ralph Schackart – William Blair

Good afternoon. First question, I wasn’t sure if it was Peter or Sean that made the comment but there was some reference to focusing on mobile upsell versus sort of aging growth going forward. I’m just curious as to whether I understood that correctly, and B.) if you can just put a little more color on that please?

Sean Aggarwal

Ralph, that’s right. So the context there is as you know we launched this new mobile subscription product in late May and it’s the first and only one of its kind in the industry. We’re very excited to see very good results, and as a matter of operational focus we have focused our inside sales team to sell this product largely in our high demand zip codes where web inventory sold out, agents are on the waiting list, there is tremendous pent-up demand. We’ve focused the efforts of the sales team in those markets on our existing subscribers; and less of a focus in the last four or five months therefore on acquiring new subscribers.

And as we sort of double down on this mobile product and continue to make it successful, that focus on existing subscribers will continue this quarter and a little bit into Q1; and once we feel like we’re at a good point with the attach rate and selling rate of the mobile product we’ll once again shift focus to new subscriber acquisition.

Ralph Schackart – William Blair

Okay great, one more if I could: the mobile product now, if I’m understanding it correctly, is it available in all zips beyond just the high demand?

Pete Flint

Yeah, that’s right. So when we initially launched the mobile app product in Q2 we made it only available to existing customers, and then in Q3 we expanded it to all potential customers. So we enabled our existing customers; we gave them the first opportunity to have access to that [inventory] and now we’ve opened up to everyone. So specifically to your question, we’ve made it available from the onset – it was available to all zip codes but we segmented it by customer.

Ralph Schackart – William Blair

Okay, thank you.

Operator

Your next question comes from the line of Lloyd Walmsley of Deutsche Bank. Please proceed.

Lloyd Walmsley – Deutsche Bank

Great, thanks. I was wondering if you can just comment, following up on Ralph’s question on what you’re seeing in terms of the TMA product sales and pricing premium to desktop as you expand into more markets and then as you sell on a six-month basis? Are you seeing that price premium hold up? And then just curious as a follow-up to that, are you seeing any signs that people are funding their purchases of TMA by cutting back a little bit in the core and just moving dollars, cannibalizing a little bit? Or are you still seeing no signs of cannibalization?

Pete Flint

So Lloyd, let me just share a little bit of color and then Sean will share some of the specific ARPU questions. So firstly we’re not seeing any cannibalization, so we’re seeing agents who are seeing success with the web-based product buying our mobile product largely in addition rather than substituting; and we’re seeing that in the over ARPU growth that we’re seeing.

And just a little bit more color on our strategy there: so our view is that the profit and revenue maximizing opportunity is to segment the potential customers by offering multiple different products, separating out with the mobile. We believe that this is the revenue and profit maximizing opportunity, so that’s our strategy while we’re giving the opportunity for customers to buy one product or another product. And we’re seeing that they’re in fact purchasing typically both.

Sean Aggarwal

And Lloyd, I’ll comment on the ARPU for the mobile product that we’re seeing. As you know, at launch we priced the mobile product at a premium to the web product, approximately a 25% premium. And what we’ve seen as we’ve expanded the mobile product to more customers, to more markets, that premium is very much holding. So at the end of Q3 we continued to sell the mobile product at a 25% premium to web even though the price of both increased versus Q2. So our overall ARPU as you can see from the numbers was up roughly 5%, 6% sequentially and up 45% year-on-year, so the pricing of both web and TMA went up but the relative price difference between those two retained at about a 25% premium in favor of TMA.

Lloyd Walmsley – Deutsche Bank

Great, thank you.

Operator

Your next question comes from the line of Douglas Anmuth of JP Morgan. Please proceed.

Douglas Anmouth – JP Morgan

Great, thanks for taking the question. I just wanted to ask a few things. First, just following up on the adoption of products, can you give us some clarity just on the most recent numbers in terms of percentage product uptake – meaning those agents that are buying just one product, those buying two and three perhaps? Any color there would be good, and I was also hoping you can talk through how you see the market opportunity in high demand zip codes. If we think about the 3000 that are high demand now, where you think that number can be ultimately in up to 30,000 plus zips – what’s the right number that we should be looking at in terms of the market opportunity? And then also in the recent RE/Max deal can you give us some color on how that will work, what the benefits are to you and anything around the economics there? Thanks.

Pete Flint

Yes, I’ll touch on the questions in reverse order. So just following up on the RE/Max Resorts, we announced yesterday a close partnership and particularly an advertising partnership with RE/Max Resorts in Minnesota. So that’s a very large RE/Max brokerage. On a national level, the total potential revenue is quite small and so is the nature of the brokerage industry, that a large number of sizable regional players don’t have national scale.

And we have relationships with many, many large brokerages all across the US, and specifically the nature of this is we work with the broker to offer elements of our product suite to that broker and their agents. It is better for us because it’s more efficient to sell to the broker but it doesn’t exclude the opportunity for us to sell directly to those agents as well. So it’s an opportunity for us to get closer in that market and generate revenue – get closer to those agents in that market and generate revenue in that market.

Secondly, just to talk about your question related to high demand zip codes. We said we had around 3000 zip codes that are in high demand. Total housing stock exists in 31,000 zip codes in the US, although our focus is 16,000 zip codes which represents 95% of the total housing stock. And for TMA, we expect it to perform – our truly mobile advertising product – we expect that to perform in a similar way to the web product in the sense that we have achieved scale in that market, competitive factors kick in.

The product itself becomes more desirable; consequently the ARPU and the renewal rates improve in high demand zip codes. And so we feel comfortable in early indications that the mobile product will perform in a similar way to the web product, and we’re excited as Sean said primarily to fill this into our existing subscriber base in the near term.

Sean Aggarwal

And Doug, in terms of number of customers with different subscriptions, here are some directional numbers on that: approximately 40% of the customers have one product only. Approximately 45% of the customers have two products, and 15% of the customers have three products. And that third segment, 15% of the customers with three products is obviously a function of us having introduced the new mobile product in May and largely seeing existing subscribers that already had a subscription to our Pro product and our web PLA product in addition signing up for the mobile product. So that’s the breakdown there.

Douglas Anmouth – JP Morgan

Got it, okay. Thanks guys.

Operator

(Operator instructions.) Your next question comes from the line of Kerry Rice with Needham &Co. Please proceed.

Kerry Rice – Needham & Co.

Thanks a lot. I kind of wanted to think a little bit higher or bigger picture of the impacts on the business. Maybe first could you talk a little bit about Hurricane Sandy and maybe how that might impact business East Coast if any? And then on your mortgage business, you kind of highlighted that you’re going to get more partners in the Mortgage Center. I know that the current partner announced was acquired the other day, and can you talk a little bit on how that will impact if at all the kind of ramping of that business? And then the final question is you talked about adjacent markets, but could you talk about maybe holes that you might want to fill or complimentary businesses that you might want to tuck into kind of your core businesses versus expanding adjacently?

Pete Flint

Sure. So the first question on Hurricane Sandy, so firstly we’d like to send our thoughts and wishes to all those affected by the Hurricane. Overall we haven’t seen any impact of it in our metrics in Q4. Obviously we have a lot of usage and there’s a lot of real estate marketing in the Northeast, but we’re a national company and so we haven’t seen any impact. We’re watching the metric closely but we’re certainly not affected at this point.

With regard to the Mortgage Center, towards the end of Q3 we launched the Trulia Mortgage Center and as I remarked in the prepared comments, the approach from the beginning is to create liquidity and scale in that marketplace. And we’re doing that on the consumer side by optimizing experience and then promoting it in the appropriate places on our site. We’re very early on but we’re learning a lot and figuring out what are the right touch points to optimize the revenue opportunity on our website.

Secondly we’re building scale on the mortgage provider side of the business, and so we’re in dialogs with multiple partners. We launched with one partner for simplicity’s sake but it’s our intention since the beginning to work with multiple partners to add liquidity, and overall our focus is not to monetize the service in the near term. So while our provider was required we’re not monetizing experience so there’s no revenue impact from that. And as we think about in 2013, it’s our expectation to add multiple providers into the platform.

So we’re excited about mortgage but we’re very early on in terms of our evolution as we focus on scaling and then monetizing, just like we’ve done with the for sale part of our business. And then the last question around agent talk and then building out the suite of services we provide to both consumers and professionals, we obviously just completed the initial public offering.

We are delighted with our organic growth in the business. We’re fortunate to have a world-class engineering team and access to an enormous pool of talent here in Silicon Valley. So as Sean indicated we’re continuing to hire at our development center in San Francisco, and obviously we’re mindful and thinking through about inorganic roots – but we’ll be thinking about that in a thoughtful and prudent manner. We’re delighted with the [apps] we’ve got today. As we shared, we’ve got some very innovative in-house services like agent check-ins, agent mobile apps, agent CRM and we’ll obviously review that in the future as well.

Kerry Rice – Needham & Co.

Thank you.

Operator

At this time there are no further questions in the queue. I would like to turn the conference back over to Mr. Pete Flint for closing remarks. Please proceed, sir.

Pete Flint

Great, thank you everyone for joining us today for our first earnings call as a public company. We’re excited about the tremendous momentum in the business, leadership in mobile optimization and operating leverage. We look forward to keeping you up to date with our progress. Operator, you may now close the call.

Operator

Thank you for your participation in today’s conference. This concludes the presentation. You may now disconnect. Have a wonderful day.

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