rock boy

LoopNet's 3Q Results Sizzle Past Estimates

Good quarter across the board but read the transcript. Churn was above historical rates (they don't state it explicitly but indicate it was outside of the traditional 3-5% monthly churn rate). Mgmt indicated that Premium Subscribers would decline sequentially in Q4 due to price increases, higher churn and soft commercial real estate market. I wonder if the company is beginning to hit the ceiling on raising prices which you can only do for so long before you start losing subs (which they are now seeing). So you have a company that is being valued at ~25x 2008 EBITDA that is not seeing any subscriber growth in Q4 which is likely to carry into 2008. Put another way, the company is valued at about $9k per paying subscriber that generates $53 per month in revenue but has a half life (based on 5% monthly churn) of about 10 months (lifetime value of a customer is about $1500). I'd love to own this business personally because it is a cash cow but at no where near these valuations.