EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1



Investor Relations Contact:


Tom Ryan/Raphael Gross



Media Contact:


Marcus Gamo/Aimee Grove





ZipRealty Announces Second Quarter 2009 Results

Closed transactions were 6,017 in the second quarter, an increase of 28.5% from the year-earlier period

Revenue grew to $32.1 million in the second quarter, a 5.6% increase from the year-earlier period

Quarter-end cash, cash equivalents and short-term investments totaled $44.8 million, a decrease of $130,000 from March 31, 2009

EMERYVILLE, Calif. – August 4, 2009 – ZipRealty, Inc. (Nasdaq: ZIPR) today announced financial results for its second quarter ended June 30, 2009. For the second quarter, net revenues were $32.1 million, a 5.6% increase from the $30.4 million reported in the second quarter last year. The Company’s net loss for the period was $2.4 million, or $0.12 per share, compared to a net loss of $1.7 million, or $0.08 per share, in the year-ago period. The pro forma loss per share, excluding the effect of stock-based compensation, was $0.07 for the second quarter of 2009, compared to a $0.04 pro forma loss per share for the same period a year ago.

Pat Lashinsky, President and CEO of ZipRealty, commented, “Despite a challenging environment, ZipRealty remains focused on its growth plan: investing in our industry-leading website, growing our agent force, and gaining market share locally. In the second quarter, we again achieved strong year over year growth in transaction volume, and we saw a slight increase in average transaction revenue per close compared to the first quarter, caused by fewer non-standard transactions in our mix, falling inventories in most of our markets, and greater stability in median prices.”

Lashinsky continued, “We expect 2009 to remain challenging, as unemployment and the economy create near-term obstacles. Yet, we are focused on the long-term with a commitment to innovation in our website and services as we further strengthen the centralized technology we provide to our productive local agent force. We see opportunities to improve and leverage our unique relationships with consumers and local agents, and we are excited about a new marketing alliance with Bank of America that we believe will do just that. Finally, we believe our healthy balance sheet represents another competitive advantage for ZipRealty, and our cash balance is virtually flat from the first quarter of 2009 as we focus on moving toward profitability while continuing to invest for growth.”

The Company announced the following operating metrics for the second quarter of 2009:



The total value of real estate transactions closed increased to approximately $1.38 billion in the second quarter of 2009 versus $1.32 billion in the same period in 2008.



The total number of transactions closed was 6,017, compared to 4,681 in the second quarter last year.



Average net transaction revenue per close decreased approximately 17.4% to $5,269 from $6,381 in the second quarter of 2008.



At June 30, 2009, ZipRealty employed 3,172 ZipAgents, up from 2,559 agents at the end of the second quarter of 2008 and 2,989 agents at March 31, 2009.

Balance Sheet & Liquidity

As of June 30, 2009, the Company had approximately $44.8 million of cash, cash equivalents and short-term investments, with no long-term debt. Relative to March 31, 2009 ZipRealty’s cash, cash equivalents and short-term investments decreased by $130,000.

Option Exchange Program Results

On June 26, 2009 the Company announced the commencement of a stock option exchange program for stock options held by its current employees and officers. Under the terms of the exchange offer, participants were able to tender options that had significantly higher exercise prices than the current market value in exchange for a lesser number of newly granted options. The exercise price of the new options was $3.20 per share, which was the closing price of ZipRealty’s common stock on The NASDAQ Stock Market on July 24, 2009, the date the tender offer expired.

As a result of the completed program, the Company will recognize non-cash stock-based compensation cost of approximately $600,000 to $700,000 and will recognize it ratably over the three year vesting period of the new options. This non-cash compensation cost is factored into management’s outlook.

Use of Non-GAAP Financial Measures

To supplement its financial statements presented in accordance with Generally Accepted Accounting Principles (“GAAP”), ZipRealty uses a non-GAAP measure of net income (loss) it refers to as “pro forma net income (loss)” that excludes certain items including stock-based compensation, non-cash income taxes, and certain one-time items, if any. A reconciliation of this non-GAAP measure to GAAP is provided in the attached tables. These non-GAAP adjustments are provided to enhance the user’s overall understanding of ZipRealty’s current financial performance and its prospects for the future. ZipRealty believes these non-GAAP

results provide useful information to both management and investors by excluding certain items it believes are not indicative of its core operating results and thus presents a more meaningful basis for comparison between periods. Further, this non-GAAP method involves key information management uses for planning and forecasting its future operations. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP.


The Company’s expectations for the business are consistent with the outlook communicated in March 2009. The Company plans to limit expansion to 1 to 2 new markets, including Portland, Oregon which opened at the end of April 2009, while it focuses resources on optimizing the return on investment in all of its markets. Based on this plan and management’s current information, the Company anticipates the following:



Revenues for the full-year 2009 are expected to grow in the mid-single to low double digits over 2008 levels.



The Company expects the 2009 full-year GAAP net loss to be narrower than the 2008 net loss of $14.7 million excluding legal settlement.

Conference Call Details

A conference call to discuss second quarter financial results will be webcast live on Tuesday, August 4, 2009 at 5:00 p.m. Eastern Time on the investor relations section of ZipRealty’s website, www.ziprealty.com. Listeners may also access the call by dialing 888-262-8797. A replay of the call will also be available through August 11, 2009 at 888-203-1112 and pin number 2696644.

About ZipRealty, Inc.

ZipRealty is a full-service residential real estate brokerage firm and operator of a leading website and online services focused on residential real estate. The Company utilizes its user-friendly website and employee real estate agents to provide homebuyers and sellers with high-quality service and value. ZipRealty’s website provides users with access to comprehensive local Multiple Listing Services home listings data, as well as other relevant market and neighborhood information. The Company’s proprietary business management system and technology platform help to improve productivity and reduce costs, allowing the Company to pass on significant savings to consumers as permitted by law. Founded in 1999, the Company operates in 36 major markets in 22 states and the District of Columbia. For more information on ZipRealty, visit www.ziprealty.com or call 1-800-CALL-ZIP.

Cautionary Language

This release contains forward-looking statements within the meaning of the “safe harbor” provisions of the federal securities laws, including, without limitation, statements that we plan to invest and innovate in our website and services and to gain market share, we expect 2009 to remain challenging for the residential real estate industry given factors such as unemployment

and the health of the economy, and we see opportunities to improve and leverage relationships, such as our alliance with Bank of America. Forward-looking statements also include those appearing under the heading “Outlook,” including limiting expansion to 1 or 2 new markets, and anticipating certain ranges of revenue growth and narrowing of GAAP income (loss). The forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected. The risks and uncertainties include but are not limited to our history of losses and expectation of future losses, volatility in the real estate market, macroeconomic challenges, including a loss of consumer confidence and high unemployment, a continuing decline in the residential real estate market, including an increase in sales of distressed properties and a decline in the number and/or sales prices of homes, changes in interest rates, the ability of home buyers to obtain mortgage financings on acceptable terms, the impact of tight credit on the housing market, the impact of federal and/or state efforts designed to bolster the housing and credit markets, the Company’s ability to hire, retain and train qualified agents and key personnel, the Company’s access to MLS listings and leads from third parties that it does not control, changes in mortgage-related rules, regulations or practices that could make our rebate less attractive to consumers, legal challenges to the Company’s compensation plans, including expense policies, under federal and state wage and hour laws, the Company’s ability to manage growth in terms of personnel, expansion into new markets, information and control systems and legal restrictions, the Company’s ability to comply with often complex federal and state laws and regulations concerning real estate brokerage, other core services such as insurance, internet content, privacy and other matters as well as rules of real estate industry organizations, competition, management transitions, use by Internet service providers and personal computer users of more restrictive email filters, seasonality, geographic concentration, the newness and scalability of the Company’s business model, and other risk factors set forth in the Company’s Form 10-K for its recently completed fiscal year 2008. The forward-looking statements included in this release are made as of today’s date and, except as otherwise required by law, ZipRealty does not intend to update these forward-looking statements to reflect events or circumstances after the date hereof.

ZipRealty, Inc.

Consolidated Statements of Operations (unaudited)

(in thousands, except per share amounts and operating data)


     Three Months Ended
June 30,
    Six Months Ended
June 30,
     2009     2008     2009     2008  

Net transaction revenues

   $ 31,702      $ 29,870      $ 53,054      $ 49,991   

Referral and other revenues

     432        554        792        1,057   

Net revenues

     32,134        30,424        53,846        51,048   

Operating expenses


Cost of revenues

     18,909        17,156        32,743        29,498   

Product development

     2,344        2,124        4,656        4,270   

Sales and marketing

     10,237        10,526        20,181        20,554   

General and administrative

     3,278        2,938        6,757        6,620   


     —          —          —          625   

Total operating expenses

     34,768        32,744        64,337        61,567   

Loss from operations

     (2,634     (2,320     (10,491     (10,519

Other income (expense):


Interest income

     200        604        509        1,515   

Other income, net

     1        47        1        74   

Total other income (expense), net

     201        651        510        1,589   

Loss before income taxes

     (2,433     (1,669     (9,981     (8,930

Provision for income taxes

     —          —          —          —     

Net loss

   $ (2,433   $ (1,669   $ (9,981   $ (8,930

Net loss per share:


Basic and diluted

   $ (0.12   $ (0.08   $ (0.50   $ (0.41

Weighted average common shares outstanding:


Basic and diluted

     20,140        20,074        20,136        21,771   

Supplemental operating data (unaudited)


Number of ZipAgents at beginning of period

     2,989        2,285        2,816        2,180   

Number of ZipAgents at end of period

     3,172        2,559        3,172        2,559   

Total value of real estate transactions closed during period (in billions)

   $ 1.38      $ 1.32      $ 2.29      $ 2.21   

Number of transactions closed during period (1)

     6,017        4,681        10,188        7,802   

Average net revenue per transaction during period (2)

   $ 5,269      $ 6,381      $ 5,207      $ 6,407   


(1) The term “transaction” refers to each representation of a buyer or seller in a real estate purchase or sale.
(2) Average net revenue per transaction equals net transaction revenues divided by number of transactions with respect to each period.

Pro forma net income (loss) and pro forma net income (loss) per share

Pro forma net income (loss) and pro forma net income (loss) per share have been computed to give effect to excluding stock-based compensation expense, non-cash income taxes, and certain one-time items, if any. Management believes that pro forma net income (loss) for the three and six months ended June 30, 2009 and 2008 provides useful information to investors because it excludes the impact of items it believes are not indicative of its core operating results and thus presents a more consistent basis for comparison between periods.


     Three Months Ended
June 30,
    Six Months Ended
June 30,
     2009     2008     2009     2008  

GAAP net loss as reported

   $ (2,433   $ (1,669   $ (9,981   $ (8,930

Stock-based compensation

     1,086        877        2,079        1,886   

Non-cash income taxes

     —          —          —          —     

One-time item; litigation settlement

     —          —          —          625   

Pro forma net income (loss)

   $ (1,347   $ (792   $ (7,902   $ (6,419

Pro forma net income (loss) per share:


Basic and diluted

   $ (0.07   $ (0.04   $ (0.39   $ (0.29

Pro forma weighted average common shares outstanding:


Basic and diluted

     20,140        20,074        20,136        21,771   

ZipRealty, Inc.

Consolidated Balance Sheets (unaudited)

(in thousands)


     June 30,
    December 31,



Current assets:


Cash and cash equivalents

   $ 35,328      $ 18,500   

Short-term investments

     9,518        30,889   

Accounts receivable, net of allowance

     2,345        1,625   

Prepaid expenses and other current assets

     3,057        3,442   

Total current assets

     50,248        54,456   

Restricted cash

     110        130   

Property and equipment, net

     4,007        4,516   

Intangible assets, net

     74        89   

Other assets

     488        776   

Total assets

   $ 54,927      $ 59,967   

Liabilities and Stockholders’ Equity


Current liabilities:


Accounts payable

   $ 2,710      $ 2,169   

Accrued expenses and other current liabilities

     9,151        6,706   

Total current liabilities

     11,861        8,875   

Other long-term liabilities

     401        441   

Total liabilities

     12,262        9,316   

Stockholders’ equity:


Common stock: $0.001 par value; 23,833 and 23,709 shares issued and 20,386 and 20,273 outstanding, respectively

     24        24   

Additional paid-in capital

     150,475        148,502   

Common stock warrants

     4        4   

Accumulated other comprehensive income

     (194     (246

Accumulated deficit

     (90,464     (80,483

Treasury stock, at cost: 3,447 and 3,436 shares, respectively

     (17,180     (17,150

Total stockholders’ equity

     42,665        50,651   

Total liabilities and stockholders’ equity

   $ 54,927      $ 59,967   

ZipRealty, Inc.

Consolidated Statements of Cash Flows (unaudited)

(in thousands)


     Six Months Ended
June 30,
     2009     2008  

Cash flows from operating activities


Net loss

   $ (9,981   $ (8,930

Adjustments to reconcile net loss to net cash used in operating activities


Depreciation and amortization

     1,285        1,419   

Stock-based compensation expense

     2,079        1,886   

Provision for doubtful accounts

     —          13   

Amortization of short-term investment premium (discount)

     (17     (134

Amortization of intangible assets

     15        15   

Loss on disposal of property and equipment

     7        5   

Changes in operating assets and liabilities


Accounts receivable

     (720     (1,239

Prepaid expenses and other current assets

     385        550   

Other assets

     288        (15

Accounts payable

     541        1,127   

Accrued expenses and other current liabilities

     2,296        (1,774

Other long-term liabilities

     (40     (35

Net cash used in operating activities

     (3,862     (7,112

Cash flows from investing activities


Restricted cash

     20        (40

Purchases of short-term investments

     —          (111

Proceeds from sale and maturity of short-term investments

     21,440        34,429   

Purchases of property and equipment

     (746     (902

Net cash provided by investing activities

     20,714        33,376   

Cash flows from financing activities


Proceeds from stock option exercises

     6        15   

Purchase of treasury stock

     (30     (17,477

Net cash used in financing activities

     (24     (17,462

Net increase in cash and cash equivalents

     16,828        8,802   

Cash and cash equivalents at beginning of period

     18,500        7,818   

Cash and cash equivalents at end of period

   $ 35,328      $ 16,620