EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

LOGO

FOR DISTRIBUTION

May 3, 2011

4:00 p.m. Eastern

Market Leader® Delivers 25% Growth in First Quarter Revenue

Projecting Strong Revenue Growth and Improved Adjusted EBITDA Throughout 2011

KIRKLAND, Wash. – May 3, 2011 – Market Leader, Inc. (NASDAQ: LEDR) today announced results for the quarter ended March 31, 2011.

 

   

Revenue of $7.2 million was up 25 percent over the first quarter of 2010 and six percent higher than last quarter. Revenue from software-as-a-service based products, now including ActiveRain, was 61 percent greater than a year ago.

 

   

Net loss of $4.3 million was consistent with the net loss of $4.3 million in the fourth quarter.

 

   

Adjusted EBITDA loss of $3.3 million compared to an adjusted EBITDA loss of $3.1 million in the fourth quarter, primarily reflecting increased personnel and technology costs to support a major product initiative.

“We expect to build upon our five consecutive quarters of growth with even stronger revenue growth and significantly improved Adjusted EBITDA for the rest of the year,” said Ian Morris, CEO of Market Leader.

Strong Momentum with High Value Brokerage Companies Continues

Market Leader signed nearly two hundred new broker customers during the first quarter. Additionally, the company continues to experience strong engagement among existing broker customers that drove increased software-as-a-service revenue in Q1.

Key Franchise Network Initiative Sees Strong Product Adoption

Market Leader announced on January 10 that it was selected by Keller Williams Realty International to provide a franchise-wide real estate marketing and business platform. The five year agreement with the nation’s second-largest real estate franchisor represents the largest deal in Market Leader’s history.

Market Leader fulfilled the first phase of the agreement in February by making its platform available to Keller Williams agents across the United States and Canada. In addition, Market Leader is offering a premium product that continues to attract the strong interest of Keller Williams agents. The sale of premium products to this large and growing user base offers the potential for upside beyond the revenue provided by the agreement.

Business Outlook

Following a 25 percent increase in first quarter revenue, Market Leader expects even stronger growth in every quarter of 2011.

 

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The company believes that this revenue growth, as well as an increasing shift to high-margin software-as-a-service revenue will lead to a lower adjusted EBITDA loss in the second quarter, and significantly diminished adjusted EBITDA losses in the second half of 2011.

Conference Call

The company will host a conference call and live Webcast to discuss first quarter results on Tuesday, May 3, 2011 at 4:30 p.m. Eastern time. To listen to the live conference call, please dial (719) 785-9445. A live Webcast of the call will be available from the Investor Relations section of the company’s Web site at http://www.investor.marketleader.com. An audio replay of the call will also be available to investors beginning on May 3 at 7:30 PM Eastern time and ending on May 7 at 7:30 PM Eastern time by dialing (719) 457-0820 and entering the passcode 1707823#.

Forward-Looking Statements

This release contains forward-looking statements relating to the company’s anticipated plans, products, services, and financial performance. The words “believe,” “expect,” “anticipate,” “intend” and similar expressions identify forward-looking statements, but their absence does not mean the statement is not forward-looking. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that could cause actual results to differ materially from those anticipated in the forward-looking statements. Factors that could affect the company’s actual results include its ability to retain and increase its customer base, to continue to grow revenues from the company’s software-as-a-service products, to continue to maintain current customer retention levels, to maintain conversion rates of customers acquired through promotional offers, to respond to competitive threats and real estate market conditions, to manage lead generation and other costs, to develop new products, and to expand into new lines of business. Please refer to the company’s most recent Form 10-K filed with the Securities and Exchange Commission for a more detailed description of these and other risks that could materially affect actual results. Given these risks and uncertainties, you should not place undue reliance on these forward-looking statements. The forward-looking statements are made as of today’s date and the company assumes no obligation to update any such statements to reflect events or circumstances after the date hereof.

Non-GAAP Measure

Adjusted EBITDA is a non-GAAP financial measure provided as a complement to results in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Adjusted EBITDA is not a substitute for measures determined in accordance with GAAP, and may not be comparable to Adjusted EBITDA as reported by other companies. Our use of the term “Adjusted EBITDA” refers to a financial measure defined as earnings or loss before net interest, income taxes, depreciation, amortization, equity in loss of an unconsolidated subsidiary, net loss attributable to non-controlling interest, and stock-based compensation. We believe Adjusted EBITDA to be relevant and useful information to our investors as this measure is an integral part of our internal management reporting and planning process and is the primary measure used by our management to evaluate operating performance. See below for a reconciliation of net loss, the most comparable GAAP measure, to Adjusted EBITDA.

 

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Market Leader, Inc.

NON-GAAP FINANCIAL MEASURE AND RECONCILIATION

(In thousands)

(unaudited)

 

     Three months ended  
     March 31, 2011     December 31, 2010     March 31, 2010  

Net loss attributable to Market Leader

   $ (4,344   $ (4,297   $ (3,449

Adjustments

      

Interest income and expenses, net

     (26     (35     (37

Net loss attributable to noncontrolling interest

     (140     (79  

Equity in loss of unconsolidated subsidiary

     —          —          136   

Depreciation and amortization of property and equipment

     611        593        664   

Amortization of acquired intangible assets

     262        334        479   

Stock-based compensation

     363        382        496   

Income tax expense

     3        3        3   
                        

Adjusted EBITDA

   $ (3,271   $ (3,099   $ (1,708
                        

About Market Leader, Inc.

Market Leader (NASDAQ: LEDR) provides real estate professionals with innovative marketing and technology solutions that enable them to grow and manage their business. Founded in 1999 by a second-generation real estate agent, Market Leader provides real estate agents, agent teams, and brokerage companies with subscription-based real estate marketing software and advertising products that enable them to generate a steady stream of prospects, as well as the tools and training they need to convert these prospects into clients.

With a long history of innovation, Market Leader pioneered online lead generation for real estate professionals a decade ago and today is the leading marketing partner to the real estate industry. The company also provides consumers with free access to the information and tools they need throughout the home buying and selling process, such as determining house values by address, and providing access to real estate listings, through its national consumer real estate sites. These websites enable Market Leader to provide its customers with access to millions of future home buyers and sellers while providing these consumers with free access to the information they seek throughout the home buying and selling process.

For more information on Market Leader visit www.MarketLeader.com.

Investor Contact:

Mark Lamb

Director of Investor Relations

Market Leader, Inc.

425.952.5801

markl@marketleader.com

Press Contact:

Matt Heinz

Heinz Marketing for Market Leader, Inc.

877.291.0006

matt@heinzmarketing.com

 

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Market Leader, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(unaudited)

 

     Three months ended March 31,  
     2011     2010  

Revenues

   $ 7,242      $ 5,796   

Expenses:

    

Sales and marketing (1)

     7,433        4,922   

Technology and product development (1)

     1,840        1,365   

General and administrative (1)

     1,603        1,713   

Depreciation and amortization of property and equipment

     611        664   

Amortization of acquired intangible assets

     262        479   
                

Total expenses

     11,749        9,143   
                

Loss from operations

     (4,507     (3,347

Equity in loss of unconsolidated subsidiary

     —          (136

Interest income, net

     26        37   
                

Loss before income tax expense

     (4,481     (3,446

Income tax expense

     3        3   
                

Net loss

     (4,484     (3,449

Net loss attributable to noncontrolling interest

     (140     —     
                

Net loss attributable to Market Leader

   $ (4,344   $ (3,449
                

Net loss per share attributable to Market Leader - basic and diluted:

   $ (0.17   $ (0.14
                

Number of shares used in per share calculations

     25,100        24,540   
                

(1)    Stock-based compensation is included in the expense line items above in the following amounts:

       

     2011     2010  

Sales and marketing

   $ 160      $ 132   

Technology and product development

     43        54   

General and administrative

     160        310   
                
   $ 363      $ 496   
                

 

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Market Leader, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(unaudited)

 

     March 31,
2011
    December 31,
2010
 

Assets

    

Current assets:

    

Cash and cash equivalents

   $ 18,815      $ 16,687   

Short-term investments

     22,198        28,628   

Trade accounts receivable, net of allowance of $26 and $12

     130        30   

Prepaid expenses and other current assets

     1,019        1,249   
                

Total current assets

     42,162        46,594   

Property and equipment, net of accumulated depreciation of $17,501 and $17,047

     3,925        3,856   

Intangible assets, net of accumulated amortization of $8,461 and $8,199

     2,634        2,326   

Goodwill

     1,732        954   
                

Total assets

   $ 50,453      $ 53,730   
                

Liabilities, Shareholders’ Equity and Noncontrolling Interest

    

Current liabilities:

    

Accounts payable

   $ 1,526      $ 1,157   

Accrued compensation and benefits

     1,878        1,809   

Accrued expenses and other current liabilities

     841        1,175   

Deferred rent, current portion

     214        214   

Deferred revenue

     671        517   
                

Total current liabilities

     5,130        4,872   

Deferred rent, less current portion

     493        527   
                

Total liabilities

     5,623        5,399   

Shareholders’ equity and noncontrolling interest:

    

Preferred stock, par value $0.001 per share, stated at amounts paid in; authorized 30,000,000 shares; none issued and outstanding

     —          —     

Common stock, par value $0.001 per share, stated at amounts paid in; authorized 120,000,000 shares; issued and outstanding 25,121,451 and 24,873,120 shares at March 31, 2011 and December 31, 2010, respectively

     72,872        71,889   

Accumulated deficit

     (29,054     (24,710
                

Total Market Leader, Inc. shareholders’ equity

     43,818        47,179   

Noncontrolling interest in subsidiary

     1,012        1,152   
                

Total shareholders’ equity

     44,830        48,331   
                

Total liabilities, shareholders’ equity and noncontrolling interest

   $ 50,453      $ 53,730   
                

 

 

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Market Leader, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(unaudited)

 

     Three months ended March 31,  
     2011     2010  

Cash flows from operating activities:

    

Net loss

   $ (4,484   $ (3,449

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

    

Depreciation and amortization of property and equipment

     611        664   

Amortization of acquired intangible assets

     262        479   

Stock-based compensation

     363        496   

Equity in loss of unconsolidated subsidiary

     —          136   

Changes in certain assets and liabilities

    

Trade accounts receivable

     (100     8   

Prepaid expenses and other current assets

     191        144   

Accounts payable

     376        128   

Accrued compensation and benefits

     69        (94

Accrued expenses and other current liabilities

     (334     (5

Deferred rent

     (34     (44

Deferred revenue

     154        (18
                

Net cash used in operating activities

     (2,926     (1,555
                

Cash flows from investing activities:

    

Purchases of short-term investments

     (4,958     (7,897

Sales of short-term investments

     11,397        9,800   

Purchases of property and equipment

     (630     (731

Cash paid for kwkly acquisition

     (750     —     
                

Net cash provided by investing activities

     5,059        1,172   
                

Cash flows from financing activities:

    

Payment of taxes due upon vesting of restricted stock

     (19     (174

Proceeds from exercises of stock options

     14        —     
                

Net cash used in financing activities

     (5     (174
                

Net increase (decrease) in cash and cash equivalents

     2,128        (557

Cash and cash equivalents at beginning of period

     16,687        25,434   

Cash and cash equivalents at end of period

   $ 18,815      $ 24,877   
                

 

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