Current Report
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): 04/28/2009
Market Leader, Inc.
(Exact name of registrant as specified in its charter)
Commission File Number: 000-51032
| Washington | 91-1982679 | |
|
(State or other jurisdiction of incorporation) |
(IRS Employer Identification No.) |
11332 NE 122nd Way, Kirkland WA 98034
(Address of principal executive offices, including zip code)
425-952-5500
(Registrant s telephone number, including area code)
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 2.02. | Results of Operations and Financial Condition |
The information in this Form 8-K and the exhibit attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, unless expressly set for by specific reference in such filing.
On April 28, 2009, Market Leader, Inc. issued a press release announcing its financial results for the quarter ended March 31, 2009. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference. The press release should be read in conjunction with the note regarding forward-looking statements, which is included in the text of the press release.
| Item 9.01. | Financial Statements and Exhibits |
| 99.1 | Press release issued by Market Leader, Inc. dated April 28, 2009. |
2
Signature(s)
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Market Leader, Inc. | ||||||||
|
Date: April 28, 2009 |
By: | /s/ Jacqueline Davidson | ||||||
| Jacqueline Davidson | ||||||||
| Chief Financial Officer | ||||||||
3
Exhibit 99.1
For Release:
April 28, 2009
4:00 p.m. Eastern
Market Leader Announces First Quarter Results
KIRKLAND, Wash. – April 28, 2009 – Market Leader, Inc. (NASDAQ: LEDR) today announced results for the first quarter ended March 31, 2009.
Comparisons of Quarterly Results
| • |
Revenue was $6.5 million in the first quarter compared to $7.8 million in the fourth quarter of 2008. The decline in sequential quarter revenue reflected fewer customers and lower average revenue per customer. |
| • |
Net loss of $2.9 million compared to net loss of $8.8 million in the fourth quarter, which included $6.2 million of non-cash charges. |
| • |
Adjusted EBITDA was a loss of $0.9 million in the first quarter compared to Adjusted EBITDA loss of $0.5 million in the fourth quarter. |
| • |
Market Leader’s cash position remained strong with $57.1 million in cash, cash equivalents and short-term investments. |
Enterprise-level Partnership Announced
Market Leader recently announced a strategic partnership with Realty Executives International that has already led to dozens of RealtyGenerator™ trials by brokerage companies in their franchise network. Realty Executives is launching a comprehensive local lead generation strategy to drive buyers directly to its local brokers’ Web sites. To support this initiative, Realty Executives is providing its franchisees with co-marketing funds to help them promote their company and generate leads online. In addition, Realty Executives is also offering its franchisees Market Leader’s advanced lead generation and lead management solution — RealtyGenerator — to help them cultivate all of their consumer relationships and convert those relationships into closed sales. Realty Executives has nearly 15,000 sales associates and more than 700 franchises.
Lease Amendment Yields Savings
The Company continues to take a disciplined approach to expense management and to reducing non-strategic uses of cash. As a result of a recent lease renegotiation, Market Leader will maintain its offices in its existing location under an extended term while eliminating excess capacity and avoiding any fees for early lease termination. Starting in the second quarter, Market Leader expects $600,000 in annualized savings compared to the prior lease.
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Business Outlook
Market Leader believes that its Vision based products — RealtyGenerator, Team Leader and Growth Leader™ — drive stronger customer success and retention than traditional lead generation products, and should result in stronger retention. The Company expects that these products will account for the majority of its revenue by year-end. Market Leader also expects that the revenue declines seen in recent quarters will moderate significantly starting in the second half of this year.
“We are pleased with the success that customers are seeing with Growth Leader, and with all of our Vision based products. Our products are helping many of our real estate agent and broker customers grow their business despite very challenging market conditions,” said Market Leader CEO Ian Morris.
Cash Position Update
The Company believes that its strong cash position is a strategic asset. Liquidity and security of principal continue to be core to the Company’s investment policy. The Company invests in money market funds that hold high quality, short-term U. S. government obligations and repurchase agreements collateralized by U. S. government obligations, U. S. Treasury securities, and FDIC-insured certificates of deposit with terms of one year or less. Cash, cash equivalents and short-term investments totaled $57.1 million at the end of the first quarter.
Conference Call
Market Leader will host a conference call and live Webcast to discuss first quarter financial results on Tuesday, April 28, 2009 at 4:30 p.m. Eastern time. To listen to the live conference call, please dial 913-312-0855. A live webcast of the call will be available from the Investor Relations section of the company’s Web site at http://www.marketleader.com . An audio replay of the call will also be available to investors beginning at 7:30 p.m. ET on April 28 through 11:59 p.m. on April 29 by dialing 719-457-0820 and entering the passcode 2914103#.
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 respond to competitive threats and real estate market conditions, to manage lead generation and other costs, to develop new products, to expand into new lines of business, and to effectively re-brand and re-launch the Company. Please refer to the Company’s 2008 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.
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Non-GAAP Measures
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”). The term “Adjusted EBITDA” refers
to a financial measure that we define as earnings or loss before net interest, income taxes, depreciation, amortization, impairment of long-lived assets including goodwill impairment, equity in loss of unconsolidated subsidiary, stock-based
compensation and gain on sale of fixed assets. 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. 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. The components of
Adjusted EBITDA include the key revenue and expense items for which our operating managers are responsible and upon which we evaluate their performance, and we also use Adjusted EBITDA for planning purposes and in presentations to our Board of
Market Leader, Inc.
NON-GAAP FINANCIAL MEASURE AND RECONCILIATION
(In thousands)
(unaudited)
| Three months ended | ||||||||||||
| March 31, 2009 | December 31, 2008 | March 31, 2008 | ||||||||||
|
Net loss |
$ | (2,875 | ) | $ | (8,848 | ) | $ | (1,192 | ) | |||
|
Adjustments |
||||||||||||
|
Interest income and expenses, net |
(95 | ) | (128 | ) | (519 | ) | ||||||
|
Gain on sale of fixed assets |
— | — | (791 | ) | ||||||||
|
Impairment of goodwill and long-lived assets |
— | 4,883 | — | |||||||||
|
Impairment of and equity in loss of unconsolidated subsidiary |
94 | 1,461 | 151 | |||||||||
|
Depreciation and amortization of property and equipment |
803 | 1,032 | 959 | |||||||||
|
Amortization of acquired intangible assets |
482 | 454 | 492 | |||||||||
|
Stock-based compensation |
711 | 743 | 823 | |||||||||
|
Income tax expense (benefit) |
2 | (58 | ) | 2 | ||||||||
|
Adjusted EBITDA |
$ | (878 | ) | $ | (461 | ) | $ | (75 | ) | |||
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 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 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.
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For more information on Market Leader visit www.MarketLeader.com .
LEDR: FINANCIAL
Investor Contact:
Mark Lamb
Director of Investor Relations
Market Leader, Inc.
425.952.5801
markl@marketleader.com
Press Contact:
Hugh Siler
Siler & Company for Market Leader, Inc.
949.646.6966
hugh@silerpr.com
#FINANCIAL STATEMENTS FOLLOW#
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Market Leader, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(unaudited)
| Three months ended March 31, | ||||||||
| 2009 | 2008 | |||||||
|
Revenues |
$ | 6,529 | $ | 11,196 | ||||
|
Expenses: |
||||||||
|
Sales and marketing (1) |
4,742 | 7,430 | ||||||
|
Technology and product development (1) |
1,407 | 1,958 | ||||||
|
General and administrative (1) |
1,969 | 2,706 | ||||||
|
Gain on sale of fixed assets |
— | (791 | ) | |||||
|
Depreciation and amortization of property and equipment |
803 | 959 | ||||||
|
Amortization of acquired intangible assets |
482 | 492 | ||||||
|
Total expenses |
9,403 | 12,754 | ||||||
|
Loss from operations |
(2,874 | ) | (1,558 | ) | ||||
|
Equity in loss of unconsolidated subsidiary |
(94 | ) | (151 | ) | ||||
|
Interest income and expenses, net |
95 | 519 | ||||||
|
Loss before income tax expense |
(2,873 | ) | (1,190 | ) | ||||
|
Income tax expense |
2 | 2 | ||||||
|
Net loss |
$ | (2,875 | ) | $ | (1,192 | ) | ||
|
Net loss per share - basic and diluted: |
$ | (0.12 | ) | $ | (0.05 | ) | ||
|
Number of shares used in per share calculations |
24,057 | 24,523 | ||||||
| (1) | Stock-based compensation is included in the expense line items above in the following amounts: |
| 2009 | 2008 | |||||
|
Sales and marketing |
$ | 204 | $ | 153 | ||
|
Technology and product development |
83 | 70 | ||||
|
General and administrative |
424 | 600 | ||||
| $ | 711 | $ | 823 | |||
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Market Leader, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(unaudited)
|
March 31,
2009 |
December 31,
2008 |
|||||||
|
Assets |
||||||||
|
Current assets: |
||||||||
|
Cash and cash equivalents |
$ | 31,126 | $ | 47,668 | ||||
|
Short-term investments |
25,982 | 10,980 | ||||||
|
Trade accounts receivable, net of allowance of $26 and $29 |
49 | 79 | ||||||
|
Prepaid expenses and other current assets |
875 | 1,482 | ||||||
|
Total current assets |
58,032 | 60,209 | ||||||
|
Property and equipment, net of accumulated depreciation of $14,457 and $13,859 |
4,242 | 4,452 | ||||||
|
Acquired intangible assets, net of accumulated amortization of $4,987 and $4,506 |
3,697 | 4,179 | ||||||
|
Minority investment in unconsolidated subsidiary |
490 | 584 | ||||||
|
Total assets |
$ | 66,461 | $ | 69,424 | ||||
|
Liabilities and Shareholders’ Equity |
||||||||
|
Current liabilities: |
||||||||
|
Accounts payable |
$ | 715 | $ | 736 | ||||
|
Accrued compensation and benefits |
1,131 | 1,767 | ||||||
|
Accrued expenses and other current liabilities |
820 | 1,111 | ||||||
|
Deferred rent, current portion |
289 | 289 | ||||||
|
Deferred revenue |
470 | 374 | ||||||
|
Total current liabilities |
3,425 | 4,277 | ||||||
|
Deferred rent, less current portion |
343 | 303 | ||||||
|
Total liabilities |
3,768 | 4,580 | ||||||
|
Shareholders’ equity: |
||||||||
|
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 24,090,760 and 24,035,074 shares at March 31, 2009 and December 31, 2008, respectively |
68,624 | 67,900 | ||||||
|
Accumulated deficit |
(5,931 | ) | (3,056 | ) | ||||
|
Total shareholders’ equity |
62,693 | 64,844 | ||||||
|
Total liabilities and shareholders’ equity |
$ | 66,461 | $ | 69,424 | ||||
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Market Leader, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
| Three months ended March 31, | ||||||||
| 2009 | 2008 | |||||||
|
Cash flows from operating activities: |
||||||||
|
Net loss |
$ | (2,875 | ) | $ | (1,192 | ) | ||
|
Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
|
Depreciation and amortization of property and equipment |
803 | 959 | ||||||
|
Amortization of acquired intangible assets |
482 | 492 | ||||||
|
Stock-based compensation |
711 | 823 | ||||||
|
Gain on sale of fixed assets |
0 | (791 | ) | |||||
|
Equity in loss of unconsolidated subsidiary |
94 | 151 | ||||||
|
Changes in certain assets and liabilities |
||||||||
|
Trade accounts receivable |
30 | 3 | ||||||
|
Prepaid expenses and other current assets |
610 | 32 | ||||||
|
Other noncurrent assets |
— | 398 | ||||||
|
Accounts payable |
(49 | ) | (473 | ) | ||||
|
Accrued compensation and benefits |
(636 | ) | (222 | ) | ||||
|
Accrued expenses and other current liabilities |
(136 | ) | (205 | ) | ||||
|
Deferred rent |
40 | (122 | ) | |||||
|
Deferred revenue |
96 | 21 | ||||||
|
Net cash used in operating activities |
(830 | ) | (126 | ) | ||||
|
Cash flows from investing activities: |
||||||||
|
Purchases of short-term investments |
(14,987 | ) | — | |||||
|
Sales of short-term investments |
— | 27,400 | ||||||
|
Proceeds from sale of fixed assets |
— | 1,209 | ||||||
|
Purchases of property and equipment |
(529 | ) | (376 | ) | ||||
|
Payments related to the Realty Generator acquisition |
(155 | ) | (228 | ) | ||||
|
Net cash (used in) provided by investing activities |
(15,671 | ) | 28,005 | |||||
|
Cash flows from financing activities: |
||||||||
|
Payment of taxes due upon vesting of restricted stock |
(41 | ) | — | |||||
|
Purchase and retirement of common stock |
— | (342 | ) | |||||
|
Proceeds from exercises of stock options |
— | 26 | ||||||
|
Net cash used in financing activities |
(41 | ) | (316 | ) | ||||
|
Net (decrease) increase in cash and cash equivalents |
(16,542 | ) | 27,563 | |||||
|
Cash and cash equivalents at beginning of period |
47,668 | 35,450 | ||||||
|
Cash and cash equivalents at end of period |
$ | 31,126 | $ | 63,013 | ||||
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