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): 08/04/2009
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, Suite 200, 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 August 4, 2009, Market Leader, Inc. issued a press release announcing its financial results for the quarter ended June 30, 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 August 4, 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: August 4, 2009 | By: | /s/ Jacqueline Davidson | ||||
| Jacqueline Davidson | ||||||
| Chief Financial Officer | ||||||
3
For Release
August 4, 2009
4:00 p.m. Eastern
Market Leader ® Announces Second Quarter Results
KIRKLAND, Wash. – August 4, 2009 – Market Leader, Inc. (NASDAQ: LEDR) today announced results for the second quarter ended June 30, 2009.
Comparisons of Quarterly Results
| • |
Revenue was $5.9 million in the second quarter compared to $6.5 million in the first quarter, reflecting a sequential quarter decline in the customer count that was more moderate than in the first quarter. Revenue from the company’s Vision products increased 40 percent to $2.1 million in the second quarter compared to $1.5 million in the first. |
| • |
Net loss of $3.0 million in the second quarter compared to net loss of $2.9 million in the first quarter. |
| • |
Adjusted EBITDA was a loss of $1.2 million in the second quarter compared to an Adjusted EBITDA loss of $0.9 million in the first quarter. |
| • |
Market Leader’s cash position remained strong with $55.2 million in cash, cash equivalents and short-term investments. |
| • |
Customer retention improved for the second consecutive quarter. |
“Market Leader achieved a record high level of customer retention in the second quarter, demonstrating the important role our products play in the lives of our real estate professional customers. We are proud that our products are helping so many Market Leader customers thrive despite a challenging real estate market,” said CEO Ian Morris.
Vision Product Update
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. These products accounted for more than a third of the Company’s second quarter revenue and the Company continues to expect that they will represent a majority of revenue by year-end.
Market Leader has now signed more than one hundred RealtyGenerator agreements with brokerage companies nationwide as a result of its marketing partnership with Realty Executives International that commenced in April 2009. Early feedback from these customers has been positive with many customers already reporting significant new business from their use of the RealtyGenerator system.
Page 1 of 7
Market Leader’s improved customer retention rate is being driven by both the success that customers are seeing with the company’s Vision products as well as stronger retention rates from the thousands of customers who have built their business around the Company’s JustListed ® and HouseValues ® products. About half of all Market Leader customers have been using the Company’s products for two years or longer, and these core customers are an important factor in the strong retention rates seen Company wide.
This progress has further strengthened Market Leader’s previously stated expectation that the sequential quarter revenue declines seen in recent quarters will moderate significantly in the third quarter.
Market Remains Challenging
While existing home sales improved in the second quarter compared to the first quarter level, research from REAL Trends, Inc. shows that real estate commissions declined once again in the second quarter. Market Leader expects real estate professionals to continue to remain cautious regarding new marketing expenditures as they recover from the industry slowdown.
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 $55.2 million at the end of the second quarter.
Conference Call
Market Leader will host a conference call and live Webcast to discuss second quarter financial results on Tuesday, August 4, 2009 at 4:30 p.m. Eastern Time. To listen to the live conference call, please dial 913-312-0869. 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 6:30 p.m. Central Time on August 4 through 11:59 p.m. Central Time on August 5 by dialing 719-457-0820 and entering the passcode 2249478#.
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
Page 2 of 7
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 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 Directors. See below for a reconciliation of net loss, the most comparable GAAP measure, to Adjusted EBITDA.
Market Leader, Inc.
NON-GAAP FINANCIAL MEASURE AND RECONCILIATION
(In thousands)
(unaudited)
| Three months ended | ||||||||||||
|
June 30,
2009 |
March 31,
2009 |
June 30,
2008 |
||||||||||
|
Net loss |
$ | (3,015 | ) | $ | (2,875 | ) | $ | (1,271 | ) | |||
|
Adjustments |
||||||||||||
|
Interest income and expense, net |
(59 | ) | (95 | ) | (289 | ) | ||||||
|
Impairment of and equity in loss of investee |
61 | 94 | 185 | |||||||||
|
Depreciation and amortization of property and equipment |
780 | 803 | 1,015 | |||||||||
|
Amortization of acquired intangible assets |
480 | 482 | 492 | |||||||||
|
Stock-based compensation |
535 | 711 | 745 | |||||||||
|
Income tax expense |
2 | 2 | 34 | |||||||||
|
Adjusted EBITDA |
$ | (1,216 | ) | $ | (878 | ) | $ | 911 | ||||
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
Page 3 of 7
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 .
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#
Page 4 of 7
Market Leader, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(unaudited)
|
Three months ended
June 30, |
Six months ended
June 30, |
|||||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||||
|
Revenues |
$ | 5,947 | $ | 10,131 | $ | 12,476 | $ | 21,327 | ||||||||
|
Expenses: |
||||||||||||||||
|
Sales and marketing (1) |
4,676 | 6,242 | 9,418 | 13,672 | ||||||||||||
|
Technology and product development (1) |
1,278 | 1,491 | 2,685 | 3,449 | ||||||||||||
|
General and administrative (1) |
1,744 | 2,232 | 3,713 | 4,938 | ||||||||||||
|
Gain on sale of fixed assets |
— | — | — | (791 | ) | |||||||||||
|
Depreciation and amortization of property and equipment |
780 | 1,015 | 1,583 | 1,974 | ||||||||||||
|
Amortization of acquired intangible assets |
480 | 492 | 962 | 984 | ||||||||||||
|
Total expenses |
8,958 | 11,472 | 18,361 | 24,226 | ||||||||||||
|
Loss from operations |
(3,011 | ) | (1,341 | ) | (5,885 | ) | (2,899 | ) | ||||||||
|
Equity in loss of investee |
(61 | ) | (185 | ) | (155 | ) | (336 | ) | ||||||||
|
Interest income and expense, net |
59 | 289 | 154 | 808 | ||||||||||||
|
Loss before income tax expense |
(3,013 | ) | (1,237 | ) | (5,886 | ) | (2,427 | ) | ||||||||
|
Income tax expense |
2 | 34 | 4 | 36 | ||||||||||||
|
Net loss |
$ | (3,015 | ) | $ | (1,271 | ) | $ | (5,890 | ) | $ | (2,463 | ) | ||||
|
Net loss per share—basic and diluted: |
$ | (0.13 | ) | $ | (0.05 | ) | $ | (0.24 | ) | $ | (0.10 | ) | ||||
|
Number of shares used in per share calculations |
24,112 | 24,235 | 24,085 | 24,379 | ||||||||||||
| (1) | Stock-based compensation is included in the expense line items above in the following amounts: |
| 2009 | 2008 | 2009 | 2008 | |||||||||||||
|
Sales and marketing |
$ | 184 | $ | 225 | $ | 388 | $ | 378 | ||||||||
|
Technology and product development |
(50 | ) | 8 | 33 | 78 | |||||||||||
|
General and administrative |
401 | 512 | 825 | 1,112 | ||||||||||||
| $ | 535 | $ | 745 | $ | 1,246 | $ | 1,568 | |||||||||
Page 5 of 7
Market Leader, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(unaudited)
|
June 30,
2009 |
December 31,
2008 |
|||||||
|
Assets |
||||||||
|
Current assets: |
||||||||
|
Cash and cash equivalents |
$ | 34,220 | $ | 47,668 | ||||
|
Short-term investments |
20,991 | 10,980 | ||||||
|
Trade accounts receivable, net of allowance of $30 and $29 |
56 | 79 | ||||||
|
Prepaid expenses and other current assets |
1,277 | 1,482 | ||||||
|
Total current assets |
56,544 | 60,209 | ||||||
|
Property and equipment, net of accumulated depreciation of $13,202 and $13,859 |
4,517 | 4,452 | ||||||
|
Acquired intangible assets, net of accumulated amortization of $5,468 and $4,506 |
3,224 | 4,179 | ||||||
|
Minority investment in investee |
429 | 584 | ||||||
|
Total assets |
$ | 64,714 | $ | 69,424 | ||||
|
Liabilities and Shareholders’ Equity |
||||||||
|
Current liabilities: |
||||||||
|
Accounts payable |
$ | 744 | $ | 736 | ||||
|
Accrued compensation and benefits |
1,113 | 1,767 | ||||||
|
Accrued expenses and other current liabilities |
961 | 1,111 | ||||||
|
Deferred rent, current portion |
214 | 289 | ||||||
|
Deferred revenue |
544 | 374 | ||||||
|
Total current liabilities |
3,576 | 4,277 | ||||||
|
Deferred rent, less current portion |
841 | 303 | ||||||
|
Total liabilities |
4,417 | 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 24,120,760 and 24,035,074 shares at June 30, 2009 and December 31, 2008, respectively |
69,243 | 67,900 | ||||||
|
Accumulated deficit |
(8,946 | ) | (3,056 | ) | ||||
|
Total shareholders’ equity |
60,297 | 64,844 | ||||||
|
Total liabilities and shareholders’ equity |
$ | 64,714 | $ | 69,424 | ||||
Page 6 of 7
Market Leader, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
|
Six months ended
June 30, |
||||||||
| 2009 | 2008 | |||||||
|
Cash flows from operating activities: |
||||||||
|
Net loss |
$ | (5,890 | ) | $ | (2,463 | ) | ||
|
Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
|
Depreciation and amortization of property and equipment |
1,583 | 1,974 | ||||||
|
Amortization of acquired intangible assets |
962 | 984 | ||||||
|
Stock-based compensation |
1,246 | 1,568 | ||||||
|
Deferred income tax expense |
0 | 59 | ||||||
|
Gain on sale of fixed assets |
0 | (791 | ) | |||||
|
Equity in loss of investee |
155 | 336 | ||||||
|
Changes in certain assets and liabilities |
||||||||
|
Trade accounts receivable |
23 | 36 | ||||||
|
Prepaid expenses and other current assets |
280 | (81 | ) | |||||
|
Other noncurrent assets |
— | 398 | ||||||
|
Accounts payable |
(172 | ) | (505 | ) | ||||
|
Accrued compensation and benefits |
(654 | ) | (157 | ) | ||||
|
Accrued expenses and other current liabilities |
(57 | ) | (447 | ) | ||||
|
Deferred rent |
463 | (221 | ) | |||||
|
Deferred revenue |
170 | 45 | ||||||
|
Net cash used in operating activities |
(1,891 | ) | 735 | |||||
|
Cash flows from investing activities: |
||||||||
|
Purchases of short-term investments |
(19,981 | ) | — | |||||
|
Sales of short-term investments |
10,000 | 27,400 | ||||||
|
Proceeds from sale of fixed assets |
— | 1,209 | ||||||
|
Purchases of property and equipment |
(1,425 | ) | (970 | ) | ||||
|
Payments related to the Realty Generator acquisition |
(155 | ) | (382 | ) | ||||
|
Net cash (used in) provided by investing activities |
(11,561 | ) | 27,257 | |||||
|
Cash flows from financing activities: |
||||||||
|
Payment of taxes due upon vesting of restricted stock |
(41 | ) | — | |||||
|
Purchase and retirement of common stock |
— | (997 | ) | |||||
|
Proceeds from exercises of stock options |
45 | 207 | ||||||
|
Net cash provided by (used in) financing activities |
4 | (790 | ) | |||||
|
Net (decrease) increase in cash and cash equivalents |
(13,448 | ) | 27,202 | |||||
|
Cash and cash equivalents at beginning of period |
47,668 | 35,450 | ||||||
|
Cash and cash equivalents at end of period |
$ | 34,220 | $ | 62,652 | ||||
Page 7 of 7