Search the web
Welcome, Guest
[Sign Out, My Account]
EDGAR_Online

Quotes & Info
Enter Symbol(s):
e.g. YHOO, ^DJI
Symbol Lookup | Financial Search
MOVE > SEC Filings for MOVE > Form 10-Q on 6-Nov-2012All Recent SEC Filings

Show all filings for MOVE INC

Form 10-Q for MOVE INC


6-Nov-2012

Quarterly Report


Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations

The following "Management's Discussion and Analysis of Financial Condition and Results of Operations" is intended to assist the reader in understanding the Company's business and is provided as a supplement to, and should be read in conjunction with, the Company's condensed consolidated financial statements and accompanying notes. The Company's results of operations discussed below are presented in conformity with GAAP.

This Quarterly Report on Form 10-Q and the following "Management's Discussion and Analysis of Financial Condition and Results of Operations" may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. This Act provides a "safe harbor" for forward-looking statements to encourage companies to provide prospective information about themselves so long as they identify these statements as forward looking and provide meaningful cautionary statements identifying important factors that could cause actual results to differ from the projected results. All statements other than statements of historical fact that the Company makes in this Form 10-Q are forward looking. Generally, you can identify these statements by use of forward-looking words such as "estimates," "expects," "anticipates," "projects," "plans," "intends," "believes," "might," "will," "should," or the negative of these terms and other comparable terminology, although not all forward-looking statements are so identified. In particular, the statements herein regarding industry prospects and our future consolidated results of operations or financial position are forward-looking statements. Forward-looking statements reflect our current expectations, which are inherently uncertain. Actual results may differ significantly from our expectations. Factors that could cause or contribute to such differences include those discussed below and elsewhere in this Form 10-Q, as well as those discussed in the Annual Report, and in other documents we file with the SEC. This Form 10-Q should be read in conjunction with the Annual Report, including the factors described under the caption Part 1, Item 1A, "Risk Factors" within the Annual Report.

Our Business

Move, Inc. and its subsidiaries ("Move," "we," "our" or "us" ) operate an online network of web sites for real estate search, finance, moving and home enthusiasts and provide a comprehensive resource for consumers seeking the online information and connections they need regarding real estate. Our consumer web sites are REALTOR.comŽ, Move.com and Moving.comTM. Through our ListHubTM business, we are also an online real estate listing syndicator and provider of advanced performance reporting solutions for the purpose of helping to drive an effective online advertising program for brokers, real estate franchises, and individual agents. We also provide lead management software for real estate agents and brokers through our Top ProducerŽ and newly acquired TigerLeadŽ SaaS products.

With REALTOR.comŽ as our flagship web site and brand, we are the leading real estate information marketplace connecting consumers with the information and the expertise they need to make informed home buying, selling, financing and renting decisions. Move's purpose is to empower people to love where they live. By connecting consumers and real estate professionals in order to facilitate transactions, we aim to realize our purpose and win the hearts and minds of our consumers, customers and business partners in the process.

Through the collection of assets we have developed over 15 years in this business, Move is positioned to address the needs and wants of both consumers and real estate professionals throughout the process of home ownership. Although the real estate marketplace has been unquestionably changed by the Internet, and likely will continue to evolve through the growth of mobile devices and social networking, our business continues to be about empowering consumers with timely and reliable information and connecting them to the real estate professionals who have the expertise to help them better understand and succeed in that marketplace.

We provide consumers with a powerful combination of breadth, depth and accuracy of information about homes for sale, new construction, homes for rent, multi-family rental properties, senior living communities, home financing, home improvement and moving resources. Through REALTOR.comŽ, consumers have access to over 94 million properties across the United States ("U.S.") as well as properties for sale from another 32 countries worldwide. Our for-sale listing content, comprising over 4 million properties as of September 30, 2012, and accessible in 11 different languages, represents the most comprehensive, accurate and up-to-date collection of its kind, online or offline. Through REALTOR.comŽ and our mobile applications, we display approximately 98% of all for-sale properties listed in the U.S. We source this content directly from our relationships with more than 800 Multiple Listing Services ("MLS") across the country, which represents nearly all MLSs, with approximately 88% of the listings updated every 15 minutes and the remaining listings updated daily.


Table of Contents

REALTOR.comŽ's substantial content advantage has earned us trust with both consumers and real estate professionals. We attract a highly engaged consumer audience and have developed an exceptionally large number of relationships with real estate professionals across the country. More than 20 million users, viewing an average of over 385 million pages and spending an average of over 325 million minutes on the REALTOR.comŽ web site each month over the last twelve-month period, interact with over 400,000 real estate professionals on REALTOR.comŽ and our mobile applications. We delivered approximately 70% more connections between our consumers and real estate professionals during the nine-month period ending September 30, 2012, as compared to the same period in the prior year. This illustrates the success of our continued commitment to not only deliver valuable information to consumers, but more importantly, to connect them with real estate professionals who can provide the local expertise consumers want when making home-related decisions.

In addition to providing an industry-leading content mix, Move facilitates connections and transactions between consumers and real estate professionals. Although attracting and engaging a large consumer audience is an important part of our business, to succeed we must also focus on winning the hearts and minds of real estate professionals, who are both customers of our business and suppliers of much of our property content. We believe this starts with our commitment to respecting the listing and content rights of the real estate agents, brokers, MLSs and others who work hard to help generate these important data resources. Through REALTOR.comŽ and our ListHubTM business, we aggregate, syndicate and display real estate listings across the web, accounting for an estimated 60% of all for-sale listing detail page views online or on mobile applications through third-party property listing businesses in the U.S. Part of the reason we have become the leading source for real estate listing content is that we work closely with, and respect the rights of, real estate professionals while still maintaining a balance that allows consumers to obtain the information and expertise they expect and need.

At the same time, we are committed to delivering valuable connections, advertising systems and productivity and lead management tools to real estate professionals, with the goal of helping to make them more successful. By combining REALTOR.comŽ advertising systems with the productivity and lead management tools offered through our Top ProducerŽ and newly acquired TigerLeadŽ SaaS CRM products, we are able to help grow and enrich connections between our customers and consumers, and to help our customers better manage those connections in an effort to facilitate transactions and grow their business.

Our dual focus on both the consumer and the real estate professional has helped us create and maintain REALTOR.comŽ as a distinct advantage in the online real estate space. For over 15 years, we have provided consumers with access to a highly accurate and comprehensive set of real estate listing data and, as a result, have built relationships within the real estate industry that are both broad and deep. We expect this industry to continue to progress as new technologies are embraced and as consumers' needs and wants evolve. We also expect that real estate professionals, to stay relevant, will likewise need to evolve along with technology, consumers and the market. We aim to keep REALTOR.comŽ positioned to lead this transformation with consumers and real estate professionals at the forefront, and expect to leverage our collection of advertising systems, productivity tools and other assets to do so.

Products and Services

Through our REALTOR.comŽ web site, mobile applications and business operations, we offer a number of services to real estate franchises, brokers and agents, as well as non-real estate related advertisers, in an effort to connect those advertisers with our consumer audience. We categorize the products and services available through the REALTOR.comŽ business as listing advertisements, non-listing advertisements or ListHubTM syndication and reporting. In addition, through the newly acquired TigerLeadŽ business, we are able to provide expertise in real estate search engine marketing through sophisticated key word buying and a platform and model that grades each lead source and lead in order to deliver high quality intelligent leads to the agent or broker. These marketing services are included in our REALTOR.comŽ revenue total. The collection of services offered through the REALTOR.comŽ business represented approximately 75% and 76% of our overall revenues for the three and nine months ended September 30, 2012, respectively, and approximately 73% of our overall revenues for the three and nine months ended September 30, 2011.

Top ProducerŽ and TigerLeadŽ are our SaaS businesses providing productivity and lead management tools tailored to real estate agents. These businesses complement REALTOR.comŽ and our mission of connecting consumers and real estate professionals to facilitate transactions by empowering real estate professionals' ability to connect with, cultivate and ultimately convert their relationships with home buyers and sellers into transactions. Our Top ProducerŽ product offerings include a web- and mobile-based CRM solution, our Market SnapshotŽ product and a series of template web site products. In addition to the internet marketing services offered by our newly acquired TigerLeadŽ business described above, the TigerLeadŽ SaaS CRM product provides real estate agents and brokers with a sophisticated IDX web site platform to capture and manage leads that are delivered with unique insights such as how many times a user has returned to the site to search particular listings and price ranges. The SaaS CRM product revenues of TigerLeadŽ are included with our Top ProducerŽ product suite and represent our SaaS businesses. The SaaS products represented approximately 15% and 14% of our overall revenues for the three and nine months ended September 30, 2012, respectively, and approximately 16% of our overall revenues for the three and nine months ended September 30, 2011.


Table of Contents

We separately operate several other web sites providing multi-family rental, senior housing and moving-related content and services for our consumer audience. Through our Move Rentals and Senior Housing businesses, we aggregate and display rental listings nationwide. We offer a variety of listing-related advertisements that allow rental property owners and managers to promote their listings and connect with consumers through our web sites. Pricing models include monthly subscriptions and cost-per-click. Through our Moving.comTM business we provide consumers with quotes from moving companies and truck rental companies. The majority of revenue from Moving.comTM is derived from cost-per-lead pricing models. Our Move Rentals, Senior Housing and Moving.comTM product lines ("Move Vertical Businesses") collectively represented approximately 10% of our overall revenues for the three and nine months ended September 30, 2012, and approximately 11% of our overall revenues for the three and nine months ended September 30, 2011.

Market and Economic Conditions

In recent years, our business has been, and we expect may continue to be, influenced by a number of macroeconomic, industry-wide and product-specific trends and conditions. For a number of years prior to 2006, the U.S. residential real estate market experienced a period of hyper-sales rates and home price appreciation, fueled by the availability of low interest rates and flexible mortgage options for many consumers. During the latter half of 2006 and through 2008 lending standards were tightened, equity markets declined substantially, liquidity in general was impacted, unemployment rates rose and consumer spending declined. The combination of these factors materially impacted the U.S. housing market in the form of fewer home sales, lower home prices and accelerating delinquencies and foreclosures, all of which created a cycle that further exacerbated the housing market downturn.

The effects on the housing market have persisted for several years but key market indicators suggest that large parts of the housing market have bottomed out and have entered a recovery mode. In Q3 2012, the nation saw a 13.89% reduction in the median age of inventory, as well as a year-over-year reduction in inventory of 8.51%. National median list prices also increased slightly at 2.54% year-over-year during the third quarter. Lower inventories, combined with somewhat higher median list prices, suggest that as we end 2012, the housing market is in better shape than it was a year ago.

According to the Federal Housing Administration's first quarter 2012 report on Fannie Mae and Freddie Mac, the 12-month delinquency rate has returned to 2002 levels, meaning the percentage of people who've fallen behind on mortgages owned by those government-sponsored enterprises has declined considerably. Banks, however, continue to have tighter credit standards for mortgage loans, which has made home purchases more difficult. Therefore, we believe that market conditions will continue to impact spending by real estate professionals in the near term.

Over the past three years, this environment has had a direct impact on our primary customers: real estate professionals. Fewer home sales and lower home prices impact commission income, which causes real estate professionals to either reduce their marketing spend or exit the market altogether. The prolonged housing market downturn was a significant cause of the decline in revenue over the past three years and may continue to be a challenge to revenue until both the housing and lending markets have fully recovered.

Acquisitions

On September 1, 2012, we entered into an agreement with Tiger Lead Solutions whereby we acquired substantially all of its operating assets for a purchase price of $22.0 million in cash, $3.0 million of which was paid into escrow for a one-to-two year period to secure certain obligations of Tiger Lead Solutions. In addition, we entered into employment agreements with members of Tiger Lead Solution's senior management whereby we granted 273,420 restricted stock units with a grant date fair value of $2.2 million. These time-based restricted stock units will vest one year from the date of grant and would be forfeited in the event of termination by Move for cause or voluntary resignation. The TigerLeadŽ business provides an integrated set of internet marketing services and SaaS CRM tools to residential realtors and brokers to generate, cultivate, and manage leads.

The acquisition has been accounted for as a business combination with the total purchase price being allocated to the assets acquired based on their respective fair values. The $22.0 million purchase price was preliminarily allocated $11.9 million to definite-lived intangible assets, $0.9 million to indefinite-lived intangible assets, $0.1 million to net tangible assets with the remaining $9.1 million to goodwill, pending the finalization of the purchase price allocation. The identifiable intangible assets are being amortized over estimated lives ranging from six to nine years, with the exception of $0.9 million in indefinite-lived trade name and trademarks. The financial results of the acquisition are included in our Consolidated Financial Statements from the date of acquisition. Pro forma information for this acquisition has not been presented because the effects were not material to our historical consolidated financial statements.


Table of Contents

Investment in Unconsolidated Joint Ventures

In August 2010, we entered into a joint venture agreement with a national mortgage banker d/b/a Mortgage Match and contributed an initial investment of $0.5 million in exchange for a 49.9% ownership in the joint venture. We recorded our initial investment in the joint venture at $0.5 million, reflecting such cash payment. The Mortgage Match business was operated by our joint venture partner or one of its affiliates under an Interim Services Agreement also entered into in August 2010, under which we operated the MortgageMatch.com website, performed various supporting services and received a fixed monthly fee.

During the three months ended September 30, 2011, we and our joint venture partner decided to dissolve the joint venture. As a result of that dissolution, we received a distribution of $0.5 million that represented the refund of our initial investment. In addition, we incurred $0.6 million in costs related to the dissolution of the joint venture which are included in "General and administrative" within the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2011.

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations is based upon our unaudited Condensed Consolidated Financial Statements, which have been prepared in accordance with GAAP. The preparation of these unaudited Condensed Consolidated Financial Statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to revenue recognition, uncollectible receivables, valuation of investments, intangible and other long-lived assets, stock-based compensation and contingencies. Our estimates are based upon historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. There were no significant changes to our critical accounting policies during the nine months ended September 30, 2012, as compared to those policies disclosed in the Annual Report.

Legal Contingencies

We are currently involved in certain legal proceedings, as discussed within the section "Legal Proceedings" in Note 22, "Commitments and Contingencies," within our Consolidated Financial Statements contained in Item 8 in the Annual Report, and in Note 16, "Commitments and Contingencies," to our unaudited Condensed Consolidated Financial Statements contained within Part I, Item 1 of this Quarterly Report on Form 10-Q. Because of the uncertainties related to both the amount and range of potential liability in connection with legal proceedings, we are unable to make a reasonable estimate of the liability that could result from unfavorable outcomes in our remaining pending litigation. As additional information becomes available, we will assess the potential liability related to our pending litigation and determine whether reasonable estimates of the liability can be made. Unfavorable outcomes, or significant estimates of our potential liability, could materially impact our results of operations and financial position.

Results of Operations

Three Months Ended September 30, 2012 and 2011

Revenue

Revenue increased $3.0 million, or 6%, to $49.4 million for the three months ended September 30, 2012, compared to $46.5 million for the three months ended September 30, 2011. The increase in revenue was primarily due to increases in the listing advertisements in our REALTOR.comŽ business during the three months ended September 30, 2012, due to the introduction of our new Co-BrokeTM product, our PreQualplus product and new internet marketing services revenue from our TigerLeadŽ acquisition, partially offset by revenue decreases from our featured products (i.e. Featured Homes, Featured Area Community and Buyer Assist). The increase in REALTOR.comŽ product revenue was partially offset by a decline in our Top ProducerŽ product suite. Our Move Vertical Businesses were relatively flat for the three months ended September 30, 2012, compared to the three months ended September 30, 2011.

Cost of Revenue

Cost of revenue increased $0.3 million, or 3%, to $10.2 million for the three months ended September 30, 2012, compared to $10.0 million for the three months ended September 30, 2011. The increase was primarily due to a $0.3 million increase in lead acquisition costs.


Table of Contents

Gross margin percentage remained constant at 79% for the three months ended September 30, 2012, compared to the three months ended September 30, 2011.

Operating Expenses

Sales and marketing. Sales and marketing expenses increased $1.0 million, or 6%, to $17.2 million for the three months ended September 30, 2012, compared to $16.3 million for the three months ended September 30, 2011. This increase was mainly due to increases in online distribution costs of $0.4 million, personnel-related costs of $0.3 million, consulting costs of $0.2 million and other cost increases of $0.1 million.

Product and web site development. Product and web site development expenses increased $1.0 million, or 12%, to $9.4 million for the three months ended September 30, 2012, compared to $8.4 million for the three months ended September 30, 2011. The increase was primarily due to increases in personnel-related costs as we continue to invest in new product initiatives.

General and administrative. General and administrative expenses decreased $0.4 million, or 3%, to $10.5 million for the three months ended September 30, 2012, compared to $10.8 million for the three months ended September 30, 2011. The decrease was primarily due to a decrease in outside legal fees of $0.7 million, one-time joint venture dissolution costs of $0.6 million incurred in 2011 and other cost reductions of $0.2 million. These cost reductions were partially offset by an increase of $1.1 million in personnel-related costs, including a $0.5 million increase in stock-based compensation.

Amortization of intangible assets. Amortization of intangible assets increased $0.1 million to $0.5 million for the three months ended September 30, 2012, compared to $0.4 million for the three months ended September 30, 2011. This increase was due to the amortization of intangible assets that were newly acquired in the third quarter of 2012.

Stock-based compensation and charges. The following chart summarizes the stock-based compensation and charges that have been included in the following captions for each of the periods presented (in thousands):

                                               Three Months Ended
                                                 September 30,
                                                2012         2011
Cost of revenue                              $       71    $     52
Sales and marketing                                 361         307
Product and web site development                    527         238
General and administrative                        1,037         560
Total stock-based compensation and charges   $    1,996    $  1,157

Stock-based compensation and charges increased $0.8 million for the three months ended September 30, 2012, compared to the three months ended September 30, 2011, primarily due to new grants of time-based restricted stock units and stock option awards.

Interest Expense, Net

Interest expense, net remained relatively constant for the three months ended September 30, 2012 and 2011.

Other Expense, Net

Other expense, net remained relatively constant for the three months ended September 30, 2012 and 2011.

Income Taxes

As a result of our historical net operating losses, we have generally not recorded a provision for income taxes. However, we recorded certain indefinite-lived intangible assets as part of the purchase accounting for acquisitions, which creates a permanent difference as the amortization can be recorded for tax purposes but not for book purposes. For the three months ended September 30, 2012 and 2011, income tax expense included state income taxes and a deferred tax provision related to amortization of certain indefinite-lived intangible assets.


Table of Contents

Nine Months Ended September 30, 2012 and 2011

Revenue

Revenue increased $2.0 million, or 1%, to $146.5 million for the nine months ended September 30, 2012, compared to $144.5 million for the nine months ended September 30, 2011. The increase in revenue was primarily due to increases in the listing advertisements in our REALTOR.comŽ business and to the introduction of our new Co-BrokeTM product, our PreQualplus product and new internet marketing services revenue from our TigerLeadŽ acquisition, partially offset by revenue decreases from our featured products (i.e. Featured Homes, Featured Area Community and Buyer Assist). The increase in REALTOR.comŽ product revenue was partially offset by a decline in our Top ProducerŽ product suite along with declines in our Move Vertical Businesses.

Cost of Revenue

Cost of revenue decreased $1.7 million, or 5%, to $29.5 million for the nine months ended September 30, 2012, compared to $31.2 million for the nine months ended September 30, 2011. The decrease was primarily due to a $1.3 million reduction in personnel-related costs, a $0.4 million reduction in credit card processing fees and a $0.3 million reduction in production and fulfillment costs, partially offset by a $0.3 million increase in consulting costs.

Gross margin percentage increased to 80% for the nine months ended September 30, 2012, compared to 78% for the nine months ended September 30, 2011, mainly due to the increased revenue and cost reductions described above.

Operating Expenses

Sales and marketing. Sales and marketing expenses increased $0.5 million, or 1%, to $53.0 million for the nine months ended September 30, 2012, compared to $52.5 million for the nine months ended September 30, 2011. As a result of the departure of certain sales management during the nine months ended September 30, . . .

  Add MOVE to Portfolio     Set Alert         Email to a Friend  
Get SEC Filings for Another Symbol: Symbol Lookup
Quotes & Info for MOVE - All Recent SEC Filings
Copyright © 2014 Yahoo! Inc. All rights reserved. Privacy Policy - Terms of Service
SEC Filing data and information provided by EDGAR Online, Inc. (1-800-416-6651). All information provided "as is" for informational purposes only, not intended for trading purposes or advice. Neither Yahoo! nor any of independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. By accessing the Yahoo! site, you agree not to redistribute the information found therein.