ZipRealty, Inc. (Nasdaq: ZIPR) today announced financial results
for its second quarter ended June 30, 2007. For the quarter, net
revenues were $31.3 million, a 16% increase from the $26.9 million
reported in the second quarter of 2006. The Company�s net loss for
the period was $1.0 million, or $0.05 per basic and diluted share,
compared with a net loss of $0.2 million or $0.01 per basic and
diluted share in the year ago period. On a pro forma basis, second
quarter net income per diluted share was $0.01 versus net income of
$0.07 per diluted share for the same period a year ago. Pat
Lashinsky, President and CEO of ZipRealty, commented, �We were
pleased to post solid results for the quarter in the current
challenging residential real estate environment. We credit our
value proposition and ability to execute, particularly during a
period of investment in national expansion. To that point, hiring
the right team in the right markets is our top priority. In
addition, we are working to ensure that our agents and customers
have the best tools available during the decision making process.
To date, those features continue to drive record traffic and
activity to our site, and combined with new market investments this
year, we are confident that ZipRealty is uniquely positioned to
continue to gain market share in a challenging market and to better
drive value when the market turns. With that goal, I am pleased to
announce that we will be entering the New York market by the end of
the year. Our initial expansion into the Long Island and
Westchester County markets will be the tenth and eleventh new
markets during 2007 and approaches the high end of our stated goal
of opening ten to twelve new markets this year.� ZipRealty
announced the following operating metrics for the second quarter of
2007: At June 30, 2007, there were 2,070 ZipAgents employed, up
from 1,669 at the end of the second quarter of 2006. The total
value of real estate transactions closed increased to approximately
$1.41 billion in the second quarter of 2007 versus $1.26 billion
for the same period in 2006. The total number of transactions
closed increased approximately 12.3% to 3,988 from 3,552 during the
same prior year period. Average net revenue per transaction
increased approximately 3.7% to $7,649 from $7,375 in the second
quarter of 2006. Balance Sheet & Liquidity As of June 30, 2007,
the Company had approximately $86.7 million of cash, cash
equivalents and short-term investments, with no long-term debt. Use
of Non-GAAP Financial Measures To supplement its financial
statements presented in accordance with 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 is the
primary basis 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. Financial Guidance 2007
is expected to be a year of significant investment, as the Company
plans to expand into ten to twelve new markets. Based on this plan
and management�s current outlook, the Company reiterates the
following guidance from May 2007: Revenues are expected to range
from $105 to $110 million. Average agent productivity is expected
to approximate 0.6 to 0.7 closed transactions per agent per month,
with average net revenue per transaction of approximately $6,500 to
$7,000. Agent count at the end of the year is expected to be
between 2,200 and 2,400 agents. The Company expects to report a
full year GAAP net loss of between $10 and $13 million, or $0.45 to
$0.60 per basic and diluted share, based on 23 million shares
outstanding. The range of the pro forma loss is expected to be
between $6 and $9 million, or $0.25 to $0.40 per basic and diluted
share. Conference Call Details A conference call to discuss second
quarter results and the Company�s outlook for 2007 will be webcast
live on Tuesday, August 7, 2007 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
800-817-2743. A replay of the conference call will be available
through August 14, 2007 by dialing 888-203-1112, password 8879004.
About ZipRealty, Inc. ZipRealty is a full-service residential real
estate brokerage firm. The Company uses the Internet, proprietary
technology and efficient business processes to provide home buyers
and sellers with high-quality service and value. Founded in 1999,
the Company operates in 28 major markets in 17 states and the
District of Columbia. The Company�s client-centric business
strategy utilizes a sophisticated web site, which enables
homebuyers and sellers to access comprehensive local Multiple
Listing Services home listings data and other relevant information.
The Company also utilizes a proprietary business management
technology platform, which reduces costs and allows the Company to
pass on significant financial savings to consumers. This
Internet-enabled, technology-driven, employee-based model provides
the Company with a distinct competitive advantage, allowing
ZipRealty to consistently deliver outstanding service to clients.
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 regarding the residential real estate market
conditions for the remainder of 2007, the advantages of the
Company�s platform in creating a unified infrastructure, culture
and focus on customer service, growth of the Company�s brand, the
Company�s future financial performance, and statements under
�Financial Guidance� concerning expected investment and plans to
open new markets, revenues, agent productivity, average net revenue
per transaction, agent headcount, net loss and loss per share and
shares outstanding for the year ending December 31, 2007. 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 a continuing decline in the residential real estate market,
including a decline in the number and/or sales prices of homes, the
Company�s limited operating history and limited profitability, the
Company�s access to MLS listings and leads from third parties that
it does not control, economic events or trends in housing prices,
interest rates, the newness and scalability of the Company�s
business model, the Company�s ability to hire, retain and train
qualified agents and key personnel, 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 mortgage and insurance, internet content, privacy
and other matters as well as rules of real estate industry
organizations, competition, seasonality, geographic concentration,
use by Internet service providers and personal computer users of
more restrictive email filters, and other risk factors set forth in
the Company's filings with the SEC, including but not limited to
its Quarterly Report on Form 10-Q for the fiscal quarter ended
March 31, 2007. 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 Six Months Ended June 30, June
30, 2007 2006 2007 2006 � Net transaction revenues $ 30,506 $
26,195 $ 53,181 $ 44,843 Referral and other revenues � 775 � � 714
� � 1,482 � � 1,283 � Net revenues � 31,281 � � 26,909 � � 54,663 �
� 46,126 � � Operating expenses Cost of revenues 17,312 14,590
30,387 25,330 Product development 1,813 1,351 3,494 2,752 Sales and
marketing 9,829 7,596 18,676 14,679 General and administrative �
4,457 � � 3,030 � � 8,425 � � 6,329 � Total operating expenses �
33,411 � � 26,567 � � 60,982 � � 49,090 � � Income (loss) from
operations � (2,130 ) � 342 � � (6,319 ) � (2,964 ) � Other income
(expense): Interest income 1,094 896 2,182 1,696 Other income
(expense), net � 4 � � - � � - � � - � Total other income
(expense), net � 1,098 � � 896 � � 2,182 � � 1,696 � � Income
(loss) before income taxes (1,032 ) 1,238 (4,137 ) (1,268 ) �
Provision for (benefit from) income taxes � - � � 1,458 � � - � �
(260 ) � Net income (loss) $ (1,032 ) $ (220 ) $ (4,137 ) $ (1,008
) � � Net income (loss) per share: Basic $ (0.05 ) $ (0.01 ) $
(0.19 ) $ (0.05 ) Diluted $ (0.05 ) $ (0.01 ) $ (0.19 ) $ (0.05 ) �
Weighted average common shares outstanding: Basic 22,501 20,366
22,255 20,329 Diluted 22,501 20,366 22,255 20,329 � Supplemental
operating data (unaudited) Number of ZipAgents at beginning of
period 1,875 1,481 1,794 1,366 Number of ZipAgents at end of period
2,070 1,669 2,070 1,669 � Total value of real estate transactions
closed during period (in billions) $ 1.41 $ 1.26 $ 2.45 $ 2.16 �
Number of transactions closed during period (1) 3,988 3,552 7,098
6,190 � Average net revenue per transaction during period (2) $
7,649 $ 7,375 $ 7,492 $ 7,244 � (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 earnings (loss) and pro forma
earnings (loss) per share Pro forma net (loss) and pro forma
earnings net (loss) per share have been computed to give effect to
excluding stock-based compensation expense and non-cash income
taxes. Management believes that pro forma net (loss) for the three
and six months ended June 30, 2007 and 2006 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 Six Months Ended June 30, June 30, 2007 2006
2007 2006 GAAP net income (loss) as reported $ (1,032 ) $ (220 ) $
(4,137 ) $ (1,008 ) Stock-based compensation 1,172 613 1,995 1,169
Non-cash income taxes � - � � 1,289 � � - � � (280 ) Pro forma net
income (loss) $ 140 � $ 1,682 � $ (2,142 ) $ (119 ) � Pro forma net
income (loss) per share: Basic $ 0.01 $ 0.08 $ (0.10 ) $ (0.01 )
Diluted $ 0.01 $ 0.07 $ (0.10 ) $ (0.01 ) � Pro forma weighted
average common shares outstanding: Basic 22,501 20,366 22,255
20,329 Diluted 24,130 24,145 22,255 20,329 ZipRealty, Inc.
Consolidated Balance Sheets (unaudited) (in thousands) � June 30,
December 31, 2007 2006 Assets Current assets: Cash and cash
equivalents $ 6,712 $ 8,575 Short-term investments 80,005 80,233
Accounts receivable, net of allowance 3,100 1,781 Prepaid expenses
and other current assets 3,214 3,151 Current and deferred income
taxes � 32 � � 29 � � Total current assets 93,063 93,769 �
Restricted cash 90 90 Property and equipment, net 4,633 4,114
Investment in non-consolidated companies 13 17 Other assets � 309 �
� 367 � � Total assets $ 98,108 � $ 98,357 � � � Liabilities and
Stockholders' Equity Current liabilities: Accounts payable $ 2,696
$ 2,184 Accrued expenses � 8,624 � � 7,791 � � Total current
liabilities 11,320 9,975 � Other long-term liabilities � 501 � �
513 � � Total liabilities � 11,821 � � 10,488 � � � Stockholders'
equity: Common stock: 22,526 and 21,627 shares issued and
outstanding at June 30, 2007 and December 31, 2006, respectively 23
22 Additional paid-in capital 139,518 134,813 Common stock warrants
3,305 5,519 Deferred stock-based compensation (27 ) (71 )
Accumulated other comprehensive loss (138 ) (157 ) Accumulated
deficit � (56,394 ) � (52,257 ) Total stockholders' equity � 86,287
� � 87,869 � � � Total liabilities and stockholders' equity $
98,108 � $ 98,357 �
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