Exhibit 99.1
Homestore Reports First Quarter 2005 Results; Revenue Growth, Improved
Profitability and Positive Cash Flow Highlight Quarter, Continued Investment
Spending Expected
WESTLAKE VILLAGE, Calif.--(BUSINESS WIRE)--May 5, 2005--Homestore,
Inc. (NASDAQ:HOMS), the leading provider of real estate media and
technology solutions, today reported financial results for the first
quarter ended March 31, 2005. Total revenue for the first quarter was
$56.5 million, compared to $53.4 million in the first quarter of 2004.
Homestore reported a net loss for the first quarter of $395,000,
or $0.00 per share, compared to a loss of $5.1 million, or $0.04 per
share, for the first quarter of 2004.
Homestore's EBITDA (income from operations, excluding
restructuring charges and certain other non-cash expenses, principally
stock-based charges, depreciation, and amortization) for the first
quarter of 2005 was $2.4 million, compared to $780,000 for the first
quarter of 2004. The first quarter results included a $1.4 million
dollar litigation settlement, which is reflected in sales and
marketing expense. The Company has reported EBITDA because management
uses it to monitor and assess the Company's performance and believes
it is helpful to investors in understanding the Company's business.
At March 31, 2005, Homestore had $62.9 million in cash and
short-term investments available to fund operations, an increase of
$3.0 million from the previous quarter.
"The first quarter of 2005 was another quarter of continued
improvement for Homestore, with revenue growth driven by strong
performances in our Realtor.com and Top Producer businesses," said
Mike Long, Homestore's chief executive officer. "Over the balance of
this year, we will continue to implement our staged investment
program, which is designed to generate operating improvements in our
other businesses and better position us to create significant
long-term shareholder value."
CONFERENCE CALL
As previously announced, Homestore will host a conference call,
which will be broadcast live over the Internet today, Thursday, May 5,
2005, at 2:00 p.m. PDT (5:00 p.m. EDT). Chief Executive Officer, Mike
Long, and Chief Financial Officer, Lew Belote, will discuss the
Company's first quarter 2005 results. In order to participate in the
call, investors should log on to http://ir.homestore.com and click on
"Event Calendar." Windows Media Player software is required and is
obtainable at no cost. Please connect to the above Web site ten
minutes prior to the call to load any necessary audio software. A
replay of the call will be available in the same section of the
Company's Web site two hours after the end of the call. A telephone
replay will also be available from 5:00 p.m. PDT (8:00 p.m. EDT) on
May 6 until midnight on May 12 at 706-645-9291, conference code
5540366. For additional information regarding the Company's results,
please go to the "SEC Filings" section at http://ir.homestore.com to
view annual reports as filed with the Securities and Exchange
Commission on Form 10-K. Homestore's Form 10-Q for the quarter ended
March 31, 2005 is expected to be filed with the Securities and
Exchange Commission on, or before, Monday, May 9, 2005.
USE OF NON-GAAP FINANCIAL MEASURES
To supplement its consolidated financial statements presented in
accordance with generally accepted accounting principles in the United
States ("GAAP"), Homestore uses a non-GAAP measure of income (loss)
from operations excluding restructuring charges and certain other
non-cash expenses, principally stock-based charges, depreciation and
amortization, which is referred to as EBITDA. 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 Homestore's current financial performance and its
prospects for the future. Homestore believes these non-GAAP results
provide useful information to both management and investors by
excluding certain expenses that it believes are not indicative of its
core operating results and a more consistent basis for comparison
between quarters. 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.
CAUTION REGARDING FORWARD LOOKING STATEMENTS
This press release may contain forward-looking statements,
including information about management's view of Homestore's future
expectations, plans and prospects, within the safe harbor provisions
under The Private Securities Litigation Reform Act of 1995. These
statements involve known and unknown risks, uncertainties and other
factors which may cause the results of Homestore, its subsidiaries,
divisions and concepts to be materially different than those expressed
or implied in such statements. These risk factors and others are
included from time to time in documents Homestore files with the
Securities and Exchange Commission, including but not limited to, its
Form 10-Ks, Form 10-Qs and Form 8-Ks. Other unknown or unpredictable
factors also could have material adverse effects on Homestore's future
results. The forward-looking statements included in this press release
are made only as of the date hereof. Homestore cannot guarantee future
results, levels of activity, performance or achievements. Accordingly,
you should not place undue reliance on these forward-looking
statements. Finally, Homestore expressly disclaims any intent or
obligation to update any forward-looking statements to reflect
subsequent events or circumstances.
HOMESTORE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
Three Months Ended
------------------------------
December
March 31, 31, March 31,
2005 2004 2004
------------------------------
Revenue $ 56,456 $ 54,334 $ 53,424
Cost of revenue 12,901 12,457 13,250
------------------------------
Gross profit 43,555 41,877 40,174
Operating expenses:
Sales and marketing 22,362 19,976 24,259
Product and website development 4,379 3,847 3,935
General and administrative 16,377 17,014 13,991
Amortization of intangible assets 1,197 1,462 2,328
Restructuring charges -- 971 345
Impairment of long-lived assets -- -- --
------------------------------
Total operating expenses 44,315 43,270 44,858
------------------------------
Loss from operations (760) (1,393) (4,684)
Interest expense, net 353 258 (85)
Gain on settlement of distribution
agreement -- -- --
Other income (expense), net 12 124 (8)
------------------------------
Income (loss) from continuing operations (395) (1,011) (4,777)
Gain on disposition of discontinued
operations -- 7,294 --
Income (loss) from discontinued
operations -- (251) (306)
==============================
Net income (loss) $ (395)$ 6,032 $ (5,083)
==============================
Basic income (loss) per share
Continuing operations $ (0.00)$ (0.01)$ (0.04)
Discontinued operations -- 0.05 (0.00)
==============================
Net income (loss) $ (0.00)$ 0.04 $ (0.04)
==============================
Diluted income (loss) per share
Continuing operations $ (0.00)$ (0.01)$ (0.04)
Discontinued operations -- 0.05 (0.00)
------------------------------
Net income (loss) $ (0.00)$ 0.04 $ (0.04)
------------------------------
Shares used to calculate basic and
diluted per share amounts
Basic 146,656 146,323 121,138
==============================
Diluted 146,656 154,902 121,138
==============================
HOMESTORE, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE
INCOME FROM OPERATIONS EXCLUDING RESTRUCTURING CHARGES AND
CERTAIN OTHER NON-CASH EXPENSES, PRINCIPALLY STOCK-BASED CHARGES,
DEPRECIATION, AND AMORTIZATION (EBITDA)
(in thousands)
(unaudited)
Three Months Ended
---------------------------
March December March
31, 31, 31,
2005 2004 2004
---------------------------
Income (loss) from operations $ (760)$ (1,393)$ (4,684)
Plus:
Stock-based charges 384 134 417
Amortization of intangible assets 1,197 1,462 2,328
Depreciation 1,624 1,737 2,372
Restructuring charges -- 971 345
---------------------------
Income from operations excluding
restructuring charges and certain
other non-cash expenses (EBITDA) $ 2,445 $ 2,911 $ 778
===========================
HOMESTORE, INC.
SEGMENT OPERATING RESULTS
(in thousands)
(unaudited)
Three Months Ended
-----------------------------
December March
March 31, 31, 31,
2005 2004 2004
-----------------------------
Revenue:
Media services $ 39,058 $ 37,562 $ 37,632
Software 5,602 4,978 4,389
Print 11,796 11,794 11,403
-----------------------------
Total revenue 56,456 54,334 53,424
-----------------------------
Operating income (loss)
Media services 10,216 9,697 5,407
Software 585 223 (48)
Print (1,180) (1,013) (407)
Unallocated (10,381) (10,300) (9,636)
-----------------------------
Loss from operations $ (760)$ (1,393)$ (4,684)
=============================
HOMESTORE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three months ended
March 31,
------------------
2005 2004
------------------
Cash flows from continuing operating activities:
Income (loss) from continuing operations $ (395)$ (4,777)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) continuing operating
activities:
Depreciation 1,624 2,372
Amortization of intangible assets 1,197 2,328
Provision for doubtful accounts 375 160
Stock-based charges 384 417
Other non-cash items (53) 37
Changes in operating assets and liabilities, net of
discontinued operations:
Accounts receivable (36) 173
Prepaid distribution expense 5,411
Restricted cash (21) --
Other assets (2,257) (1,029)
Accounts payable and accrued expenses (4,348) (3,411)
Accrued distribution obligation -- (3,655)
Deferred revenue 7,987 7,914
------------------
Net cash provided by (used in) continuing operating
activities 4,457 5,940
Net cash used in discontinued operations -- (577)
------------------
Net cash provided by operating activities 4,457 5,363
------------------
Cash flows from investing activities:
Purchases of property and equipment (1,546) (1,073)
Maturities of short-term investments -- 1,000
Purchases of short-term investments (285) --
------------------
Net cash used in investing activities (1,831) (73)
------------------
Cash flows from financing activities:
Proceeds from exercise of stock options, warrants
and shares issuances under employee stock
purchase plan 470 1,963
Payments on capital leases (332) (706)
------------------
Net cash provided by financing activities 138 1,257
------------------
Change in cash and cash equivalents 2,764 6,547
Cash and cash equivalents, beginning of period 14,819 13,942
------------------
Cash and cash equivalents, end of period $ 17,583 20,489
==================
HOMESTORE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
March 31, December 31,
2005 2004
--------------------------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 17,583 $ 14,819
Short-term investments 45,325 45,040
Accounts receivable, net 12,193 12,532
Other current assets 14,763 12,498
--------------------------
Total current assets 89,864 84,889
Property and equipment, net 15,163 15,242
Goodwill, net 19,502 19,502
Intangible assets, net 16,667 17,864
Restricted cash 5,861 5,840
Other assets 7,082 7,167
--------------------------
Total assets $ 154,139 $ 150,504
==========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,295 $ 2,675
Accrued expenses 36,977 39,894
Obligation under capital leases 1,665 1,774
Deferred revenue 51,471 39,487
--------------------------
Total current liabilities 92,408 83,830
Obligation under capital leases 768 991
Deferred revenue 103 4,100
Other liabilities 3,121 4,190
------------- ------------
Total liabilities 96,400 93,111
------------- ------------
Stockholders' equity:
Common stock 147 147
Additional paid-in capital 2,043,773 2,043,053
Deferred stock-based charges (347) (406)
Accumulated other comprehensive income 371 409
Accumulated deficit (1,986,205) (1,985,810)
--------------------------
Total stockholders' equity 57,739 57,393
--------------------------
Total liabilities and stockholders'
equity $ 154,139 $ 150,504
==========================
ABOUT HOMESTORE, INC.
Homestore, Inc. (NASDAQ:HOMS) is the leading provider of real
estate media and technology solutions. The Company operates the No. 1
network of home and real estate Web sites including flagship site
REALTOR.com(R), the official Web site of the National Association of
REALTORS(R) and HomeBuilder.com(TM), the official new homes site of
the National Association of Home Builders. Homestore also operates
RENTNET(R), an apartments, corporate housing and self-storage
resource, SeniorHousingNet(TM), a resource for senior housing and
care, and FactoryBuiltHousing.com, the official Web site of the
Manufactured Housing Institute, as well as Homestore.com(R), a home
information resource. Homestore's print businesses are Homestore(R)
Plans and Publications and Welcome Wagon(R). Homestore's professional
software division includes TOP PRODUCER(R) Systems, a leading provider
of real estate sales productivity applications. For more information:
http://ir.homestore.com.
CONTACT: Homestore Inc.
Mollie O'Brien, 805-557-2303
investorrelations@homestore.com