Exhibit 99.1
Homestore Reports Third Quarter 2005
Results; Revenue up 21 Percent; Net Income of $1.9 Million
WESTLAKE VILLAGE, Calif.--(BUSINESS WIRE)--Nov. 8,
2005--Homestore, Inc. (NASDAQ:HOMS), the leading provider of real
estate media and technology solutions, today reported financial
results for the third quarter ended September 30, 2005. Total revenue
for the third quarter was $66.3 million, a 21 percent increase from
$54.8 million in the third quarter of 2004. Net income for the third
quarter was $1.9 million, or $0.01 per share, compared to a net loss
of $4.6 million, or $0.03 per share, for the third quarter of 2004.
"Our third quarter financial results represent further validation
of our ongoing investment programs," said Mike Long, Homestore's chief
executive officer. "The businesses that were early beneficiaries of
our investments are performing very well and are positioned for
continued growth." Long continued, "With yesterday's announcement of a
$100 million strategic investment by Elevation Partners, we are able
to aggressively pursue initiatives and opportunities that both enhance
our value to consumers and deliver market leading product offerings to
our customers."
Net income for the third quarter of 2005 included legal expense of
$5.5 million, reflected in general and administrative expense, related
to the Company's obligation to advance the defense costs of former
officers. Net loss from the third quarter of 2004 included a similar
expense in the amount of $7.2 million.
Homestore's EBITDA (income from operations, excluding
restructuring charges and certain other non-cash and non-recurring
items, principally stock-based charges, depreciation, and
amortization) for the third quarter of 2005 was $2.9 million, compared
to a loss of $3.4 million for the third quarter of 2004. The Company's
EBITDA calculation for the third quarter of 2005 excludes the impact
of $1.3 million in non-recurring revenue. 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.
NINE MONTH RESULTS
Revenue for the first nine months of 2005 was $186.0 million,
compared to $162.5 million for the same period in 2004. Net income for
the nine months ended September 30, 2005 was $4.9 million, or $0.03
per share, compared with a net loss of $(13.9) million, or $(0.10) per
share, in the first nine months of 2004.
CONFERENCE CALL
As previously announced, Homestore will host a conference call,
which will be broadcast live over the Internet today, Tuesday,
November 8, 2005, at 2:00 p.m. PST (5:00 p.m. EST). Chief Executive
Officer, Mike Long, and Chief Financial Officer, Lew Belote, will
discuss the Company's third 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.
PST (8:00 p.m. EST) on November 8 until midnight on November 15 at
706-645-9291, conference code 1448942. 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 September 30, 2005 is expected to be
filed with the Securities and Exchange Commission on, or before,
Wednesday, November 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 and non-recurring items, 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.
ABOUT HOMESTORE, INC.
Homestore, Inc. offers a wide variety of information and decision
support tools for consumers looking for home and real estate-related
information on the Internet. The Company operates the No. 1 network of
real estate sites, including 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.
RENTNET(R), SeniorHousingNet(TM), FactoryBuiltHousing.com, and
Homestore.com(R) are part of the Homestore Network as well. Homestore
is also a leading supplier of media and technology solutions for real
estate professionals, local and national advertisers, and providers of
home and real estate-related products and services. Homestore's print
division includes Homestore(R) Plans and Publications and Welcome
Wagon(R), and the Company's software division includes TOP PRODUCER(R)
Systems. On the Net: http://ir.homestore.com
HOMESTORE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------------------
2005 2004 2005 2004
--------- --------- --------- ---------
Revenue $ 66,338 $ 54,782 $186,047 $162,526
Cost of revenue 13,901 12,655 40,341 38,372
-------- -------- -------- --------
Gross profit 52,437 42,127 145,706 124,154
-------- -------- -------- --------
Operating expenses:
Sales and marketing 22,449 21,415 67,500 68,412
Product and website
development 5,846 3,812 15,287 11,515
General and administrative 22,155 22,371 58,224 51,428
Amortization of intangible
assets 734 1,990 2,889 6,432
Restructuring charges -- -- (1,442) 345
Litigation Settlement -- -- -- 2,168
-------- -------- -------- --------
Total operating expenses 51,184 49,588 142,458 140,300
-------- -------- -------- --------
Income (loss) from operations 1,253 (7,461) 3,248 (16,146)
Interest income (expense), net 521 474 1,370 414
Other income (expense), net 171 2,234 252 2,242
-------- -------- -------- --------
Income (loss) from continuing
operations 1,945 (4,753) 4,870 (13,490)
Income (loss) from discontinued
operations -- 180 -- (428)
-------- -------- -------- --------
Net income (loss) $ 1,945 $ (4,573) $ 4,870 $(13,918)
======== ======== ======== ========
Basic income (loss) per share
Continuing operations $ 0.01 $ (0.03) $ 0.03 $ (0.10)
Discontinued operations -- (0.00) -- (0.00)
-------- -------- -------- --------
Net income (loss) $ 0.01 $ (0.03) $ 0.03 $ (0.10)
======== ======== ======== ========
Diluted income (loss) per share
Continuing operations $ 0.01 $ (0.03) $ 0.03 $ (0.10)
Discontinued operations -- (0.00) -- (0.00)
-------- -------- -------- --------
Net income (loss) $ 0.01 $ (0.03) $ 0.03 $ (0.10)
======== ======== ======== ========
Shares used to calculate basic
and diluted per share amounts
Basic 147,234 145,823 146,875 133,226
======== ======== ======== ========
Diluted 161,120 145,823 156,264 133,226
======== ======== ======== ========
HOMESTORE, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE
INCOME FROM OPERATIONS EXCLUDING RESTRUCTURING CHARGES AND
CERTAIN OTHER NON-CASH AND NON-RECURRING ITEMS, PRINCIPALLY
STOCK-BASED CHARGES, DEPRECIATION, AND AMORTIZATION (EBITDA)
(in thousands)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------------
2005 2004 2005 2004
-------- -------- -------- ---------
Income (loss) from operations $ 1,253 $(7,461) $ 3,248 $(16,146)
Plus:
Stock-based charges 152 134 669 685
Amortization of intangible assets 734 1,990 2,889 6,432
Depreciation 2,048 1,888 5,508 6,164
Restructuring charge -- -- (1,442) 345
Non-recurring revenue (1,332) -- (2,664) --
Litigation settlement -- -- -- 2,168
------- ------- ------- --------
EBITDA $ 2,855 $(3,449) $ 8,208 $ (352)
======= ======= ======= ========
HOMESTORE, INC.
SEGMENT OPERATING RESULTS
(in thousands)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------------------
2005 2004 2005 2004
--------- --------- --------- ---------
Revenue:
Media services $ 46,578 $ 37,151 $130,123 $112,490
Software 6,574 4,539 18,576 13,232
Print 13,186 13,092 37,348 36,804
-------- -------- -------- --------
Total revenue $ 66,338 $ 54,782 $186,047 $162,526
======== ======== ======== ========
Operating income (loss)
Media services $ 17,584 $ 8,395 $ 42,648 $ 21,451
Software 997 175 2,751 240
Print (1,791) 367 (4,935) (178)
Unallocated (15,537) (16,398) (37,216) (37,659)
-------- -------- -------- --------
Income (loss) from
operations $ 1,253 $ (7,461) $ 3,248 $(16,146)
======== ======== ======== ========
HOMESTORE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Nine Months Ended
September 30,
------------------
2005 2004
-------- ---------
Cash flows from continuing operating activities:
Income (loss) from continuing operations $ 4,870 $(13,490)
Adjustments to reconcile net income (loss) to
net cash provided by continuing
operating activities:
Depreciation 5,508 6,164
Amortization of intangible assets 2,889 6,432
Gain on sale of property and equipment (132) (2,213)
Provision for doubtful accounts 554 63
Stock-based charges 669 685
Other non-cash items (72) 157
Changes in operating assets and liabilities, net
of discontinued operations:
Accounts receivable (1,831) (362)
Prepaid distribution expense -- 10,509
Restricted cash 848 (5,105)
Other assets (1,561) 4,975
Accounts payable and accrued expenses (7,237) (571)
Accrued distribution obligation -- (7,406)
Deferred revenue 2,444 7,248
------- --------
Net cash provided by continuing operating
activities 6,949 7,086
Net cash used in discontinued operations -- (276)
------- --------
Net cash provided by operating activities 6,949 6,810
------- --------
Cash flows from investing activities:
Purchases of property and equipment (7,740) (2,707)
Maturities of short-term investments 17,475 1,000
Purchases of short-term investments (9,785) (13,575)
Proceeds from sale of assets 164 6,723
------- --------
Net cash used in investing activities 114 (8,559)
------- --------
Cash flows from financing activities:
Proceeds from exercise of stock options,
warrants and shares issuances
under employee stock purchase plan 1,593 3,266
Payments on capital leases (1,378) (1,629)
------- --------
Net cash provided by financing activities 215 1,637
------- --------
Change in cash and cash equivalents 7,278 (112)
Cash and cash equivalents, beginning of period 14,819 13,942
------- --------
Cash and cash equivalents, end of period $22,097 $ 13,830
======= ========
HOMESTORE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
September 30, December 31,
2005 2004
-------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 22,097 $ 14,819
Short-term investments 37,350 45,040
Accounts receivable, net 13,809 12,532
Other current assets 14,153 12,498
----------- -----------
Total current assets 87,409 84,889
Property and equipment, net 17,479 15,242
Goodwill, net 19,502 19,502
Intangible assets, net 14,975 17,864
Restricted cash 4,992 5,840
Other assets 6,846 7,167
----------- -----------
Total assets $ 151,203 $ 150,504
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 4,158 $ 2,675
Accrued expenses 33,807 39,894
Obligation under capital leases 1,270 1,774
Deferred revenue 45,959 39,487
----------- -----------
Total current liabilities 85,194 83,830
Obligation under capital leases 117 991
Deferred revenue 72 4,100
Other liabilities 1,240 4,190
----------- -----------
Total liabilities 86,623 93,111
----------- -----------
Stockholders' equity:
Common stock 148 147
Additional paid-in capital 2,045,431 2,043,053
Deferred stock-based charges (429) (406)
Accumulated other comprehensive income 370 409
Accumulated deficit (1,980,940) (1,985,810)
----------- -----------
Total stockholders' equity 64,580 57,393
----------- -----------
Total liabilities and stockholders' equity $ 151,203 $ 150,504
=========== ===========
CONTACT: Homestore, Inc.
Mollie O'Brien, 805-557-2303
InvestorRelations@homestore.com