Technology TransactionsHomeStore Reports $4 Million Quarterly Profit
HomeStore.com, Inc. (Nasdaq: HOMS), operator of Realtor.com, announced pro forma revenues of $118.4 million for the first quarter, as well as a pro forma profit of $4 million. This is the third consecutive quarter the company has reported cash profitability.
On a pro forma basis, said the company, revenues rose to $118.4 million, up from $57.6 million a year earlier while net income for the first quarter was $4.0 million compared with a loss of $33.7 million during the first quarter of 2000.
"Pro forma" net income and loss figures, says the company, do not reflect charges related to the acquisition of move.com, the write-down of "certain investments," and non-cash charges such as the amortization of intangible assets and stock-based charges. To create a better basis for comparison, the company says pro forma operating results assume that the acquisition of move.com from Cendant Corporation occurred on January 1, 2000.
The move.com acquisition was completed in February. In exchange for its properties, Cendant received approximately 26.3 million shares of HomeStore stock. The move.com purchase gave HomeStore title to move.com, Rent Net, House Net, Senior Housing Net, and Self Storage Net, as well as the direct marketing company, Welcome Wagon.
In its quarterly report issued last week, Cendant said it "sold its full service real estate Internet portal, move.com, along with certain ancillary businesses, to Homestore.com for more than $700 million in February 2001. The transaction resulted in an approximately 10 times return on Cendant"s investment. Cendant currently owns approximately 19% of the outstanding shares of Homestore.com."
On the basis of generally accepted accounting principles (GAAP), HomeStore said it had revenues of $105.5 million for the first quarter and a net loss of $67.1 million. In the first quarter of 2000, on a GAAP basis, the company had sales of $38.6 million and a net loss of $29.2 million.
HomeStore obtains revenues from advertising and Realtor subscriptions. The company says that advertising represented 36 percent of its pro forma income while subscriptions constituted 64 percent.
"The number of professional subscriptions rose to approximately 359,000 at March 31, 2001," said the company, "a 95-percent increase from the total at December 31, 2000 of 184,000 professionals on a pro forma basis."
The company said that subscription growth was "due to the increase in the number of professional subscribers of Homestore.com products, including the bulk purchase of lead generation products by Cendant Corporation."
For the year, HomeStore said it expects to generate pro forma revenues of $500.0 million and pro forma earnings per share of $0.53. In the second quarter of 2001, Homestore.com expects to have revenues of $122.5 million and pro forma earnings per share of $0.11.
The company reported that it held cash and cash equivalents worth $284.152 million at the end of the quarter, up from $180.985 million as of December 31, 2000.
Quarterly results were announced after the stock market closed. For the day, HomeStore shares closed at $28.73, down 70 cents.
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