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Move, Inc. (MOVE)

Q1 2009 Earnings Call

May 7, 2009, 5:00 pm ET


Todd Friedman - The Blueshirt Group

Steven H. Berkowitz - Chief Executive Officer & Director

Lewis R. Belote, III - Chief Financial Officer


Jason Helfstein - Oppenheimer & Co.

Mitch Bartlett - Craig-Hallum Capital Group, LLC

Mark May - Needham & Co.

William Morrison - ThinkEquity



Good day, ladies and gentlemen, and welcome to the first quarter 2009 Move Incorporated earnings conference call. My name is Wayne and I will be your coordinator for today. (Operator Instructions) I would now like to turn the call over to your host for today’s call Mr. Todd Friedman. Please proceed, sr.

Todd Friedman

Thank you, Wayne. Good afternoon, everyone, and welcome to our first quarter 2009 earnings call. On the call today is Steve Berkowitz, our Chief Executive Officer and Lew Belote, our Chief Financial Officer.

Today’s call is being webcast from the Investor Relations section of our website and will be available for replay shortly after we conclude. A copy of our press release issued earlier this afternoon is also available on our website.

Please be advised that some of the comments that will be made today constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act that involve potential risks and uncertainties concerning Move’s expected financial performance as well as Move’s strategic and operational plans. These potential risks and uncertainties include among other decreases or delays in advertising spending and market acceptance of new products and services.

Additional factors are discussed in the company’s annual and quarterly reports which are filed with the SEC and are available on our website. All information discussed in this call is as of May 7, 2009 and Move undertakes no duty to update this information. Results projected on the call today may differ materially from actual results and should not be considered as a guarantee of future performance.

On the call today, we will also be discussing non-GAAP financial measures in talking about the company’s performance. Reconciliations of those measures to GAAP measures can be found in the table attached to our press release. I’ll now turn the call over to Steve.

Steven Berkowitz

Thank you. Thank you for joining us today.

As I discussed with you last quarter, I spent the last hundred days completely immersing myself in Move’s people, products, technology, industry relationships in every aspect of our business. I’d like to use most of time for prepared remarks, giving you insight on what I’ve learned, where I believe the company needs to go, and how we plan to get there.

I think the first quarter highlighted both the challenges we face and the opportunities that exist in the market. So we’ll have Lew cover for the first quarter results and then I’ll come back and provide you with a broader business perspective and an outline on our strategic plan. Lew?

Lewis Belote

Thanks, Steve. Let me start by saying that as you are all aware, the real estate market was difficult and credit markets did not improve in the first quarter and we are not making predictions about when those conditions will improve. In that context, our EBITDA and operating cash flow are positive indicators of the underlying strength of our asset base.

At a high level, revenue for the quarter was $54.9 million and our adjusted EBITDA was $6.6 million when you exclude non-recurring severance cost. At a time when the real estate market is in a continued downturn, our revenue only declined slightly and we have successfully managed our cost structure to drive an EBITDA margin greater than 10%.

The Q1 results reflect the benefit of our $20 million in cost reduction that we completed in the second half of last year. Given the changes in our business model and our management team over the past few quarters, we think it’s important to note the changes in our core operating expenses, so you can better understand the underlying cost structure and earnings leverage in our business. We define core operating expenses as the four major expense categories, minus stock base compensation, severance charges, and other non-recurring charges.

In the first quarter, they were $50.9 million, a 14% decline compared to $59.1 million in the first quarter last year and a $2.1 million decline from the fourth quarter of 2008. You can see in our core operating expenses that we have been successfully reducing our costs, to create efficiencies in our organization as well as to free up investment dollars for future opportunities.

Now looking at the quarter more closely, revenue was $54.0 million compared to $61.9 million in the first quarter of last year.

The 11% decrease was a result of a decline in each of our businesses with a Top Producer being down just slightly, but New Homes and Media were down 47% and 30% respectively.

Compared to Q408, revenue was down 4.5%. The sequential declines were impacted heavily by New Homes and Media, but and Top Producer were not able to generate enough new sales to offset customer attrition, as we saw the addressable market of real estate agents continue to contract in the quarter.

While we’ve been successful in marketing primarily to highly productive realtors, those with more than ten listings per year, we’re starting to see a portion of that group in certain markets struggle to maintain their advertising spend. In spite of the bad news in the media about residential real estate, there’s still an expectation that $4.6 million resale transactions will occur in 2009.

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