Online real estate brokerage ZipRealty is set to start offering shares on Wall Street this week at $10 to $12 per share, according to filings with the Securities and Exchange Commission. Its common stock will be listed on the Nasdaq National Market under the symbol “ZIPR.”
The company set its IPO at 4.55 million shares, which it expects will net proceeds of about $44.5 million, and said it will use money raised from the offering to generate working capital. Zip also said it might use some of the proceeds for potential acquisitions.
The Emeryville, Calif.-based company has been in the brokerage business since 1999. Zip warned investors in its SEC filings that its “Internet-enabled residential real estate brokerage business model remains relatively unproven” and that it will have to continue to recruit, hire and retain qualified agents and maintain access to MLS home listings in order to grow.
“In addition, economic trends could have an impact on our business; for example, an increase in interest rates could lead to fewer residential real estate transactions and possibly reduce the demand for our services,” Zip stated in the filings.
Through the first nine months of this year, ZipRealty generated $44.7 million in revenue and had $2.24 million in net operating income, according to the filings. “We returned to profitability in the second and third quarters of 2004, primarily as a result of higher average net transaction revenue and increased transactional volume due to our increased ZipAgent force and seasonal factors,” Zip stated in the filings.
Zip sustained a loss in the first quarter of 2004, and as of Sept. 30, had an accumulated deficit of $53 million, according to the SEC filings.
As of Sept. 30, ZipRealty had more than 400,000 active registered users who had accessed its Web site within the last nine months. The company has closed more than 16,000 real estate transactions with an aggregate transaction value of approximately $5 billion since inception.
ZipRealty currently operates in Atlanta, Baltimore, Washington, D.C., and Northern Virginia, Boston, Chicago, Dallas, Los Angeles, Orange County, Calif., Phoenix and Scottsdale, Ariz., Sacramento, San Diego, the San Francisco Bay Area and Seattle.
Zip agents earn a compensation package of between 40 and 75 percent of the commissions they generate, as well as an expense allowance of up to $1,500 per month. Zip also provides its agents with health, retirement and other benefits, and pays for certain marketing costs. Zip agents may also be granted equity incentives based on performance.
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Zip was founded by University of California at Berkeley graduates Scott Kucirek and Juan Mini. Kucirek, who serves as the company’s EVP of new market development, has a master’s degree in business from the Haas School of Business, and a bachelor’s degree in bioengineering from U.C. Berkeley. He previously served nine years in the U.S. Navy as a naval aviator and worked in several management and planning roles. Eric A. Danziger, former president and COO of Carlson Hotels Worldwide, replaced Mini as CEO In 2001. Mini remains on the company’s board of directors and is responsible for leading market expansion.
Zip’s management team and board of directors will beneficially own more than two-thirds of the outstanding common stock following its initial offering, and will be able to control corporate events requiring stockholder approval, according to the SEC filings.
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