Real estate brokerage firm ZipRealty today reported a net loss of $800,000, or 4 cents a share, for the first quarter, down from a $700,000 profit during the same quarter a year ago.
Meanwhile, net revenues increased 8 percent to $19.2 million from last year.
The company also announced plans to enter Palm Beach, Fla., and the greater Philadelphia area by the end of the year.
“In terms of new market activity for the period, we commenced operations in Tampa and were particularly pleased that Houston reached profitability just nine months after its launch,” Chief Executive Eric Danziger said Monday in a statement.
“Additionally, we expect to be operational in Orlando in the second quarter and Minneapolis and Austin in the third quarters of 2006… Collectively, these new market opportunities position ZipRealty for further revenue diversification while meeting our shorter term goal of four to six new markets this year,” he said.
During an earnings announcement Monday, Danziger said that the expansion to the Philadelphia market will also bring ZipRealty operations to parts of New Jersey and Delaware. Because New Jersey has statewide restrictions on real estate rebates, he said the company is “working on alternatives to our rebate offerings” for that state.
ZipRealty announced last Wednesday that Danziger will step down as company CEO and president on Aug. 1. “Having led ZipRealty through tremendous growth over the past five years, Mr. Danziger plans to move back to his home in Arizona to spend more time with his family,” the company said in a statement.
Danziger said during the earnings announcement, “To everything there is a season. This is my season to return to Arizona … It’s a good time to exit stage right.”
The company’s chief financial officer, Gary Beasley, has assumed the role of president and as of Wednesday, ZipRealty had not yet found a CEO to succeed Danziger.
Beasley in a statement today said, “While the real estate market continues to transition, we are confident that ZipRealty remains well positioned to execute its growth strategy. Combined with a strong balance sheet and a brand that is increasingly associated with service and satisfaction relative to our peers, we have the utmost confidence in our ability to scale nationally.”
The number of transactions that ZipRealty closed in the first quarter increased 13 percent to 2,638 from the same period last year, and the total value of those transactions also increased approximately 8 percent to $899 million, the company said.
ZipRealty’s operations in California were a drag on the company compared to other markets, company officials said Monday – California operations accounted for about one-third of transaction revenue in first-quarter 2006 compared to 58 percent in first-quarter 2005.
The decline in the performance of the California real estate market also contributed to a decline in the average net revenue per transaction – from $7,391 in first-quarter 2005 to $7,069 in first-quarter 2006 – as home prices in many U.S. markets tend to be lower than home prices in California.
The company expects second-quarter revenues to reach between $22 million and $24 million, with reported loss per share between 4 cents and 2 cents.
For the full year, ZipRealty reiterated that it expects revenues to range between $105 million and $115 million, with reported earnings per fully diluted share for fiscal 2006 to be between 2 cents and 8 cents with a corresponding pro forma earnings per fully diluted share range of 15 cents to 25 cents.
ZipRealty shares (Nasdaq: ZIPR) closed at $9.41 per share on Monday, up .53 percent from the previous day’s close. The company’s first-quarter earnings were announced after closing.
ZipRealty employs more than 1,400 agents in 17 major metropolitan areas across the nation, and the company grew its sales force from 1,366 agents at the beginning of the first quarter to 1,481 at the end of the quarter.
Danziger said that visitors to the ZipRealty Web site increased about 50 percent in the first quarter compared to the same quarter in 2005, while the company’s cost per lead dropped about 24 percent.
“Transaction volume is down but (the amount of) people interested in real estate is higher than ever,” said Beasley. Traffic to real estate sites has increased about 20 percent this year compared to last year, he added.
About 32 percent of visitors to ZipRealty’s Web site are directly entering the ZipRealty.com Web site address, Beasley noted, while about 44 percent of traffic to the site is through affiliates, 19 percent is directed to the site through paid ads, and the remainder is generated through other partnerships.
Beasley also said that as the real estate market has slowed, commission rates have risen in some markets. “You’re seeing … commissions being increased in some areas as people are offering more attractive incentives to get people to buy their homes and look at their homes. We have not seen pressures on commissions during this downturn, which is a bit counterintuitive,” he said.
