Online real estate search and marketing company Trulia Inc. today publicly filed for an initial public offering of shares in the company worth up to $75 million. Trulia’s move follows in the footsteps of competitor Zillow, which filed for an IPO a year ago, raising $75.7 million, and today has a market capitalization rate of $1.09 billion.
Trulia’s filing of an S-1 registration statement with the U.S. Securities and Exchange Commission comes on the heels of news reports that Trulia had quietly filed for an IPO with the SEC at the end of July under the provisions of a new law, the U.S. Jumpstart Our Business Startups (JOBS) Act, that allows emerging companies with less than $1 billion in revenue to file confidentially. That’s an attractive option for some companies, Reuters reported, because the filing can be withdrawn without publicizing it if regulatory issues come up.
Companies filing for an IPO are subject to an SEC ban discussing themselves while in registration to go public, usually for a period of 40 to 90 days after the filing of an IPO. Trulia spokesman Ken Shuman declined to comment for this story, saying "we are in a quiet period and can’t comment on the filing."
Trulia became the second most visited real estate website in June, jumping two positions from its long-held No. 4 spot and bumping down Realtor.com and Yahoo Real Estate in the process, according to Web rankings from metrics firm Experian Hitwise. Zillow has held the No. 1 spot since March, and both Zillow and Trulia retained their spots in July.
In the registration statement, Trulia noted that its database includes more than 110 million properties, including 4.5 million homes for sale and rent. Trulia also offers information on local schools, crime and neighborhood amenities, as well as more than 5 million unique user contributions from consumers, local experts and real estate professionals.
Trulia, which has 462 full-time employees, is based in San Francisco and also has offices in Denver and New York City.
While Trulia proposed $75 million as a maximum offering price in its S-1 registration statement, that is an estimate used solely to calculate a registration fee. Trulia could raise considerably more than that amount.
The regulatory filing sheds light on the company’s growth since its founding in 2005. Between 2007 and 2011, Trulia’s revenue grew from $1.7 million to $38.5 million — a compounded annual growth rate of about 119 percent, the company said. In the six months ended June 30, 2012, Trulia generated $29 million in revenue and had a net loss of $7.6 million, up from $6.2 million in all of 2011 and $3.8 million in all of 2010.
Among the risk factors cited in the filing, Trulia noted its history of losses: "We have not been profitable on a quarterly or annual basis since we were founded, and as of June 30, 2012, we had an accumulated deficit of $43.8 million."
Rival Zillow had racked up $78.7 million in losses when it filed for its IPO last year. The company first declared profitability in the second quarter of 2011, in its first financial report after going public. In this year’s second quarter, Zillow announced a 75 percent year-over-year increase in total revenue to $27.8 million and a net income of $1.3 million.
Monthly unique visitors to Trulia.com rose from 5 million in the six months through June 30, 2009, to 22 million in the six months through June 30, 2012. Citing comScore data, the filing noted that "a significant portion of our visitors do not visit our primary competitors’ websites. For instance, according to comScore, during each month in 2011 and in each of the six months ended June 30, 2012, more than 50 percent of our audience did not visit Zillow.com."
Trulia’s paid subscribers jumped from 2,398 as of June 30, 2009, to 21,544 as of June 30, 2012. The company has been deriving an increasing share of its revenue from subscription products sold to real estate professionals. Subscriptions accounted for 32 percent, 47 percent, 58 percent and 68 percent of Trulia’s revenue in 2009, 2010, 2011, and the six months ended June 30, 2012, respectively, the company said in the filing.
"We believe our subscription products provide compelling value and a better return on investment than other marketing channels. On average, paying subscribers receive more than five times the number of monthly leads compared to real estate professionals who only use our free products," the filing said.
Trulia said in the filing that its audience was "highly motivated and ready to purchase homes," citing surveys conducted between November 2011 and May 2012 in which 76 percent of more than 290,000 respondents contacting real estate professionals through their marketplace indicated that they were planning to move in the next six months, and in which almost half of more than 210,000 respondents stated that they were prequalified for a mortgage.
Subscriptions have been edging out display advertising as a source of revenue for the company, accounting for 32 percent of Trulia’s revenue in the six months ended June 30, 2012 compared with 68 percent of revenue in 2009. Trulia’s subscription products include Trulia Pro, Trulia Local Ads and Trulia Mobile Ads. Trulia debuted Trulia Mobile Ads in May as a mobile advertising platform designed to connect real estate professionals with likely homebuyers.
The company offers subscriptions lasting from one to 12 months with most subscribers choosing a period of less than 12 months, the filing said.
Trulia has made a concerted effort to ramp up its mobile traffic through the introduction of several consumer-facing mobile applications for iPhone, iPad, Kindle and Android devices in recent years. Mobile traffic accounted for 14 percent and 20 percent of Trulia’s overall traffic in 2011 and the six months ended June 30, 2012, respectively.
"In the six months ended June 30, 2012, we had over 4.3 million mobile monthly unique visitors, an increase of 176 percent over the same period in 2011. In addition, our mobile users are more likely than our Web users to contact real estate professionals through our marketplace," the filing said.
The filing notes that Trulia’s future goals include expanding its audience, increasing user engagement, growing the number of real estate professionals in its marketplace (currently about 360,000), increasing revenue, increasing brand awareness, expanding to adjacent markets such as rentals, mortgages, home improvement and agent tools, and to expand its business internationally.
Trulia proposed "TRLA" as its New York Stock Exchange symbol. The company began shuffling management in preparation for an IPO in February 2011, and in December hired two executives with experience at publicly traded companies.
