LoopNet, Inc. Announces Third Quarter 2009 Financial Results

http://www.businesswire.com/news/home/20091028006331/en

SAN FRANCISCO--(Business Wire)--
LoopNet, Inc. (NASDAQ:LOOP), today announced financial results for the third
quarter ended September 30, 2009.

Revenue for the third quarter of 2009 was $18.8 million, compared to $22.4
million in the third quarter of 2008. Net income applicable to common
stockholders for the third quarter of 2009 was $3.7 million or $0.09 per diluted
share, compared to $4.8 million or $0.13 per diluted share in the third quarter
of 2008. Non-GAAP net income (net income excluding stock-based compensation and
litigation related costs) for the third quarter of 2009 was $5.3 million or
$0.12 per diluted share, compared to $6.4 million or $0.17 per diluted share in
the third quarter of 2008.

LoopNet`s Adjusted EBITDA (earnings before interest, tax, depreciation,
amortization, stock-based compensation and litigation related costs) for the
third quarter of 2009 was $7.8 million, compared to $10.4 million in the third
quarter of 2008. The Company has reported Adjusted EBITDA because management
uses it to monitor and assess the Company`s performance and believes it is
helpful to investors in understanding the Company`s business.

"We are very pleased with how the company and business performed during Q3
2009," said LoopNet Chairman and CEO Richard Boyle. "Despite extremely
challenging industry conditions, we comfortably exceeded the financial targets
that we set three months ago, and several key measures of our business improved
substantially in the quarter. Equally important, we are as confident as ever
that our team, approach, and positioning will enable us to emerge from the
current down cycle as a much stronger company."

The number of LoopNet registered members, which includes both basic and premium
members, grew to 3,760,249 during the third quarter of 2009, a 21% increase over
the third quarter of 2008. The number of LoopNet premium members as of the end
of the third quarter of 2009 was 69,809, a 17% decline from the third quarter of
2008. The average monthly price of premium membership increased to $66.09, up 2%
over the third quarter of 2008. There were 729,467 total commercial real estate
listings active on the LoopNet marketplace as of the end of the third quarter of
2009, a 14% increase over the third quarter of 2008. In addition, there were
44.1 million profile views of listings on the LoopNet marketplace during the
third quarter of 2009, a 1% decline from the third quarter of 2008. Average
monthly unique visitors during the third quarter of 2009, as reported by
comScore Media Metrix, were approximately 1,005,000, a 11% increase over the
third quarter of 2008.

Balance Sheet and Liquidity

As of September 30, 2009, LoopNet had $125.5 million of cash, cash equivalents
and short-term investments and no debt.

Business Outlook

Based on current visibility, the Company expects revenue for the quarter ending
December 31, 2009 to be in the range of $17.7 to $17.9 million,Adjusted EBITDA
to be in the range of $6.7 to $6.9 million and non-GAAP net income to be in the
range of $0.08 to $0.09 per diluted share, assuming an effective tax rate of
approximately 40%. The Company expects stock-based compensation to be
approximately $0.03 per share (net of tax benefit) in the quarter ending
December 31, 2009. The Adjusted EBITDA and non-GAAP net income guidance for the
quarter ending December 31, 2009 exclude stock-based compensation and litigation
related costs.

Conference Call Information

LoopNet, Inc. will discuss these financial results in a conference call at 1:30
p.m. PDT, 4:30 p.m. EDT, today. To participate in the conference call, please
dial 888-419-5570 if you are calling from within the United States or
617-896-9871 if you are calling from outside the United States, and enter pass
code number 36051578. Investors may also listen to a live web cast of the
conference call on the investor relations section of our website at
investor.LoopNet.com/events.cfm. For investors unable to participate in the live
conference call, an audio replay will be available until Friday, October 30,
2009 at 8:59 p.m. PDT. To access the audio replay, dial 888-286-8010 within the
United States or 617-801-6888 internationally and enter pass code number
39573798. A web cast replay of the call will be available on the investor
relations section of our website at http://investor.LoopNet.com/events.cfm
approximately two hours after the conclusion of the call and will remain
available for 30 calendar days.

Non-GAAP Financial Measures

This press release includes discussions of Adjusted EBITDA, non-GAAP net income
and non-GAAP net income per share, which are non-GAAP financial measures
provided as a complement to results provided in accordance with accounting
principles generally accepted in the United States of America ("GAAP"). The term
"Adjusted EBITDA" refers to a financial measure that we define as earnings
before net interest, income taxes, depreciation, amortization, stock-based
compensation and litigation related costs. The term "non-GAAP net income" refers
to a financial measure that we define as net income before stock-based
compensation and litigation related costs. Non-GAAP net income is also provided
on a per share basis, using shares outstanding at the relevant period of
measurement. Adjusted EBITDA, non-GAAP net income and non-GAAP net income per
share are not substitutes for measures determined in accordance with GAAP, and
may not be comparable to Adjusted EBITDA, non-GAAP net income and non-GAAP net
income per share as reported by other companies. We believe Adjusted EBITDA to
be relevant and useful information to our investors as this measure is an
integral part of our internal management reporting and planning process and is
the primary measure used by our management to evaluate the operating performance
of our business. The components of Adjusted EBITDA include the key revenue and
expense items for which our operating managers are responsible and upon which we
evaluate their performance, and we also use Adjusted EBITDA for planning
purposes and in presentations to our board of directors. We believe non-GAAP net
income and non-GAAP net income per share to be relevant and useful information
to our investors as they provide meaningful insight into the Company`s
performance while excluding infrequent and non-recurring items that may not be
considered directly related to our on-going business operations. We believe that
non-GAAP net income and non-GAAP net income per share are also used by companies
and investors to evaluate performance in the online marketplace and platform
industry. We also believe that Adjusted EBITDA, non-GAAP net income and non-GAAP
net income per share allow for a more accurate comparison of our operating
results over historical periods. A limitation of Adjusted EBITDA, non-GAAP net
income and non-GAAP net income per share is that they do not include all items
that impact our net income for the period. Management compensates for this
limitation by also relying on the comparable GAAP financial measure of net
income, which includes the items that are excluded from Adjusted EBITDA,
non-GAAP net income and non-GAAP net income per share. Management believes that
these non-GAAP measures should be considered as a complement to, and not as a
substitute for, or superior to, the corresponding measures calculated in
accordance with GAAP. A reconciliation of these non-GAAP measures to GAAP is
provided in the attached tables. Reconciliations of Company expectations for
Adjusted EBITDA and non-GAAP net income per share for the quarter ending
December 31, 2009 to Company expectations for GAAP net income for the quarter
ending December 31, 2009 are not provided, as GAAP net income expectations for
this period is not accessible. GAAP net income expectations are not accessible
for this period due to the uncertain nature of the timing and amount of
potential litigation related costs.

About LoopNet, Inc.

LoopNet, Inc. is the leading online marketplace for commercial real estate and
businesses for sale in the United States. The LoopNet.com online marketplace
enables commercial real estate agents, working on behalf of property owners and
landlords, to list properties for sale or for lease by submitting detailed
property listing information in order to find a buyer or tenant. Commercial real
estate brokers, agents, buyers and tenants use the LoopNet online marketplace to
search for available property listings that meet their commercial real estate
criteria. By connecting the sources of commercial real estate supply and demand
in an efficient manner, LoopNet enables commercial real estate participants to
initiate and complete transactions more cost-effectively. LoopNet also delivers
technology and information services to commercial real estate organizations to
manage their online listing presence and optimize property marketing.

LoopNet customers include virtually all of the top commercial real estate firms
in the U.S., including CB Richard Ellis, CCIM, Century 21 Commercial, Coldwell
Banker Commercial, Colliers International, The CORE Network, CORFAC
International, Cushman & Wakefield, First Industrial Realty Trust, Grubb &
Ellis, Jones Lang LaSalle, Lee & Associates, Lincoln Property Company, Marcus &
Millichap, NAI Global, ONCOR International, ProLogis, Prudential CRES, RE/MAX,
Retail Brokers Network, SIOR, Sperry Van Ness and TCN Worldwide.

Forward Looking Statements

This release contains forward-looking statements regarding LoopNet`s
expectations regarding its future financial results as well as trends in the
commercial real estate industry. These statements are based on current
information and expectations that are inherently subject to change and involve a
number of risks and uncertainties. Actual events or results might differ
materially from those in any forward-looking statement due to various factors,
including, but not limited to economic events or trends in the commercial real
estate market or in general, the effects of recent economic and consumer
confidence trends on global and domestic financial markets, our ability to
continue to attract new registered members, convert them into premium members
and retain such premium members, seasonality, our ability to manage our growth,
our ability to successfully integrate the technologies, operations and personnel
of acquired businesses in a timely manner, our ability to obtain the expected
strategic and financial benefits from acquisitions, our ability to introduce new
or upgraded products or services and customer acceptance of such services, our
ability to obtain or retain listings from commercial real estate brokers, agents
and property owners and competition from current or future companies. Additional
information concerning factors that could cause actual events or results to
differ materially from those in any forward looking statement are contained in
our Quarterly Report on Form 10-Q filed with the Securities and Exchange
Commission ("SEC"), and subsequent SEC filings made by us. Copies of filings
made by us with the SEC are available on the SEC`s website or at
http://investor.loopnet.com/sec.cfm. LoopNet does not intend to update the
forward-looking statements included in this press release which are based on
information available to us as of the date of this release.

LOOPNET, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)

December 31, September 30,
2008 2009
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 61,325 $ 122,040
Short-term investments 3,262 3,416
Accounts receivable, net of allowance of $121 and $181, respectively 1,564 1,758
Prepaid expenses and other current assets 1,530 1,285
Deferred income taxes, net 607 607
Total current assets 68,288 129,106

Property and equipment, net 2,208 2,515
Goodwill 23,056 23,368
Intangibles, net 5,678 4,781
Deferred income taxes, net, non-current 5,829 7,031
Deposits and other noncurrent assets 3,151 3,876
Total assets $ 108,210 $ 170,677

Liabilities and stockholders` equity
Current liabilities:
Accounts payable $ 622 $ 1,234
Accrued liabilities 2,020 2,603
Accrued compensation and benefits 2,759 2,793
Deferred revenue 10,358 9,793
Total current liabilities 15,759 16,423

Commitments and contingencies
Series A convertible preferred stock - 48,122
Stockholders` equity:
Common stock, $.001 par value, 125,000,000 shares authorized; 39,218,665 and 39,443,402
shares issued, respectively; and 34,292,704 and 34,517,441 shares outstanding, respectively 39 39
Additional paid in capital 114,915 120,456
Other comprehensive loss (276 ) (428 )
Treasury stock, at cost, 4,925,961 shares (54,556 ) (54,556 )
Retained earnings 32,329 40,621
Total stockholders` equity 92,451 106,132
Total liabilities and stockholders` equity $ 108,210 $ 170,677

LOOPNET, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(unaudited)

Three months ended September 30, Nine months ended September 30,
2008 2009 2008 2009

Revenues $ 22,403 $ 18,795 $ 65,019 $ 58,145
Cost of revenue (1) 2,876 2,670 7,994 8,339
Gross margin 19,527 16,125 57,025 49,806

Operating expenses (1):
Sales and marketing 4,711 2,650 14,375 11,394
Technology and product development 2,301 2,833 6,648 8,047
General and administrative 5,227 5,547 14,232 17,418
Total operating expenses 12,239 11,030 35,255 36,859
Income from operations 7,288 5,095 21,770 12,947

Interest and other income, net 459 52 1,914 159
Income before tax 7,747 5,147 23,684 13,106

Income tax expense 2,927 1,342 9,476 4,659
Net income 4,820 3,805 14,208 8,447
Convertible preferred stock accretion of discount - (85 ) - (155 )
Net income applicable to common stockholders $ 4,820 $ 3,720 $ 14,208 $ 8,292

Net income per share applicable to common stockholders
Basic $ 0.14 $ 0.09 $ 0.39 $ 0.20
Diluted $ 0.13 $ 0.09 $ 0.38 $ 0.19

Weighted average shares
Basic 35,503 41,915 36,243 41,833
Diluted 36,787 42,919 37,693 42,765

(1) Stock-based compensation is allocated as follows:

Cost of revenue $ 153 $ 4 $ 408 $ 361
Sales and marketing 554 (755 ) 1,632 481
Technology and product development 347 699 919 1,745
General and administrative 465 1,174 1,418 2,475
Total $ 1,519 $ 1,122 $ 4,377 $ 5,062

LOOPNET, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)

Nine months ended September 30,
2008 2009

Cash flows from operating activities:
Net income $ 14,208 $ 8,447
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense 1,584 1,922
Stock-based compensation 4,377 5,062
Tax benefits from exercise of stock options (689 ) (288 )
Deferred income tax (938 ) (1,202 )
Changes in operating assets and liabilities:
Accounts receivable (652 ) (193 )
Prepaid expenses and other assets (1,892 ) (16 )
Income taxes payable (9 ) 288
Accounts payable 78 612
Accrued expenses and other current liabilities 2,084 583
Accrued compensation and benefits 29 35
Deferred revenue 1,314 (566 )
Net cash provided by operating activities 19,494 14,684

Cash flows from investing activities:
Purchase of property and equipment (1,041 ) (1,352 )
Purchase of investments (750 ) (750 )
Acquisition, net of acquired cash (12,584 ) (312 )
Net cash used in investing activities (14,375 ) (2,414 )

Cash flows from financing activities:
Net proceeds from exercise of stock options 327 190
Net proceeds from sale of convertible preferred stock - 47,967
Repurchase of common stock (44,595 ) -
Tax benefits from exercise of stock options 689 288
Net cash provided by (used in) financing activities (43,579 ) 48,445

Net increase (decrease) in cash and cash equivalents (38,460 ) 60,715

Cash and cash equivalents at beginning of period 104,564 61,325

Cash and cash equivalents at end of period $ 66,104 $ 122,040

LOOPNET, INC.
Reconciliation of GAAP Net Income to Adjusted EBITDA
(In thousands, except per share data)

Three months ended September 30, Nine months ended September 30,
2008 2009 2008 2009

GAAP net income $ 4,820 $ 3,805 $ 14,208 $ 8,447

Add back (deduct):
Income tax expense 2,927 1,342 9,476 4,659
Depreciation and amortization 587 681 1,584 1,922
Interest and other income, net (459 ) (52 ) (1,914 ) (159 )
Stock-based compensation 1,519 1,122 4,377 5,062
Litigation related costs 1,028 928 2,693 4,452
Adjusted EBITDA $ 10,422 $ 7,826 $ 30,424 $ 24,383

Reconciliation of GAAP Net Income to Non-GAAP Net Income
(In thousands, except per share data)

Three months ended September 30, Nine months ended September 30,
2008 2009 2008 2009

GAAP net income $ 4,820 $ 3,805 $ 14,208 $ 8,447

Add back (deduct):
Stock-based compensation 1,519 1,122 4,377 5,062
Litigation related costs 1,028 928 2,693 4,452
Income taxes associated with non-GAAP adjustments (963 ) (535 ) (2,828 ) (3,381 )
Non-GAAP net income $ 6,404 $ 5,320 $ 18,450 $ 14,580

Diluted non-GAAP net income per share $ 0.17 $ 0.12 $ 0.49 $ 0.34

Shares used in non-GAAP diluted net income per share calculation 36,787 42,919 37,693 42,765

LoopNet, Inc.
Brent Stumme, 415-284-4310
Chief Financial Officer
Derek Brown, 415-284-4310
VP, Investor Relations & Corporate Planning

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