FINANCIAL OVERVIEW RACHEL GLASER CHIEF FINANCIAL OFFICER Analyst & Investor Day 2014 May 22, 2014
Statements made in this presentation or orally accompanying its delivery (whether in narrative, bullet, numerical, graphical or other form, and whether or not accompanied by linguistic cues such as believe, will, might, intend, expect, plan, anticipate, project, target, outlook or the like) that are not historical fact are forward-looking statements within the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. Such statements may include, among others, remarks about management s views of Move s expectations, plans or prospects, or about Move products, sales, earnings, expenditures, debt, assets, cash flow, technology, operations, business strategies or initiatives. Forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause the actual results of Move (including its subsidiaries, divisions and affiliates) to be materially different than those expressed or implied in, or inferred from, such statements, or that could cause other forward-looking statements to prove incorrect. These factors include the condition of the real estate, mortgage and financial markets, sales that decrease, fail to grow or remain flat, failures or delays in Move s ability to innovate or deliver new products, product launches that do not gain sufficient acceptance by our customers and other risk factors included from time to time in documents Move files with the Securities and Exchange Commission, including, but not limited to, its Form 10-Ks, Form 10-Qs and Form 8-Ks. Other unknown or unpredictable factors also could have material adverse effects on Move s future results. The forward-looking statements made in this presentation are made only as of the date hereof, and those made orally, accompanying delivery of the presentation, are made only as of the date such statements are spoken. Move cannot guarantee future results, levels of activity, performance or achievements. Accordingly, you should not place undue or uncorroborated reliance on these forward-looking statements. Finally, Move expressly disclaims any intent or obligation to update any forward-looking statements to reflect subsequent events or circumstances. 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 on the company s investor relations website.
MOVE IS BEST POSITIONED TO CAPTURE MARKET SHARE; GROWTH IS AHEAD OF US
CURRENT STATE
HUGE ADDRESSABLE MARKET $2.9B Software & Services $9.0B Agents & Brokers $0.8B Moving & Storage $34 BILLION $5.2B Rentals $12.8B Home Improvement $3.6B Mortgage & Insurance (1) Internal estimate; data sources Borrell and Associates and BIA/Kelsey (2) Based on FY14 revenue guidance for Move, Zillow, and Trulia.
2014 AGENT/BROKER AD SPEND BREAKDOWN (1) 11% Direct Mail 27% Outdoor 3% Other 20% Display 18% Print 6% Search 7% Video $3.9B Other Digital Channels (e.g., search engines, long-tail publishers, etc.) 9% Television 8% Mobile 10% Email $0.8B Top 3 Online Real Estate Portals (1) Internal estimate; data sources Borrell and Associates and BIA/Kelsey (2) Based on FY14 revenue guidance for Move, Zillow, and Trulia.
2014 Digital Ad Spend Overall Ad Spend Growth Shift to Mobile Shift to Other Digital Total Digital Ad Spend Growth 2018 Digital Ad Spend 2014-2018 GROWTH OF DIGITAL ADVERTISING SPEND ($ IN BILLIONS) $8.0 $0.9B $2.9B $7.6B $7.0 $1.3B $6.0 $5.0 $4.7B $0.7B $4.0 $3.0 $2.0 $1.0 $0.0 (1) Internal estimate; data sources Borrell and Associates and BIA/Kelsey (2) Based on FY14 revenue guidance for Move, Zillow, and Trulia.
TRAFFIC GROWTH 300 + % GROWTH SINCE 2007 MAR-2014 Q1-2014 2013 2012 2011 2010 2009 2008 2007 Average Monthly Unique Visitors comscore Source: comscore realtor.com Unique Visitors
LEAD GROWTH 300 + % GROWTH SINCE 2010 MAR-14 Q1-2014 2013 2012 2011 2010 Average Monthly Listing Leads Source: realtor.com Internal Metrics
HIGHEST QUALITY CONTENT Q: ON WHICH WEBSITE DID YOU FIND YOUR HOME? % 31 Competitor 1 23 Competitor 2 13 Competitor 3 7 Competitor 4 7 0 5 10 15 20 25 30 Source: California Association of REALTORS 2013 Survey of California Home Buyers
MOST ENGAGED AUDIENCE PAGE VIEWS PER UNIQUE VISITOR 24.0x Competitor 1 23.9x Competitor 2 15.9x MINUTES PER UV 32.8x Competitor 1 30.7x Competitor 2 19.6x ANNUAL REVENUE PER UV* $2.94 Competitor 1 $1.75 Competitor 2 $2.48 *Represents Q1 2014 reported revenue results. Source: Unique Visitors, Page Views and Minutes based on comscore Multi-Platform report including PC and mobile for Q1 2014
HIGHEST LEAD VOLUME Q: WHAT IS YOUR #1 SOURCE OF LEAD VOLUME? % 9.8 Competitor 1 3.6 Competitor 2 3.4 Competitor 3 1.4 0 5 10 Source: PAA Research
MOBILE IS NOW 55% OF ALL LISTING PAGE VIEWS WWW MOBILE Source: Move Internal Metrics. www.realtor.com, m.realtor.com and all realtor.com mobile apps
MOBILE APP USERS 7-8X AS ENGAGED * WWW MOBILE *Measured by Listing Page Views per Unique User from Mobile app users as compared to Web users Source: Move Internal Metrics. www.realtor.com and all realtor.com mobile apps
BRANDS Consumer Advertising Software and Services 77% of Total Revenue 23% of Total Revenue
CONSUMER ADVERTISING PRODUCTS MONETIZATION Showcase Listings Connection for Co-Brokerage Featured Products Display Ads Adjacent Search Verticals
SHOWCASE LISTINGS Exclusive Leads, Exclusive Branding CONNECTION FOR CO-BROKERAGE Buyers Leads, 1 lead to 1 agent
HIGHEST DEMAND FOR CONNECTION FOR CO-BROKERAGE SOLD SOLD OUT/WAIT LIST
1 OPPORTUNITY OPTIMIZE YIELD PER LISTING
FACT: BUSINESS MODEL FOUNDED ON EXCLUSIVITY SHOWCASE PROVIDES EXCLUSIVE LEADS TO 42% OF ALL LISTINGS Source: Move Internal Metrics. CONNECTION SM FOR CO-BROKERAGE PROVIDES EXCLUSIVE LEADS TO REMAINING LISTINGS ONE INQUIRY TO ONE AGENT
FACT: REVENUE HAS NOT SCALED WITH TRAFFIC Revenue Unique Users $400,000 REVENUE NOT SCALING WITH TRAFFIC $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $- Source: Move Internal Metrics. 2010 2011 2012 2013 2014 MAR-14 REVENUE UNIQUE USERS
FACT: EXAMPLE ZIP CODE Per Month INDUSTRY DOESN T VALUE EXCLUSIVITY *Assumes average $20 cost per lead and $75 cost per 1,000 Listing Page Views Competitor 1 Competitor 2 Assumed Listing Page Views 1,000 1,000 1,000 Impressions 1,000 3,000 3,000 Lead Potential 3.0 9.0 9.0 Revenue Potential $60.00 $225.00 Multiple vs. realtor.com 3.8x $180.00 3.0x Cost per Unique Lead $20.00 $75.00 $60.00 Cost per Unique Listing Page View $0.06 $0.23 $0.18
FACT: CURRENT BUSINESS MODEL IMPEDES GROWTH 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000-7.5M 7.2M 6.8M 7.0M 6.6M 6.3M $32 $33 $36 3.5M 3.6M 3.0M 2.6M 2.7M 3.0M 2009* 2010 2011 2012 2013 2014E $90,000 $80,000 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 HISTORICAL LISTING COUNT ACTIVE LISTINGS TOTAL REVENUE PER HISTORICAL LISTING *Excludes Divested Businesses. Source: Move Internal Metrics.
VALUE Millions 1 2-3X MONETIZATION FACTOR ON CONNECTION FOR CO-BROKERAGE OPPORTUNITY $140M +2-3x Audience +Rate +Inventory Increase Prices to Value Exclusivity Future 2015+ OPTIMIZE YIELD PER LISTING $40-50M Market Price To Non-Exclusivity Current Value 2014 Today Source: Move Internal Estimates
2 OPPORTUNITY CAPTURE MORE SHARE OF WALLET
FACT: MASSIVE LEAD GROWTH 2011 2012 2013 2014 ~5M ~1.0M BUYER/SELLER LEADS PRODUCED ANNUAL HOME SALES REALTORS INQUIRIES FAR OUTPACING HOME SALES & NUMBER OF REALTORS Source: Move internal estimate and National Association of REALTORS existing home sales from the National Association of REALTORS
2 OPPORTUNITY: Marketplace Move (Current) Move (Shift to Non Exclusive) Value of Software Leads per Year 150 150 150 150 Conversion to Transaction 2.0% 4.0% 3.0% 4-5% Average Home Price* $350,000 $350,000 $350,000 $350,000 Commission Rate (1-side) 2% 2% 2% 2% IMPROVE AGENT ROI Commission Income $21,000 $42,000 $31,500 Annual Cost Cost/Lead *Average Home Price represents typical Co-Broke listing/lead. Source: Move Internal Metrics. $3,000 $20 $3,000 $20 $3,000 $20 $42,000 - $52,500 $4,000 - $5,000 $27 - $33 ROI 6.0x 13.0x 9.5x 9.5x
2 OPPORTUNITY: IMPROVE AGENT ROI Marketplace Move (Current) Move (Shift to Non- Exclusive) Value of Software Leads per Year 150 150 150 150 Conversion to Transaction 2.0% 4.0% 3.0% 4-5% Average Home Price* $350,000 $350,000 $350,000 $350,000 Commission Rate (1-side) 2% 2% 2% 2% Commission Income $21,000 $42,000 $31,500 Annual Cost Cost/Lead $3,000 $20 $3,000 $20 $3,000 $20 $42,000 - $52,500 $4,000 - $5,000 $27 - $33 ROI 6.0x 13.0x 9.5x 9.5x *Average Home Price represents typical Co-Broke listing/lead. Source: Move Internal Metrics.
2 OPPORTUNITY: IMPROVE AGENT ROI Marketplace Move (Current) Move (Shift to Non- Exclusive) Value of Software Leads per Year 150 150 150 150 Conversion to Transaction 2.0% 4.0% 3.0% 4-5% Average Home Price* $350,000 $350,000 $350,000 $350,000 Commission Rate (1-side) 2% 2% 2% 2% Commission Income $21,000 $42,000 $31,500 Annual Cost Cost/Lead $3,000 $20 $3,000 $20 $3,000 $20 $42,000- $52,500 $4,000 - $5,000 $27 - $33 ROI 6.0x 13.0x 9.5x 9.5x *Average Home Price represents typical Co-Broke listing/lead. Source: Move Internal Metrics.
3 OPPORTUNITY GROW INTO ADJACENT CONSUMER SEGMENTS
3 REVENUE GROWTH OPPORTUNITY OPPORTUNITY GROW INTO ADJACENT CONSUMER SEGMENTS LEADERSHIP Source: Move Internal Estimates Market Size Move Revenue Opportunity Implied Market Share Agents & Brokers $9.0B $450 500M 5.6 6.6% Software & Services $2.7B $130 160M 4.8 6.0% Moving & Storage $0.8B $15 20M 3.2 4.5% EARLY MOMENTUM Rentals $5.2B $40 50M 0.8 1.0% Finance & Lending $3.6B $55 70M 0.7 1.1% GREENFIELD Home Improvement $12.8B $10 20M 0.1 0.2% FUTURE REVENUE POTENTIAL $700 820 MILLION
GROWING TO $100 PER LISTING
CURRENT BUSINESS MODEL + Audience Growth + Pricing Leverage + Customer Acquisition / Prospecting FUTURE BUSINESS MODEL + Shift to non-exclusive listing monetization + Optimize yield per listing (1x to 3x) + SaaS integration & agent lead conversion + Grow into Adjacent Segments Source: Move Internal Metrics.
THE ROAD TO $100 PER LISTING 700M $60M $700M $85M 600M $85M 500M $90M 400M $125M 300M $255M 200M 100M 0 Current Revenue Yield Optimization Audience Growth Conversion Software & Services Adjacent Verticals Projected Revenue at $100 per Listing Source: Move Internal Estimates.
MOVE FINANCIALS
REVENUE ADJUSTED EBITDA Revenue ($M) Adj. EBITDA ($M) $260 +13% $700M 50 $240 $220 +14% $140-210M 40 $200 +4% $180 30 $160 $140 20 $120 $255 $100 2012 2013 2014 (E) FUTURE 0 Adj. EBITDA 13.5% 12.6% 12% 20-30% *See appendix for reconciliation of Non-GAAP Adjusted EBITDA to the most directly comparable measures. Percentages above revenue bars represent year-over-year growth rate. Source: Move Internal Estimates.
OPERATING LEVERAGE % OF REVENUE ADJUSTED EBITDA VARIABLE COST 12% 10% 20-30% 10% SCALABLE COST 63% 50-60% FIXED COST 15% 10% Source: Move Internal Estimates 2014 @ $255M Revenue Costs exclude interest, taxes, depreciation, amortization, stock based and other non-cash items regularly excluded from Adjusted EBITDA calculations. FUTURE @ $700M Revenue
VALUATION DISCONNECT ONE VIEW $600M $520M $400M COMP: LEDR 7X Rev $3/Share - SaaS NOLs Total Value Excluding realtor.com -$120-150M Implied realtor.com Value Source: Move Internal Metrics.
Unique Visitors Adj. EBITDA Multiple Adj. EBITDA Rev Multiple Revenue Market Cap VALUATION DISCONNECT ANOTHER VIEW Move Competitor 1 Competitor 2 Move Competitor 1 Competitor 2 $300 $4,000 $200 $3,000 $100 $2,000 $0 $255.0 $295.0 $253.0 $1,000 $0 $400 $4,030 $1,180 15.0 $40 10.0 $20 5.0 $0 $30.0 $40.6 $20.0 0.0 1.6x 13.7x 4.7x 45.0 100.0 30.0 15.0 75.0 50.0 25.0 0.0 24 43 23 0.0 13.3x 99.3x 59.0x Source: 2013 Analyst Consensus Estimates (Revenue & Adj. EBITDA), Unique Visitors from comscore Mar 2013, Market Cap and Rev/Adj. EBITDA multiples as of 5/10/13
$700M $600M $400M $200M - Revenue Adj. EBITDA $700 $140 / 20% 2X REVENUE 10X EBITDA $ 1 =.4B Source: Move Internal Estimates.
QUESTIONS &ANSWERS