Don't be fooled by the fact that VISTAinfo (Nasdaq: VINF) has taken a beating like other technology stocks this year, but the worst is behind the company and better days lay ahead. VISTAinfo products seat 325,000 agents, a feat unrivaled by any other application or MLS service provider to date. That fact coupled with the company's march to impending profitability, makes VISTAinfo one of the must-watch companies for 2001.

The company has spent the past year reorganizing from a b-to-c company into a b-to-b with an emphasis on accelerating penetration of its application and information services for real estate professionals. Third quarter and nine month revenues recently announced were $22.4 million and $66.3 million respectively, compared with $6.5 million and $19.4 million for the same periods the year before. Net losses were also trimmed as the company paid down debt.

Causing the stock to temporarily take hits was the acquisition of Data Management Systems, the country's leading supplier of MLS information management systems. According to a company statement, the net loss attributable to common shareholders after acquisition charges, for the third quarter 2000, declined to $2.8 million or $0.11 per share compared with $8.3 million or $0.43 per share in the same period last year. The net loss to common shareholders, after acquisition-related charges, in the first nine months of 2000 was $8.0 million, or $0.32 per share, compared to $11.5 million, or $0.64 cents per share, in the nine month period a year ago.

According to Howard Latham, VISTAinfo's chief operating officer, it will take some time before the acquisition costs are outrun by the profits that the MLS information services division is expected to generate. The company is trying to phase out its expensive-to-maintain legacy systems and migrate its existing and new customers to its one-solution-fits-all system, RE/Xplorer. RE/Xplorer is a Web-based information management system which can easily integrate with the company's productivity software for agents and brokers. Currently, 34 of the 100-plus MLSs using VISTA's software have upgraded to the underlying platform which supports RE/Xplorer, deploying the Web-based MLS information to about 125,000 agents. Other MLSs are using one of the company's Windows-based products.

Like its MLS systems competitor, Interealty, the company is poised for growth, but it plans to take a different approach from its rival in serving MLS organizations and their agent members.

Find out what's on Howard Latham's mind in this exclusive interview with Realty Times editor, Blanche Evans.

B.E.: You sound like a man with money in the bank.

H.L.: (Laughs) Yes, last week we reported earnings, and we're a very sound growing company. The auditors have no problems with our statements, and we're profitable on a cash basis, We've paid down debt. We acquired Moore's Data Management Systems last year and it is just going to take a while for that size transaction to be eaten through.

B.E.: Both you and Interealty are moving toward one product offering. You have the same target customer bases. If there is strength in numbers, could there be a merger in the works?

H.L.: Because of SEC rules, I can't talk about things like that, but no, we are not merging with another company.

B.E.: Do you have or are you going to create a transaction management system like Interealty integrated with MLS data?

H.L.: In May, we announced the National MLS infrastructure. We were not going to create another transaction management system. The MLS is the focal point of the data and we would work through open standards to facilitate that. We feel agents and brokers want to enter information one time, and if you want to reuse that information five or six times on broker sites, franchise systems, public sites, etc., you should be able to from the MLS system. In the MLS system you can do edit checking like you can from nowhere else, from street name spellings to tax data. You only want to enter data once. When you have to reenter it, then errors creep in. The MLS is a great point for edit checking and repository of listing data.

B.E.: What about leveraging into other services?

H.L.: We are working with different transaction managers in an open standard and that is where the MLS and brokers will get the benefit. These only benefit the agents if they are deployed and used. They don't want to bring up new programs, they want a seamless workflow. Working with MLS organizations and transaction managers we have been focused on making the work flow make sense. Not on whether we have the best widget.

Where we have focused development time is in working toward N.A.R. standards, and that the MLSs are on Internet-enabled browser platforms. That is critical because you can integrate easily. We take that as our core competency, and we work closely with key transaction managers and say how do you want to make this work flow?

B.E.: So beating them to the punch isn't your goal?

H.L.: ....There are different models. You can pay as you go, pay by the transaction. Some are from the mortgage company, but any one of those business models mean you have to run a dominate number of transactions through that platform.

B.E.: Are you going to merge with Homestore's eRealtor platform?

H.L.: We think there will be multiple transaction platforms. There are two sides to the transaction, with brokers on both sides. They are going to be looking for more than one solution. I get more confident every day when anyone says they are going to be the only one. There is a lot of investment money out there, the business models vary greatly, and how they define the transaction varies. There is going to be a lot of choice.

B.E.: Are you going to integrate your products for agents on the RE/Xplorer platform?

H.L.: We are not going the Interealty route. Our focus is on how to capitalize on enabling platforms with MLS data. There are several different players. We are a base technology platform, then the transaction managers like Realty Desktop or Closeyourdeal, each of them have different business models, depending on how they work and the agent and broker will have a piece of that say. If an MLS purchases a system for us we need to work with them on their local rules on how they are deploying transaction managers. In some parts of the country, the brokers have a very vocal voice in that; elsewhere it is the agent who has a voice.

B.E.: What about broker reciprocity? Will you be selling consultation or technology services which will allow brokers and agents to put the MLS listings on their company Web sites?

H.L.: We have already been doing that with RETS. When we announced our compliance with RETS, some of the first examples of its use was with broker reciprocity. RETS is an open standard, if they are licensed and have the right security out of their MLS, then we can supply them with the listing information out of the MLS. If they are doing it themselves there is no fee because that is the definition of open standards. If they want to customize the listings, then we can charge a fee.

B.E.: Do these consultation services have a name?

H.L.: (Laughs.) We don't have a set of services under an umbrella of a name, mainly because every broker is going to want something different. We can help on a consulting basis if your system is RETS enabled, then we can say here's where the standards are, and if you want more help from us, then we do that on a fee for services.

B.E.: What do brokers typically want?

H.L.: It's all over the place. That's why we do it as a customized service. They may have in-house technologists or they may be contracting outside so that we are working with a third-party vendor. If you want to work with your MLS, ask your MLS if the system is RETS- enabled, then if it is, then your vendor should be able to help. To the best of my knowledge, we have more RETS-enabled systems than anyone in the country.

B.E.: What if the broker is not on your system?

H.L.: If they aren't in our MLS provider's system, we won't help enable other vendors.

B.E.: Sounds like there is a lot of room for new business with most MLSs wanting to cut over to Web-based systems....

H.L.: Our base MLS business is very strong and we are continuing to enhance it. What it means to be an MLS provider is the opportunity is going to continue to get bigger.

B.E.: What about Cyberhomes? Is it still up for sale?

H.L.: We announced that we were putting Cyberhomes up for sale and we are at a point that I can't go any further in talking to you, but the key thing is that our focus is on the real estate professional and the industry.

B.E.: Did broker reciprocity have anything to do with your decision to sell Cyberhomes?

H.L.: Because brokers have gotten more involved in MLS decisions on committees, it has had an impact, but we also were looking at where we wanted to go as a company. We looked at the whole landscape of the public web site and a lot of pieces went into it from the investment required to the changing landscape of broker reciprocity. We felt our competency and long term growth opportunities were with the MLS. All agents belong to an MLS and they are already sharing information. It is the perfect place to go into transaction management, so we may go into one day. Cyberhomes was leading edge in its day, and it was a consumer play, and that is not our focus area.

B.E.: What would you advise brokers to do who are interested in putting the MLS listings on their sites?

H.L.: They need to insure that their MLS system is RETS-enabled, and providing listings by long-term viable MLS partners. We think MLS systems should be open and provide choice to the brokers.

B.E.: Can you release any news about RE/Xplorer before you debut the new version at the N.A.R. convention next week?

H.L.: No, we'll have to wait for the convention, but this is the way our company is going to go. Let's put it this way, if you wanted to buy a system today we would sell you RE/Xplorer. We are helping our current systems migrate to the Internet. As we help people migrate, they will be able to turn off their old systems. RE/Xplorer is a fully functioning system, but it is a shared database so there is no duplication of data, so it is not like a parallel system. The MLSs want to move to Internet technology. We are seeing the growth and usage.

Published: November 2, 2000

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