There were lots of smiles around Homestore's California headquarters Friday as employees watched the stock continue to soar on news that the real estate media and technology giant is profitable for the second quarter in a row. The stock closed Friday up almost 11 percent to 32 3/8 from its close on Thursday.

Homestore's is definitely one dotcom that is far from diving into a deadpool. The company reported revenue of $79.0 million and net income, excluding certain non-cash items, of $3.3 million, or $0.04 per share, for the fourth quarter of 2000. This is the company's second consecutive quarter of cash profitability, the PR arm says. Homestore.com has also ended its first full year as a publicly traded company with a whopping 213% year-over-year growth in pro forma revenues.

Homestore attributes its strength in part to "substantial increases in professional subscribers and unique visitors to its online network," and more than "$345 million in cash on its balance sheet."

Since its last announcement when it boasted 131,000 agents as subscribers, Homestore now says it has 145,000 agent subscribers, and the company's prospects only look stronger for 2001 for two reasons, less competition and the release of new subscription products.

Homestore bought one competitor, Move. Com, and has played a part in hastening the demise or retreat of others such as Cyberhomes.com. As some of Homestore's competitors drop out of the listings race or focus on other aspects of their business, Homestore is just about the last real estate portal standing. Only HomeAdvisor currently rivals Homestore in size, financial backing, features and visibility.

Homestore also plans to release its long-awaited eRealtor platform, the carefully shrouded Web-based client/office/transaction software that is promised to streamline the homebuying process and client management process for both consumers and agents. The release of eRealtor is expected to add greatly to Homestore's subscription rate which has overtaken the company's ad revenue model as a primary means of revenue generation.

According to Homestore, subscriptions generated approximately 52% of total revenues in the quarter. The improvement was due to an increase in the number of professionals on the Homestore's family of Web sites as well as an increase in the average revenue per subscription, which was primarily due to increased sales of ASP products, most notably Top Presenter 2. Renewals also contributed to the increase in professional subscriptions with the renewal rate consistent with prior quarters at approximately 70%.

Advertising produced approximately 48% of total revenues in the quarter, signaling a growth trend, up from 46 percent of total revenues for the year. Growth in advertising revenue was primarily driven by an increase in advertising and sponsorship deals during the quarter, including Bank of America, Budget Group, and Kodak. Also contributing to the increase in advertising revenue was the company's expanded relationship with America Online, in which AOL sold advertising on Homestore's behalf.

Published: January 29, 2001

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