Happiness Is A Warm Gun
I swear I am not trying to pick on Zip Realty but I just couldn’t pass this one up. I saw this on Inman News. From a press release – and I quote:
Real estate brokerage company ZipRealty Inc. today announced a net loss of $20.2 million in fourth-quarter 2006, or 96 cents per share, compared with net income of $17.9 million, or 73 cents per diluted share, in fourth-quarter 2005.
For the year ended Dec. 31, 2006, ZipRealty reported a net loss of $20.6 million, compared with net income of $20.5 million for the full year in 2005.
“We are pleased with our fourth-quarter results, which exceeded expectations in terms of revenue and profitability,” ZipRealty CEO Richard Sommer said in a statement.
They LOST 20 MILLION DOLLARS in last three months of the year and they are pleased with the results. Well, if they’re happy about it, then I’m happy for them.
James Hsu says:
If you look at this as a simple logic problem. If Zip is happy they only lost $20.6 million, then you could probably assume that they were expecting to lose A LOT more than just $20.6 million! They can now go to their shareholders and say GREAT NEWS! We only lost $20.6 million!! and you thought we were gonna lose xxxx million! Hah!
What I want to know is how do they go from a net income of $20.5 million in all of 2005 to a net loss of $20.6 million in one quarter the following year? …and the CEO may be pleased, but what about the shareholders!!??
March 23, 2007 — 12:14 am
Jim Gatos says:
Boy, with a company like that, who should care about job security, eh?
Oh well, one man’s logic is another man’s insanity…
Jim
March 23, 2007 — 6:33 am
Roberta Murphy says:
Zip Realty investors may be heading over the cliff. For fiscal 2007, “the company expects to report a full year GAAP net loss of between $10 and $13 million, or $0.45 to $0.60 per share and pro forma loss is expected to be between $6 and $9 million, or $0.25 to $0.40 per share.”
http://www.quote.com/qc/news/story.aspx?symbols=NASDAQ:ZIPR&story=200703142037_RTT_03142007_2551
March 23, 2007 — 6:39 am
Athol Kay says:
Russ you missed the effects of them moving tax payments around.
“Excluding the effect of the income tax valuation allowance adjustments and share-based compensation, the pro forma loss per basic and diluted share was $0.07 for the fourth quarter versus income of $0.04 per diluted share for the same period a year ago.”
ZipRealty is still losing money, of that there is no question, but it’s not hemorraging to death in front of us.
They are obviously going continue to persue gaining market share as a goal before seeking profitablility. Seeing they doubled the number of agents from the start of 2005 through the end of 2006, and are expanding into new markets it seems they are achieving that goal. They also have 88 Million it looks like tied up in as cash and “short term investments”. I’m somewhat reminded of Amazon.com’s first few years.
Did many other brokerages increase revenues from 2005 to 2006?
I’ve not ever really looked at ZipRealty until now. Looking at the numbers, I wonder why we ever discuss Redfin when Zip is obviously a bigger fish.
March 23, 2007 — 9:00 am
caleb says:
They are reporting a net loss, but, and I haven’t looked at this closely, their revenues are up and they’re spending more. Which means they’re investing in growth. The truth is Zip doesn’t spend nearly enough.
March 23, 2007 — 4:34 pm
mike davin says:
The amount of disinformation about zip realty here is staggering. The loss is a paper loss, not a cash flow loss…they show a paper $20M income last year, which in effect is a wash out. These are not cash expenses have have to do with accounting isssues. I would suggest reading their filings before allowing these runaway blog entries.
Zip has been break-even or slightly profitable for the last two years, despite 100% growth in their market coverage area. They will show a loss this year, but so will everybody on the top 100 broker list.
I have nothing to do with Zip, but believe the the truth.
May 8, 2007 — 11:06 am
Matthew says:
You are so right Athol. Zip is a much bigger fish than Redfin, of that there is absolutely no question. Look at the numbers here. Paper loss is so much different that actual loss! This co’s closing a huge number of realty transactions as evidenced by revenue generated.
LOOK at the growth of this company. Wow. Have you checked out the website? Pretty cool, too. As a company that focuses on buyers, they’ve apaprently managed to capture a sizable portion of the internet buyer market! All that growth and technology is paid for by the revenue Zip generates by the rather SIZEABLE chunk of commission they keep in every closed transaction. It’s my undertanding that the newly licensed realtor generates a greater profit margin for Zip as they keep a smaller percentage of gross commission, which helps partially explain the high turnover and $$ bloodloss. Execs admit training is weak too. Oddly enough, it appears then that it’s the tenured producing Agent at Zip that’s payin’ for this FAST growth & incredibly high exec overhead. Did you see the figures on what the outgoing CEO was getting after only 8 mo with that co?? How long will solid producing smart Agents stay w/Zip if they get Zip?? Time will tell but this one’s a one to watch. From what I’ve read about the new CEO, he’s been w/Zip for sometime. So it’ll be interesting to see what transpires.
June 24, 2007 — 7:54 am
Sam Levy says:
ZipRealty writes off, as a loss, the rebates they give back to their buyers…the larger the write off, the more money they are making when it comes to this. They give buyers 20% of the commission they receive from the seller. Their rebate is considered a marketing expense. They also pay their employees for their expenses incured during each month, approx. $300-400 a month per agent. Multiply that by the thousands of agents they have. It’s no wonder they are writing off such huge numbers.
Also, I don’t think they can really be considered a discount brokerage since they charge sellers a comparable rate as other firms. I’ve seen agents at Coldwell and Remax charge sellers 1% for the listing office and 3% for the selling office. I’ve closed one deal where the Zip Agent listing the prop was charging the seller 6%.
I totally disagree that the type of buyers ZipRealty obtains are “lower end” since studies show that current home buyers that are using the internet to buy homes are typically younger, better off and embrace technology. These are not traits of one who is looking for cheap service. I don’t think people who want cheap service have internet connections.
ZipRealty has delivered several ready willing and able buyers to me. They work their leads effectively and that’s good for all of us. Their agents seem to be more motivated than others I’ve worked with.
They do have a great website.
March 9, 2008 — 7:30 pm
Susan says:
This is an interesting post. Numbers on paper vs. realty, its hard to know…but I guess if they’re still in business (9 years now) time will tell. Whether its right or wrong or just a matter of opinion, I do tend to think of ZipRealty as a discount agency.
December 19, 2008 — 1:55 pm