Loopnet (NASDAQ: LOOP) operates an online marketplace to allow for the purchase of commercial real estate. Of course, the industry has been in a slump for the past two years. That is, transaction volumes are low, credit markets are still frozen, vacancy rates continue to rise and asset prices remain on the down trend. Yes, it's hard to find any silver lining.
Despite all this, Loopnet continues to move forward. In its Q3 report, the company posted $18.8 million in revenues, which was down from $22.4 million in the same period a year ago. Net income was $3.7 million, or $0.09 per share.
The main reason for the revenue fall-off was the drop in premium subscriptions. They were down 17% to 69,809. Although, Loopnet did have a softening of its cancellation rate. Yet, the fact remains that premium subscription numbers will likely be under pressure for some time.
To find some growth, Loopnet is adding new features. For example, the company's search engine has classifications for distressed and auction properties.
Unfortunately, even this market is languishing. Basically, Loopnet needs a rebound in the overall commercial real estate market -- which will inevitably happen. But, there are still few signs when the rebound will finally come.
Tom Taulli is the author of various books, including The Complete M&A Handbook
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Reader Comments (Page 1 of 1)
10-29-2009 @ 3:57PM
thedude said...
I can't believe any prospective business property owner would even consider Loopnet. I checked them out briefly last year when I was considering the pruchase of some commercial space.
Instead I went with a reliable agent and when she found a space, close to what I was looking for I contacted the Mayor of the town and discussed what I was intersted in doing he began negotiations with the property owner for me.
Due to the economy and "pressure" from the local pols I got the property at significantly below market value. Savings I gained from tapping the "human network" is the reason why the company is profiting today.
The added cost of a Loopnet membership would have been trivial to the total purchase but would have provided no net benefit.
It may be a decent tool for micro managers but if you know what you want, all you have to do is put out the word to the right people and wait for the prospects to roll in.