Ever since the residential realty market turned south, investors have been wondering how long it will be before the party ends for commercial real estate.
If you're using LoopNet
The company posted healthy quarterly results last night. Revenue rose by 33% to $20.6 million. Earnings, before a $0.01-per-share hit on litigation costs, clocked in at $0.13 a share, just ahead of last year's $0.11 showing. Wall Street was looking for the company to earn just $0.12 a share on $20.2 million in revenue. (Rewind to LoopNet's fourth-quarter results.)
The growth isn't entirely organic, as LoopNet has been acquisitive in widening its lead in commercial real estate. You're also seeing the pinch of tighter pockets. Paying members inched just 4% higher to 88,226. That is a tiny fraction of the site's 2.8 million registered users, rolls that grew by a healthy 39% over the past year.
LoopNet increased its premium membership fees last year, but it's unlikely that paying-user growth would have lapped overall membership growth in this tricky environment.
Yes, it could be worse. Have you seen the companies that lean on cyberspace to move residential properties? HouseValues, ZipRealty
Commercial real estate peer CoStar
This doesn't mean that there is a LoopNet killer on the horizon, but it doesn't hurt to ramp up operations quickly the way that LoopNet has through growth initiatives and timely purchases.
The market tends to gravitate to a single industry lead-generator. Can you name a financial-rates publisher besides Bankrate
Is LoopNet in for a world of hurt as it battles both potential entrants and the threat of waning appeal in commercial listings? I don't think so. The stock is already trading at half the price it was commanding this past summer. Bad reports are already baked into the price. The good reports -- like last night's -- have a better chance of moving the stock higher than a dud quarter has of moving it lower.
What's that about a share price's reaction to earnings expectations? It's all about location, location, location.
Build a house on this Foolishness:
If you want to read Fool co-founder David Gardner's original buy report for LoopNet in the Rule Breakers newsletter service, take advantage of a 30-day guest pass that will grant you a trial subscription of the service. Bankrate and The Knot are also stock picks there. LoopNet is also a Motley Fool Hidden Gems pick.
Longtime Fool contributor Rick Munarriz has never dabbled in commercial real estate outside of the Monopoly board, although he wants you to know that he can hand you Boardwalk and Park Place at the beginning of the game and still beat you. He does not own shares in any of the companies in this story. He is part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.