Turning Around Move – the US Leader

Simon Baker

November 23, 2008

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Move Inc, the owner and operator of move.com, realtor.com and Top Producer is trading at 5 year lows – can they turn around the business?

Not since April 2003 has move.com traded at lower price levels. In those days, the business was coming out of the scandal of the early 2000’s in which revenues had been incorrectly inflated. The challenges that Move faces today are far different.

Firstly the business is highly diverse. They have the following operations:

  • Realtor.com – accounts for ~42% of overall revenues
  • Web Site Hosting and Design
  • Top Producer – accounts for ~10% of overall revenues
  • Move New Homes
  • Move Rentals
  • Welcome Wagon – accounts for ~11% of overall revenues
  • Display Advertising Sales

In addition to running a diverse set of opeations, the business has a high cost structure with around 1,500 employees.

Secondly, the business is being attacked from multiple sides – most obviously by zillow.com and trulia.com – who are competing for eyeballs and the advertising dollars.

Finally, the business is being compared with similar listed business in other countries that are performing significantly better.  These businesses are generating up to 50% EBITDA margins while Move Inc manages only to break even.

    Market Cap 24 Nov 12 Months to 30 June 2008
Company Currency Local Currency (m) US$ (m) REV (m) EBITDA (m) EBITDA % NPAT (m) NPAT %
Rightmove GBP £220 $333 £69 £35 51% £23 33%
REA $A $436 $283 $156 $37 24% $22 14%
Seloger Euro € 192 $246 € 57 € 30 52% € 14 24%
Move US$ $142 $142 $286 -$7 -2% -$10 -4%
Loopnet US$ $188 $188 $71 $29 41% $21 30%

The result is that Move Inc trades at a significant discount to its global comparatives.

So what can they do?

Here are the top 5 things that they can do to potentially move the business in the right direction.

  1. Exit the non-core businesses – Move Inc is already doing this and have already exited the homeplans business. They have also announced they are exiting from the Welcome Wagon business – they should do this, even if it means closing it down (as a last resort). They should also explore exiting the Web Site Hosting and Design business and Top Producer.
  2. Dramatically reduce costs – Move Inc needs to really stream line its operations. They need to make sure that they have no wastage including removing unnecessary overhead costs and reducing head count to more optimal levels. Competitors like Zillow and Trulia are already doing this.  Move Inc has already announced some cost reduction targets however are they truly cutting deep enough?
  3. Consolidate its position in the core For Sale advertising market – Move Inc should explore acquiring Trulia (but probably not Zillow) to expand its foot print in the core For Sale market.
  4. Expand into more attractive segments of the US real estate market – Move Inc needs to execute significantly better in the rental segment and should move into the commercial segment. LoopNet dominates this segment and is relatively unchallenged.
  5. Explore expansion into attractive international markets – Move Inc should actively explore how it can expand its operations into the more attractive international markets. One way it could do this is to acquire or merge with the likes of the REA Group, Rightmove or Seloger.

Simon Baker

November 23, 2008

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Acerca de Lucas Vargas:

  • Empezó en Grupo ZAP como el VP de Sales y en 2016 cuando la empresa tenía 60 empleados. Fue nombrado COO de VivaReal tomando el mando de Brian Requarth el Co-Fundador. VivaReal lanzó en Colombia y se trasladó a Brasil. En 2017 se hizo CEO del Grupo ZAP.
  • Ha trabajado en Mexico en PWC y en el Banco Santander
  • Tiene un Master de Business Administration de Harvard
  • En noviembre este año después de la fusión de OLX Brasil y Grupo ZAP fue nombrado el CEO del OLX Business Unit. Lidera la empresa junto con Andries Oudshoorn y Marcos Leite
Simon Baker is the Founder and Executive Chairman of Online Marketplaces and Property Portal Watch. Involved with property portals for 15 years, he’s a well-recognized expert and industry consultant.
As former CEO/MD of the REA Group for 8 years, Simon led the group to its current market-leading position. When he joined REA Group in 2001, it had $4m in revenues, $6m in losses and an $8m market cap.
By 2008, the company presided over $155m in revenues, $35m in EBITDA and enjoyed a peak market cap of $1b. Simon is currently Chairman of the Mitula Group and Real Estate Investar and a serial portal founder and, investor.