Overview: Tiger Global Management's 1Q14 positions (Part 4 of 8)
Tiger Global initiates a position in Trulia
Tiger Global Management ‘s latest 13F shows new positions in Avis Budget Group Inc. (CAR), Zillow Inc. (Z), and Trulia Inc. (TRLA). The fund sold stakes in Yahoo! Inc. (YHOO) and Amazon Inc. (AMZN). It raised positions in Vipshop Holdings (VIPS) and Charter Communication (CHTR).
Tiger Global also initiated a small position in Zillow’s competitor Trulia (TRLA), which accounts for 0.77% of the fund’s portfolio.
Trulia’s marketplace, delivered through the web and mobile applications, gives consumers tools to research homes and neighborhoods and enables real estate professionals to market their listings and attract new clients. It also offers a comprehensive suite of free and subscription products that provide real estate professionals with access to transaction-ready consumers and help them to grow and manage their online presence. Trulia’s database contains more than 113.5 million properties, including three million homes for sale and rent. It generates revenue primarily from sales of subscription products to real estate professionals, and from display advertising sold to leading real estate and consumer brand advertisers.
Trulia expects to benefit from real estate marketing spend
Trulia said in its annual filing that “Technology is changing the way that consumers search for homes and the way in which real estate professionals attract clients and build their businesses. In addition, as the U.S. housing market recovers from its recent unprecedented downturn, real estate professionals are seeking more effective ways to market themselves and achieve a greater return on their marketing investment. These trends present significant opportunities to capitalize on shifts in behavior.” It cited data from Borrell Associates Inc., an advertising research and consulting firm, which estimated in a September, 2013, industry paper that $27.3 billion would be spent in 2013 on real estate-related marketing in the United States.
In 2013, Trulia completed the acquisition of Market Leader Inc., a provider of software-as-a-service based customer relationship management software for the real estate sector. It said, “We acquired Market Leader to help accelerate our growth, including by expanding our product portfolio for real estate professionals and increasing our subscriber base.”
1Q14 earnings missed estimates as marketing spend expands
Revenue increased 127% to $54.5 million in 1Q14 and topped estimates. Trulia said in its first quarter filing, “The increase in total revenue was primarily attributable to the revenue from our acquisition of Market Leader in August, 2013, the growth in our subscriber base, the growth in sales of our mobile subscription products, an increase in the average revenue per subscriber, growth in our monthly unique visitors, and the introduction of our new product Trulia Seller Ads.”
However, 1Q14 earnings missed consensus with adjusted net loss down to $5.3 million, or $0.14 per share, from $0.6 million, or $0.02 per share for 1Q13. In February, shares fell as the company missed fourth quarter earnings estimates on increased marketing spend. Chief financial officer (or CFO) Sean Aggarwal said in 4Q13 that Trulia is planning an advertising campaign to target mobile users and that, “We anticipate the campaign to commence in late first quarter and to be in approximately $45 million investment over the course of the year.” Trulia and Zillow rival Realtor.com, which is owned by Move Inc. (MOVE), has also invested in new ad campaigns to gain market share.
Why investment in mobile has paid off
Like Zillow, Trulia has also invested in developing a mobile website and mobile applications. In 1Q14, Trulia said the number of mobile monthly unique visitors increased 68% to 19 million from 11.4 million in the three months ending on March 31, 2013. The growth was due to overall adoption of smartphones, the growth of mobile applications, and mobile web use by consumers. Its subscriber base grew by 139% to approximately 66,700 subscribers as of March 31, 2014, from 27,920 subscribers as of March 31, 2013, but saw a 20% overlap of subscribers between Trulia and Market Leader.
Trulia said it has redesigned its iPhone and Android apps ahead of the spring house hunting season. It has launched a new search experience for home buyers that are interested in new construction.
ComScore data, cited by Inman News, disclosed that for March 2014, the total number of unique visitors to Zillow.com was 45.1 million while Realtor.com had 22.1 million unique visitors, and Trulia.com saw 19.1 million unique visitors. Trulia saw a decline of 6.9% in visitors while Zillow saw a 5.3% increase from March–April. The website further cited Trulia spokesperson Matt Flegal who claimed that comScore’s mobile traffic data for Trulia is incomplete.
For 2014, Trulia forecasts total revenue to be in the range of $250–$253 million, which is an increase of $5 million from the prior outlook.
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