Contact: Scott Denne
Having bounced from one bubble to the next, ZipRealty ends a decade-long run as a public company with the sale to Realogy Holdings for $166m. Founded in 1999, the Web-based real estate software firm caught both sides of the dot-com wave before riding the real estate boom to a 2004 IPO and the crash that followed.
ZipRealty came through the dot-com bubble relatively unscathed – it had some mild layoffs but continued to raise funding. Annual revenue rose consistently following the IPO from $60m in 2004 to double that amount in 2010 before cratering to $85m in 2011; it hasn’t returned to growth since.
With the purchase, Realogy obtains a software platform and lead generation services to spread across its real estate brands – including Coldwell Banker, Century 21 and others. Offering those technologies to its franchisees should help Realogy deflect inroads from marketing and lead generation upstarts like Trulia and Zillow. While ZipRealty has proven out its technology platform at the agencies it owns, it will be up to Realogy to demonstrate that there is an appetite among realtors to deploy the white-labeled version of ZipRealty’s lead generation, lead scoring and CRM services. (ZipRealty has sold a cobranded version since 2011, but didn’t make much progress and only posted about $2m in revenue last year through the effort.)
The deal is about more than just technology. Realogy expects to double the EBITDA generated by ZipRealty’s offices and agents (the biggest driver of the transaction) to $20m annually within three years and looks forward to getting $21m in value from ZipRealty’s net operating losses. GCA Savvian advised ZipRealty on the deal.
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