Market Leader Inc (NASDAQ:LEDR) is a real estate technology company and provides marketing tools to around 23,000 agents in the U.S. Since 2005, it has made six acquisitions in the real estate sector and established its expertise in the real estate industry. It has adopted a top-down strategy due to an increasing trend of agents looking to brokerage houses for technology solutions. Its primary focus has been providing software tools to help agents generate more leads.
Trulia Inc (NYSE:TRLA) acquiring it will provide potential synergies to Market Leader Inc (NASDAQ:LEDR) as well. It can now sell its software tools with the help of Trulia’s advertising to subscribers. The integration of both companies’ products will make them more competitive, and help to close more leads.
Unlike its competitor, Zillow, Trulia Inc (NYSE:TRLA) also offers a standalone mobile product, Trulia mobile ads, or TMA, which are priced 15%-20% more than its desktop offering, and Trulia local ads, or TLA. Trulia charges premium pricing because of higher conversion of mobile leads since it has an effective search functionality and a click-to-call function that enables greater agent interaction. Thus, Trulia stands to gain from the ongoing shift from desktop usage to mobile usage. Trulia has a paid subscriber base of around 27,920 users consisting of 2,000 mobile users, 21,300 desktop users and 4,600 users of both mobile and desktop. It expects the total desktop subscriber base to decrease to 20,438 users, while mobile subscribers will increase to 3,608 users in 2013. Due to a growing mobile subscriber base and premium pricing, Trulia’s average revenue per user, or ARPU, will rise from $128 per user in 2012 to $185 per user in 2013.
Conclusion
Internet penetration and growth of mobile Internet have helped these companies increase their bottom-lines. Qihoo is expanding in both search as well as mobile segments. Improvements in its web search service and growing smartphone usage will aid revenue growth. Trulia’s acquisition of Market Leader is a win-win situation for both companies. Trulia will use Market Leader’s technological expertise to expand its customer base and provide value service to subscribers. On the other hand, Market Leader can use Trulia’s advertising to sell its products. I recommend buying all three stocks.
Madhukar Dubey has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.
The article 3 Internet Services Providers on a Spectacular Bull Run originally appeared on Fool.com and is written by Madhukar Dubey.
Madhukar is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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