Trulia has acquired Market Leader, a company that provides a software-as-a-service solution for real estate professionals, for $355 million.
Trulia is one of the leading marketplaces for real estate online. Five million homes are listed on the site and potential buyers can search, visualize, and track properties as well as access information about nearby schools and crime. The site attracts 31 million monhtly unique visitors. Trulia filed for a $75 million IPO in August 2012 to keep pace with its primary competitor Zillow, which went public in 2011.
Trulia’s former strategy was to “build first” and avoid acquisitions. According to the company’s vice president of communications Ken Shuman “most acquisitions fail and tend to be a distraction for senior management.” However, in March 2013, Trulia announced that it intended to raise $150 million to move quickly on acquisitions.
“The capital is to really to strengthen the cash reserves for new product lines and acquisitions,” Shuman said in an interview with VentureBeat. “There has to be a really compelling reason to acquire, as we’re often better off building.”
The corporate development team looked for potential buys amongst companies that provide tools and services for real estate agents, online rentals, mortgage-focused startups, and small companies that could support international expansion.
Market Leader provides a suite of software solutions that real estate professionals use to manage their business online. Products include a website-builder, tools for lead generation tools and marketing, and contact management. The combined marketplace will have 46,000 premium subscribers, which the company said is more than any other online real estate marketplace. This deal means Trulia can provide an “end-to-end solution” for these professionals.
In a statement issued the morning, Trulia’s CEO Pete Flint said that acquiring Market Leader will “create unprecedented value for our customer base” and the combined platform will “enhance the productivity of their agents.” Trulia will also benefit from Market Leader’s partnerships with franchisors and brokerages
Trulia’s foray into the realm of enterprise software could be a step towards profitability. The company has a “history of losses” and Market Leader’s revenue stream grew by more than 30% in 2012, marking its second year of consecutive growth. Rather than relying on accurate listings to attract subscribers, Trulia will be able to offer additional value to agents so they have a one-stop shop for their operations.
Trulia’s stock closed at $34.34 yesterday and Market Leader’s shareholders will receive $6 and .1553 shares of Trulia’s common stock for each share of Market Leader common stock. Trulia is headquartered in San Francisco and Market Leader will continue to work out of its offices in Kirkland, Washington as a wholly-owned subsidiary of Trulia.