Welcome to the LoopNet Incorporated earnings conference call for the third quarter of 2009. The date of this call is October 28, 2009. This call is the property of LoopNet Incorporated, and any recording, reproduction or transmission of this conference call, without the expressed prior written consent of LoopNet Incorporated is strictly prohibited. This call is being recorded. You may listen to a webcast replay of this call by going to the Investor Relations section of LoopNet’s website. The webcast will be available on the company’s website until October 30, 2009. I would now like to turn the call over to Derek Brown, Vice President of Investor Relations and Corporate Planning; please proceed.

Good afternoon. Thank you for joining us to discuss LoopNet Inc’s financial and operating results for the third quarter of 2009. With me today are Rich Boyle, Chief Executive Officer and Chairman; and Brent Stumme, Chief Financial Officer. Today Rich will begin with an overview of the business and overall corporate strategy, continued by a summary of the company’s third quarter performance and review of the marketplace. Brent will review the third quarter financial results and provide fourth quarter 2009 guidance. In coming months LoopNet will be meeting directly with institutional investors in Boston, New York and San Francisco, as well as at SunTrust Robinson Humphrey’s business and government Services Unconference in November, Credit Suisse’s Technology Conference in December, Citi’s Global Entertainment Media & Telecommunications Conference in January 2010, and Needham’s Growth Stock Conference also in January 2010. We hope to see you at these events. A webcast of many of these presentations will be available on the Investor Relations section of LoopNet’s website. I would now like to bring the following to your attention. On the call today you may hear forward-looking statements about events and circumstances that have not yet occurred. Actual outcomes and results may differ materially from the expectations contained in these statements due to a number of risks and uncertainties. Please refer to the company’s recent SEC filings at the SEC’s website at www.sec.gov for detailed discussions of the relevant risks and uncertainties. The company does not intend to update the forward-looking statements in this conference call, which is based on information available to us as of the date of this call. The press release distributed today that announced the company’s results is available on the company’s website at www.loopnet.com in the Investor Relations section, under financial press releases. The current report on Form 8-K furnished with respect to our press release is available on the company’s website in the Investor Relations section under SEC filings and on the SEC’s website. You will also hear discussion of non-GAAP financial measures. Reconciliations of these non-GAAP measures to their most comparable GAAP financial measures are contained in the press release distributed today and available on the Investor Relations section of the company’s website. Now, I will turn the call over to Rich Boyle, Chief Executive Officer and Chairman.

Thank you, Derek. I’d like to welcome all of you to the LoopNet third quarter 2009 earnings call. On our call today we will discuss our recent quarterly performance, and share with you our perspective on the current conditions in the commercial real estate industry, as well as the impact they are having on our business. We will also provide you with updates on a number of other ongoing initiatives to the company. Following my prepared remarks and those of Brent Stumme, our Chief Financial Officer, we will be opening the line for your questions. With that, why don’t we get started with our discussion? We are very pleased at how our company and business performed during the third quarter of 2009. Despite an ongoing standstill between commercial real estate buyers, sellers and lenders that has materially suppressed the number of completed transactions industry wide, we comfortably exceeded the financial targets we set three months ago, and several key measures of our business such as profile views per listing and average monthly cancellation rate for our premium membership service improved substantially. Revenue for the quarter was $18.8 million, compared to our guidance of $18 million to $18.3 million, and adjusted EBITDA was $7.8 million compared to our guidance of $6.7 million to $7 million. Our adjusted EBITDA margin for the quarter was 41.6% towards the higher end of our stated target range for this year of high 30s to low 40s on a percentage basis. In our view, these better than expected results which were achieved despite ongoing turmoil in the broader commercial real estate industry, highlight the health of our underlying business model and reflect favorably on the ability of our team to execute. We continue to outperform the industry as a whole, and believe that we are very…

Thank you Rich. LoopNet’s revenue for the third quarter of 2009 was $18.8 million compared to $22.4 million in the third quarter of 2008 in our guidance of $18 million to $18.3 million. The decline in revenue was primarily due to lower premium member subscribers, and lower advertising revenue as a result of the challenging market environment in which we are currently operating. LoopNet’s adjusted EBITDA for the quarter was $7.8 million or 41.6% of revenues, compared to $10.4 million in the third quarter of 2008 and our guidance of $6.7 million to $7 million. The company has reported adjusted EBITDA, which we define as EBITDA excluding stock-based compensation and litigation related costs, because management uses it to monitor and assess the company’s performance and believe this is helpful to investors in understanding the company’s business. Net income applicable to common stockholders for the third quarter of 2009 was $3.7 million or $0.09 per diluted share, compared to $4.8 million or $0.13 per diluted share in the third quarter of 2008. Non-GAAP net income, which we define as net income excluding stock-based compensation and litigation related costs for the third quarter of 2009 was $5.3 million or $0.12 per diluted share, compared to $6.4 million or $0.17 per diluted share in the third quarter of 2008 in our guidance of $0.08 to $0.09 per diluted share. Net income applicable to common stockholders and non-GAAP net income for the third quarter of 2009, included a favorable tax adjustment of $0.02 per diluted share. Net income applicable to common shareholders for the third quarter of 2009 also included a favorable stock compensation adjustment of $0.01 per diluted share. As of September 30, 2009, the company had $125.5 million of cash, cash equivalent and short term investment and no debt. Now I would…

(Operator Instructions). Your first question comes from the line of John Blackledge. Please proceed.

Thanks.

Hey John, how are you?

Thanks for taking the question, nice quarter. I guess you kind of addressed the premium number of declines which were definitely better than I thought, and just wondered if you can expand it all and where do you see that going into the fourth quarter and into next year. Then just wondering how much would the litigation cost in the third quarter? Thank you.

John this is Rich. I will talk about the PM trends and then I’ll let Brent to address the litigation piece. So, I guess a little bit of color on where we see it. What we did see in the third quarter was some things that got substantially better and the biggest lever that moved the net PM number in the right direction from where it had been trending was a pretty substantial improvement in cancellation rate, and we think driving that was really two factors. One is, some indications that people on the buy side of the market are indeed starting to come back in and show some interest in getting smart about properties available and developing investment strategies and we thought for a while that as pricing came down that would develop, and so far it looks like that’s as expected. The second thing affecting the cancellation rate is a lot of what we refer to as the transactional listers that kind of come in and out of the market with one listing, are basically not active in the market right now and that seems to be fairly fully flushed out by now. So those things together we think improve the cancellation rate, which was the biggest lever in the quarter. Looking forward, the first thing I think people will want to keep in mind is the seasonality in our business, Q4 tends to be seasonally weak for us and we expect that to be true again this year. We tend to get used by people that are launching off doing new deals and once the Thanksgiving holiday rolls around through the end of the year it tends to be a pretty slow market. So, we think we’ll continue to see seasonality and then what we’re cautiously optimistic about is the market continuing to develop improvement overtime next year. We are a little reluctant to predict exact timing though. It does seem to be developing in the right direction now, but somewhat slowly.

And John, this is Brent, and answer to your question about litigation cost in the quarter, they were $938,000.

That’s great, thank you.

Yes.

Thank you.

Your next question comes from the line of Ian Cordeon [ph]. Please proceed.

Hi Ian.

Hi, guys. A couple of quick follow ups, did you say that the cancellation rate improved throughout the quarter and would you care to say kind of where it came in, in terms of that range you gave?

In terms of the range, I think it did improve gradually throughout the quarter to some degree, we were pretty pleased to see kind of the positive trends there. What we’ve done historically is describe it in terms of being inside the range as opposed to give a point estimate normally and we are back into the range that we’ve been in for a couple of year now. We did give a point reading on it in the first part of this year when it exceeded the top end of that range for the first time, but it’s been our policy in the past to just give it within the range as opposed to a specific point estimate.

So, it went from a little over 7% at the beginning of this year to now down in that 4.5% to 6.5% range, and it has been improving as the year has gone on which we are very pleased about.

Yes, that’s obviously a nice improvement. I wonder on the guidance, can you talk a little bit more about the seasonality? I mean does that typically, I imagine it manifest itself in the slowdown in growth. New members, does the cancellation rate typically increase sequentially as well, any other kind of help you could provide on that seasonality?

Yes, this is Brent. So normally what we see is the gross numbers do slowdown in the quarter and mainly from Thanksgiving to Christmas things drop off quite a bit. The cancellation rate typically stays pretty close to what we’ve seen historically in the previous quarter, like in Q3. So the main issue is slowdown in the gross sales.

Okay, great. Maybe just one final question, the decline in G&A looks like it can be explained by lower legal, but sales and marketing was down sequentially. Can you just talk about how you kind of manage that number, and how are you going to manage it going forward?

Yes, I think a lot of that decline was just related to timing of sale hires. We have some open positions that got filled towards the latter part of the quarter. So it’s really just a timing issue with the sales hires.

Okay, great. Thank you very much.

Thank you.

(Operator Instructions). Your next question is from the line of Andrew Jeffrey. Please proceed.

Hey guys good afternoon.

Hey Andrew.

Rich can you talk a little bit about some of the progress you think have been making on some of your growth initiatives, specifically sort of the digitization of historical physical world listings for brokers. Do you get the sense that maybe anecdotally or otherwise, that response rates that they’re seeing when they move on to LOOP network are starting to sort of break the log jam on the demand side or is it kind of too easy or too difficult to really say?

Well, I might need to have you clarified just a little bit Andrew. I mean, I think when you say the digitization efforts on the platform, it means some of the new things that we are doing about providing additional information, is that the heart of the question?

Some of the things you have done for brokers that have historically been not been...

Bringing new listings on, yes…

Try to digitize some of the physical world listings they have had.

Right. I think in the effort regarding, how do we get more brokers who are generating marketing materials and executing marketing strategies, if you will in the offline world on to our platform, we have definitely continued to do a fair bit of that both internally through some organic means of getting them to send us listing information which we then populate on the system. I would describe that as being, it’s a relatively small incremental add to the organic growth rate on the listing side. So, the tailwinds of the secular shift in the industry conditions are probably driving more incremental new listings than our manual efforts there. We’ve also been continuing on, as we discussed earlier this year with some of the partnership based efforts, where for example the research based company that we’ve a partnership with called Xceligent has continued to roll out in new markets and aggregate more listings information, and during the second quarter in particular we had a number of test markets go live where listings information that was generated in their database was transferred to LoopNet for eventual upload into our market place to expand our footprint. Those have been, I think very good from a listing broker’s point of view and getting them online, exposed to online marketing at a very low effort from their point of view. We have not yet done much in the way of monetization of that. So those listings that have been pushed into our system in those means have not been monetized at this point. So, I think we think of it as good in terms of building the overall scale on the market place, but yet to be determined in terms of its stability to drive incremental revenue for us.

Okay. If you look sort of in aggregate at some of the things you have done to maybe drive either traffic on the network or monetization, as maybe evidenced by an up tick in some of the technologies spent, for example this quarter. What’s your sense of the ROI there, and timing to ROI? Do you feel like those are efforts that you would continue to push on in a tough revenue environment or at some point does that kind of moderate?

I will say, I mean it’s already probably balanced a bit more or we are going a little more slowly than we might have a few years ago given the overall environment, that’s certainly true. The past ROI is a really important question to us that we look at very carefully. I don’t think we are there yet frankly. We are very convinced that it’s adding to the overall scale and utility, and liquidity of our market place, but we are big believers in eventual monetization and I don’t think we are over the right hurdle in that regard yet. We are still fine-tuning a lot and expanding the effort to try new things, but I would still call it in the test mode as opposed to full scale build it up production mode.

Okay. Then, with regard to overall listings, can you give us a sense of what percentage of overall listings or leases versus for sale listings?

Yes, the 730 we do break that out exactly. I think it’s about 300,000 are buildings for sale and about 430,000 are spaces for lease.

Great, thank you very much.

Sure

(Operator Instructions). Your next question comes from the line of Mitchell Bartlett. Please proceed.

Hi Rich, hi Brent.

Hi Mitch.

Good quarter in a ugly environment, glad to see there are some signs of a turn here, maybe with 35% of your market cap and cash you might update us on what the M&A environment feels like, looks like these days.

Well, it’s an area that we are spending a lot of time and energy trying to push forward some strategies. It is also an area where in our view pay should be careful and prudent over time. So we don’t yet have anything to announce, I think we are optimistic that we’re going to continue to make some progress and eventually get some things across the finish line. Broadly, the overall picture of what we are looking at hasn’t changed, which we are focused on things that are very aligned with our core business in the form of listings, searching and tools and information services, but we don’t have anything to announce yet. Quite candidly it’s something that we’ve been spending a lot of time trying to achieve all year and I’d like to get some things done, but we want to be very careful about how we go about it and we are just not there yet.

Sure. Still a couple of projects that might be fairly large in size?

Yes, as we’ve said since the beginning there is a few difference scenarios that we think are pretty attractive investment opportunities for us if we can bring them to fruition, and it’s combinations of both acquisitions, the integration of those acquisitions with our business and ongoing organic investments of various sorts. So, there is definitely something, I think pretty interesting for us, good sized opportunities out there, but like I said so far we haven’t been able to get something done that we feel is an appropriate investment for us.

Got it, thanks.

Sure.

At this time you have no further questions.

All right. Well, I guess that concludes our call and thank everyone for joining us.

Ladies and gentlemen that conclude today’s conference. Thank you for your participation. You may now disconnect. Have a great day.