Welcome to the LoopNet Incorporated earnings conference call for the fourth quarter of 2009. The date of this call is February 10, 2010. 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 February 12, 2010. I would now like to turn the call over to Derek Brown, Vice President of Investor Relations and Corporate Planning.

Good afternoon. Thank you for joining us to discuss LoopNet Inc’s financial and operating results for the fourth 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 fourth quarter performance and review of the marketplace. Brent will review the fourth quarter financial results and provide first quarter 2010 guidance. 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 would like to welcome all of you to the LoopNet fourth quarter 2009 earnings call. On our call today we will discuss our performance during the fourth quarter 2009 and share with you our perspective on current conditions in the commercial real estate industry as well as trends and opportunities we see in our business. Additionally we will provide you with updates on a number of other ongoing initiatives in 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. Our company and business performed solidly ahead of expectations during Q4 2009. Despite ongoing gridlock in the commercial real estate industry that has materially suppressed activity levels and the number of completed transactions industry wide we comfortably exceeded the financial targets we set three months ago. Revenue in Q4 of 2009 was $18.3 million compared to our guidance of $17.7 to $17.9 million and adjusted EBITDA was $7.6 million or $0.18 per share compared to our guidance of $6.7-6.9 million. Our adjusted EBITDA margin for the quarter was 41.6%, towards the higher end of our stated target range for 2009 of high 30’s to low 40’s on a percentage basis. In our view, these better than expected results which were once again achieved despite persistent headwinds in the broader commercial real estate industry highlight the health of our underlying business model and reflect favorably on our consistent financial discipline and the ability of our team to execute. Equally important, key operating and activity measures of our core business such as the average monthly cancellation rate of our premium members, profile views and profile views per listing as well as subscriptions to recent sales showed considerable…

Thank you Rich. LoopNet’s revenue for the fourth quarter of 2010 was $18.3 million compared to $21.1 million in the fourth quarter of 2008 and our guidance of $17.7-17.9 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 $7.6 million or 41.6% of revenues compared to $9.5 million in the fourth quarter of 2008 and our guidance of $6.7-6.9 million. The company has reported adjusted EBTIDA which we define as EBITDA excluding stock based compensation and litigation related costs because management uses this to monitor and assess the company’s performance and believes it is helpful to investors in understanding the company’s business, net income applicable to common stockholders for the fourth quarter of 2009 was $3.2 million or $0.07 per diluted share compared to $4.1 million or $0.12 per diluted share in the fourth quarter of 2008. Non-GAAP net income which we define as net income excluding stock based compensation and litigation related costs for the fourth quarter of 2009 was $4.7 million or $0.11 per diluted share compared to $5.3 million or $0.15 per diluted share in the fourth quarter of 2008 and our guidance of $0.08 to $0.09 per diluted share. As of December 31, 2009 the company had $129 million of cash, cash equivalents and short-term investments and no debt. Now I would like to review some of our key operating metrics. The number of registered members which includes both basic and premium members grew to 3,925,534 during the fourth quarter of 2009, a 21% increase over the fourth quarter of 2008. The number of premium members as of the end of the fourth quarter 2009 was 68,378,…

(Operator Instructions) The first question comes from the line of Ian Corydon – B. Riley.

A couple of questions on the increased investment. I do think it makes sense for LoopNet to expand the scope of its business and offerings. If you look at the incremental investments in 2010 how much are those weighted between projects that are expected to begin to deliver revenue pretty quickly versus kind of more longer-term projects?

I think the ones that are organic investments, a few of them have been underway for some time and I think we will have some ability to impact this calendar year starting in the middle of the year. But most of them it tends to be a little bit longer term meaning we are beginning the investment now and it is going to be I think really impactful in years starting towards the end of this year out into 2011. I think the one difference to that would be where we are able to successfully go after M&A opportunities it will obviously have a more near-term impact. Those are also a little harder to predict timing wise.

The investments in fiscal 2010 are they going to be fairly equally weighted by quarter?

Yes, I believe so. They will be spread out pretty evenly throughout the year.

I don’t know if you can speak to this but you had mentioned you will continue to invest. Assuming the business grows in fiscal 2011 do you think fiscal 2010 will be kind of a low point for EBITDA margin?

I think we will be looking at the rate of investment overall going forward and I think managing that to some degree depending on how conditions change. We see what are some encouraging but pretty modest positive trends in the business right now I think if those continue we will start to grow a bit going forward which hopefully will turn into a margin this year which ends up gradually increasing over time.

A clarification on the gross new premium members. You said that was up, was that up year-over-year or was that up sequentially?

It was year-over-year.

The next question comes from the line of Brett Huff – Stephens Inc.

A couple of quick questions, I think these are mostly just making sure I understood what you said before or getting more clarification. You had said and I think the words you used you think you are broadly in the range of bid-ask-spread equilibrium. That to me I think is different from how you had characterized that even in the last call or two. I am wondering if you could just point us to the one or two things that maybe changed the outlook?

There were a few. Certainly one would be looking at the Moody’s pricing index data we look at which started to show a rate of decline in the fourth quarter which stabilized pretty considerably. In fact it took a tick up in November. December data is not out yet. Second would be looking at data that suggests we are starting to see an increase in actual transaction closes meaning buyers are starting to come in and actually deciding prices are low enough to purchase. There is definitely to be clear some variability by geography, asset type and particular deal opportunities as well. Thirdly is obviously all of our own metric data which is looking at activity around things like our recent sales service where we have seen some really strong sales, the profile view activity meaning demand side folks coming in and looking more actively at properties to buy. That seems to lend in our view some data supporting the concept that prices are now down at a level where buyers are coming in and really starting to dig deep on evaluating opportunities.

So the last one, you are finally seeing the buy side come back and sniff around a bit?

Exactly. We were kind of encouraged as well in what is typically a kind of weak quarter for us seasonality wise. When you look at it from that perspective some of the sequential improvements from Q3 to Q4 it was something we feel like was a pretty good sign as well.

You talked about the churn rate 4.5-6.5 range. You said you were comfortably in the range and that had been after being sort of at the top end or even a little above. Am I remembering that right?

That is correct. We actually went above it in early 2009. The very peak of it was just over 7% and then it fell back down into that range in Q3 and improved even further in the fourth quarter.

Can we assume a midpoint? Is that the right way to think about it?

I think our only comment is it has been within that range.

The reason you feel the churn got better and you said this is the best since 2007 or the first time…What was the gross adds were up since the first time in 2007?

On a year-over-year basis gross adds went up for the first time since 2007. I think the other part of the question was what was driving the churn improvement. We really viewed it as a couple of things. First and foremost we think we have seen a real increase in the demand side buyers coming on and looking deeper and staying on longer to try and find properties they are interested in. The second is the population of active people in the industry overall. We have really kind of been fully through the cycle now and we think we have kind of washed out the transactional participants that come and go or the part-time players in the industry to some degree. Those are probably the biggest factors. Then a lesser factor is obviously our pricing model change which we made way back in Q4 2007. There was still some [audio break] in early 2009 as we rolled that out and that is done now.

Just to clarify, the cancellation rate in Q4 of this year was the lowest it had been since Q4 2007. The premium membership gross increase was the first increase we have seen since Q4 of 2007.

The next question comes from the line of Analyst for Andrew Jeffrey - SunTrust Robinson Humphrey.

I just wanted to get a sense, you said that you expected EBITDA margins to move down to mid…

Low to mid 30’s.

How should we think about the path of getting there? Is this going to be a stair step function down as you progress in some of these investment initiatives or is this going to lever down and kind of single step?

I think you can start with looking at the guidance we gave for Q1 which is kind of the first indicator of where we are in that. As we roll out some of the investments it might go down slightly from there but even Q1 a number of these things are already underway. So the midpoint of the guidance for Q1 is guided to that range already.

About 35%.

You mentioned pricing. Are we looking at pricing remaining reasonably stable around the $66 per level? You mentioned the mix. How is that going to affect pricing?

The way the mix can affect it without necessarily saying exactly how it is going to play out is obviously we have two significantly different price points in the service. The listers have a base price that is hinged around more of an $89 a month fee and the searchers are at $49 per month. As you bring on more searchers in terms of the volume of people coming on they are a lower average price so it can affect it in that way. That said, it has been pretty stable the last few quarters at around that $66 price. I wouldn’t expect it to show any real dramatic swings.

As some of the investment initiatives become more significant in terms of total revenue what direction should we be thinking about pricing?

A number of them will be separately priced products essentially. Meaning for example our recent sales service is an incremental $30 per subscriber per month type of service. So they end up being priced wholly independently as well as some of the M&A stuff being separate prices. There are some things we may do that would be value added to the existing premium membership service. The levers there would be for us to be to increase gross sales, reduce the cancellation or the stickiness or increase average price. At this point though the stuff we are bringing out in the market right now shouldn’t change the pricing mix you that you see in premium membership right now.

More to drive traffic?

Or to introduce new services or increase stickiness but I don’t think we are going to do anything in the near-term to affect average price.

The next question comes from the line of Jim Wilson – JMP Securities.

I was wanting to go further into the new investment initiatives. Can you talk a little bit about returns? I am think if you are going to have a consistent investment program taking margins down for now you expect reasonably good returns to be coming through in order to actually drive those margins back up? Can you address what you are thinking of and maybe tie it into are you or would you be looking for strategic acquisitions to fill some of those holes?

In reverse order we are definitely looking for acquisitions as well. The BizQuest one we just announced we are excited about although it is relatively small. We have an appetite to do more. That said we have been working very hard to maintain our discipline as we do that and so we will be continuing to look at those very carefully. We do have an appetite to do more acquisitions. In terms of the returns for one of these investments we absolutely feel that in a long-term aggregate sense there is no question they are going to have very strong returns. The specific way we look at it really does vary on an investment by investment basis. Some of them are quite clean, stand alone new products where you can get a very clear return on direct investments. Others are expanding the footprint of the marketplace that are more blended in our existing business and it is a little more difficult to measure. The way we look at it from a big picture sense is achieving our near-term business plan goals of being a $200 million revenues company with 40% plus EBITDA margins, looking at the different product lines our customers want and how do we expand the scale of the core marketing and searching service as well as bring online some of these new information services either organically or via M&A. That whole big picture framework is really how we are looking at it.

As you look at the margin improvement in those starting to look for properties, is there any pattern, size of asset, geography, anything interesting or significant that might kind of reflect where and who is looking or what they are looking for? Getting bigger, even though prices have dropped? Anything like that?

In terms of market data on our marketplace?

Yes.

That is actually one of the areas we are trying to include some information in upgraded service that is going to be available later this summer. Sort of what is some of the market trend data in not just pricing trends but demand side activity trends. I do think there is quite a bit of variability. When you look right now certainly by asset type, things like multifamily come out as being a little bit better than some of the other asset classes. When you look by geography you can see some pretty wide disparities in terms of how things are going. Even within that as you start drilling down into a specific geography and asset type you can see some very huge variability between specific sub-classes and all the way down to a particular asset. We think we are in a pretty interesting position to be able to deliver some of that data to people to help them make better decisions.

Stock repurchase program obviously you noted you added to the authorization. I can’t really tell by the net share count, how much have you actually repurchased either in the quarter or program to date?

We have not actually done any repurchasing to date. It goes back to well over a year.

I think the last time we repurchased was in 2008.

So you increased the authorization because you are going to get more serious about potentially repurchasing or how should we take that?

I think I would interpret it simply as we want to have the flexibility to weigh options between some of the investments we are doing and the alternatives of changing the capital structure in this way to whatever we think is going to be the most beneficial. We haven’t committed to doing any specific purchases at this point. I guess maybe one comment I will make is I think our board does want us to pursue at a minimum buybacks that offset auction dilution of the company and so I think we are likely going forward, though we haven’t done anything yet to be clear, to be doing sort of a minimum level of buybacks that are intended to achieve that end.

The next question comes from the line of Mitchell Bartlett - Craig Hallum.

You mentioned you didn’t expect the split between listers and searchers is going to change the revenue breakdown a whole lot going forward. Is that because you think when the market does get liquid again or folks are coming back in and you will see an even increase on both sides of the equation?

I do think searchers are going to lead a little bit. But I don’t think it is going to change it dramatically would be all I would try to say there. I think it may shift it a bit but it is not going to be a major shift one way or the other is our view.

Auction Point. I kind of missed the discussion along that. Could you just review that again?

More will be announced in the coming weeks. We are very close to being able to provide more details. They are a provided of an online auction platform for commercial property. One of the very unique things about their approach to the industry is they do so with a business model which is inclusive of and relies upon and is friendly with the commercial real estate brokers. So it is a broker friendly auction model which is different than has historically existed. The strategy from our point of view in working with them is to create a platform where as we expect to see in the coming years a greatly increased volume of distressed or foreclosure listings which have a disproportionate probability they end up being auctioned as opposed to sold in a traditional manner, we have been looking for a strategy to take advantage of that. The structure right now we are not going to disclose tremendous detail but it is a minority investment. We have provided them some capital and we will be in an ongoing operating partnership between the two companies working together to try and capture that opportunity.

At this time there are no further questions. That concludes today’s conference. Thank you for your participation. You may now disconnect. Have a great day.