Edgar Filing: MOVE INC

e10vq

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2007


o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 000-26659

Move, Inc.

(Exact Name of Registrant as Specified in its Charter)


Delaware (State or Other Jurisdiction of Incorporation or Organization)		95-4438337 (I.R.S. Employer Identification No.)


30700 Russell Ranch Road Westlake Village, California (Address of Principal Executive Offices)		91362 (Zip Code)

(805) 557-2300
(Registrant’s Telephone Number, including Area Code:)

(Former Name, Former Address and Former Fiscal Year, If Changed Since Last Report)

Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer o Accelerated Filer þ Non-Accelerated Filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

At July 31, 2007, the registrant had 155,339,941 shares of its common stock outstanding.

INDEX


		Page

	PART I — FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements		3
	Condensed Consolidated Balance Sheets		3
	Condensed Consolidated Statements of Operations		4
	Condensed Consolidated Statements of Cash Flows		5
	Notes to Unaudited Condensed Consolidated Financial Statements		6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		11
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		19
Item 4.	Controls and Procedures		19

	PART II — OTHER INFORMATION

Item 1.	Legal Proceedings		20
Item 1A.	Risk Factors		20
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		21
Item 3.	Defaults Upon Senior Securities		21
Item 4.	Submission of Matters to a Vote of Security Holders		21
Item 5.	Other Information		21
Item 6.	Exhibits		21

SIGNATURES			23
EXHIBIT 10.1
EXHIBIT 10.2
EXHIBIT 10.3
EXHIBIT 10.4
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32.1
EXHIBIT 32.2

Move^TM, REALTOR.com^®, HomeBuilder.com^®, RENTNET.com^TM, Top Producer^®, Welcome Wagon^®, and Moving.com^TM are our trademarks or are exclusively licensed to us. This quarterly report on Form 10-Q may contain trademarks of other companies and organizations. REALTOR^® is a registered collective membership mark that may be used only by real estate professionals who are members of the National Association of REALTORS^® and subscribe to its code of ethics.

PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

MOVE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS


	June 30,			December 31,
	2007			2006
	(Unaudited)
	(In thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	37,245		$	14,873
Short-term investments		150,100			142,975
Accounts receivable, net		15,984			18,279
Other current assets		16,214			34,468

Total current assets		219,543			210,595

Property and equipment, net		36,739			29,245
Goodwill, net		23,877			23,877
Intangible assets, net		16,130			16,715
Restricted cash		3,286			4,279
Other assets		1,413			1,238


Total assets	$	300,988		$	285,949


LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	5,963		$	4,904
Accrued expenses		28,086			26,738
Obligation under capital leases		1,971			1,904
Deferred revenue		48,659			50,075

Total current liabilities		84,679			83,621

Obligation under capital leases		1,165			2,167
Other liabilities		2,403			2,497


Total liabilities		88,247			88,285

Commitments and contingencies (see note 10)

Series B convertible preferred stock		98,685			96,212

Stockholders’ equity:
Series A convertible preferred stock		—			—
Common stock		155			154
Additional paid-in capital		2,085,134			2,069,399
Accumulated other comprehensive income		533			326
Accumulated deficit		(1,971,766	)		(1,968,427	)


Total stockholders’ equity		114,056			101,452


Total liabilities and stockholders’ equity	$	300,988		$	285,949

The accompanying notes are an integral part of these unaudited
Condensed Consolidated Financial Statements.

MOVE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2007			2006			2007			2006
	(In thousands, except per share amounts)
	(Unaudited)

Revenue	$	73,626		$	73,891		$	144,656		$	142,870
Cost of revenue		15,299			16,447			29,997			32,853


Gross profit		58,327			57,444			114,659			110,017


Operating expenses:
Sales and marketing		27,626			28,312			55,520			53,653
Product and web site development		9,324			8,793			18,146			17,148
General and administrative		25,097			19,378			45,804			40,354
Amortization of intangible assets		505			589			1,003			1,336

Total operating expenses		62,552			57,072			120,473			112,491


Income (loss) from operations		(4,225	)		372			(5,814	)		(2,474	)

Interest income, net		2,503			1,794			4,816			3,409
Other income (expense), net		(371	)		431			384			503


Net income (loss) before income taxes		(2,093	)		2,597			(614	)		1,438

Provision for income taxes		169			—			253			—


Net income (loss)		(2,262	)		2,597			(867	)		1,438

Convertible preferred stock dividend and related accretion		(1,241	)		(1,181	)		(2,473	)		(2,355	)


Net income (loss) applicable to common stockholders	$	(3,503	)	$	1,416		$	(3,340	)	$	(917	)


Unrealized loss on marketable securities		—			—			(1	)		—
Foreign currency translation		173			53			208			51


Comprehensive income (loss)	$	(3,330	)	$	1,469		$	(3,133	)	$	(866	)


Net income (loss) per common share: (see note 7)
Basic net income (loss) applicable to common stockholders	$	(0.02	)	$	0.01		$	(0.02	)	$	(0.01	)

Diluted net income (loss) applicable to common stockholders	$	(0.02	)	$	0.01		$	(0.02	)	$	(0.01	)


Shares used to calculate basic and diluted net income (loss) per share applicable to common stockholders: (see note 7)
Basic		154,885			150,769			154,614			149,865


Diluted		154,885			165,127			154,614			149,865

The accompanying notes are an integral part of these unaudited
Condensed Consolidated Financial Statements.

MOVE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


	Six months ended
	June 30,
	2007			2006
	(In thousands)
	(Unaudited)

Cash flows from operating activities:
Net income (loss)	$	(867	)		1,438
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation		5,328			5,015
Amortization of intangible assets		1,003			1,336
Provision for doubtful accounts		556			540
Gain on sales of property and equipment		(336	)		—
Stock-based compensation and charges		13,523			5,886
Change in market value of embedded derivative liability		(98	)		—
Other non-cash items		(14	)		(315	)

Changes in operating assets and liabilities:
Accounts receivable		1,739			(1,842	)
Other assets		(3,002	)		(2,380	)
Accounts payable and accrued expenses		2,096			(16,995	)
Deferred revenue		(1,457	)		11,941


Net cash provided by operating activities		18,471			4,624


Cash flows from investing activities:
Purchases of property and equipment		(12,601	)		(6,854	)
Proceeds from the surrender of life insurance policy		5,200			—
Proceeds from sales of marketable equity securities		15,743			—
Proceeds from sales of property and equipment		336			—
Purchases of intangible assets		(418	)		—
Maturities of short-term investments		36,350			16,950
Purchases of short-term investments		(43,475	)		(10,050	)
Acquisitions, net		—			(9,572	)


Net cash provided by (used in) investing activities		1,135			(9,526	)


Cash flows from financing activities:
Proceeds from exercise of stock options and warrants		2,708			4,816
Restricted cash		993			855
Payments on capital lease obligations		(935	)		(1,374	)


Net cash provided by financing activities		2,766			4,297


Change in cash and cash equivalents		22,372			(605	)

Cash and cash equivalents, beginning of period		14,873			13,272


Cash and cash equivalents, end of period	$	37,245		$	12,667

The accompanying notes are an integral part of these unaudited
Condensed Consolidated Financial Statements.

MOVE, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Business

Move, Inc. (the “Company”) has created an online service that enables consumers to find real estate listings and other content related to residential real estate, moving and relocation. The Company’s web sites collectively have become the leading consumer destination on the Internet for home and real estate-related information based on the number of visitors, time spent on its web sites and number of property listings. The Company generates most of its revenue from selling advertising and marketing solutions to real estate industry participants, including real estate agents, homebuilders and rental property owners, and other local and national advertisers interested in reaching the Company’s consumer audience (before, during or after a move). The Company also provides software solutions to real estate agents to assist them in managing their client interactions and architects’ home plans to consumers considering building a new home. The Company derives all of its revenue from its North American operations.

The Company’s primary consumer web sites are Move.com^TM and REALTOR.com^®, the official site of the National Association of REALTORS^® (“NAR”), which provide new and existing homes, apartments, corporate housing, and self-storage listings and are home information resource sites with an emphasis on content related to mortgage financing, moving and storage, and home and garden activities. The Company’s web sites also include SeniorHousingNet^®.com, a comprehensive resource for seniors and Moving.com^TM which connects consumers with moving companies, van lines, truck rental providers and self storage facilities.

2. Basis of Presentation

The Company’s unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) including those for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X issued by the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and note disclosures required by GAAP for complete financial statements. These statements are unaudited and, in the opinion of management, all adjustments (which include only normal recurring adjustments) considered necessary for a fair presentation have been included. These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Form 10-K for the year ended December 31, 2006 which was filed with the SEC on March 5, 2007. The results of operations for these interim periods are not necessarily indicative of the operating results for a full year.

3. Significant Accounting Policy

On January 1, 2007, the Company adopted the provisions of Emerging Issues Task Force (“EITF”) Issue No. 06-03 “How Taxes Collected from Customers and Remitted to Governmental Authorities Should Be Presented in the Income Statement (That Is, Gross Versus Net Presentation)” (“EITF No. 06-03”). Under EITF No. 06-03, a company must disclose its accounting policy regarding the gross or net presentation of certain taxes. If taxes included in gross revenues are significant, a company must disclose the amount of such taxes for each period for which an income statement is presented (i.e., both interim and annual periods). Taxes within the scope of EITF No. 06-03 are those that are imposed on and concurrent with a specific revenue-producing transaction. Taxes assessed on an entity’s activities over a period of time, such as gross receipts taxes, are not within the scope of EITF No. 06-03. The Company continues to report taxes collected from customers on a net presentation basis after the adoption of EITF No. 06-03.

4. Recent Accounting Development

In February 2007, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities — Including an Amendment of FASB Statement No. 115” (“SFAS 159”). This standard permits an entity to choose to measure many financial instruments and certain other items at fair value. Most of the provisions in SFAS 159 are elective; however, the amendment to FASB Statement No. 115, “Accounting for Certain Investments in Debt and Equity Securities,” applies to all entities with available-for-sale and trading securities. The fair value option established by SFAS 159 permits all entities to choose to measure eligible items at fair value at specified election dates. A business entity will report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date. The fair value option: (a) may be applied instrument by instrument, with a few exceptions, such as investments otherwise accounted for by the equity method; (b) is irrevocable (unless a new election date occurs); and (c) is applied only to entire instruments and not to portions of instruments. SFAS 159 is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. Early adoption is permitted as of the beginning of the previous fiscal year provided that the entity makes that choice

in the first 120 days of that fiscal year and also elects to apply the provisions of SFAS No. 157, “Fair Value Measurements.” The Company is currently evaluating whether the adoption of this statement will have a material effect on its financial conditions, its results of operations or its liquidity.

5. Goodwill and Other Intangible Assets

Goodwill, net, by segment, is as follows (in thousands):


	June 30,		December 31,
	2007		2006

Real Estate Services	$	12,988	$	12,988
Consumer Media		10,889		10,889

Total	$	23,877	$	23,877

The Company has both indefinite and definite lived intangibles. Indefinite-lived intangibles consist of trade names and trademarks acquired during the year ended December 31, 2006. Definite-lived intangible assets consist of certain trade names, trademarks, brand names, domain names, purchased technology, and other miscellaneous agreements entered into in connection with business combinations and are amortized over expected periods of benefits. There are no expected residual values related to these intangible assets (in thousands):


	June 30, 2007				December 31, 2006
	Gross		Accumulated		Gross		Accumulated
	Amount		Amortization		Amount		Amortization

Trade names, trademarks, brand names, and domain names	$	22,064	$	8,816	$	22,046	$	8,184
Purchased technology		10,499		9,365		10,499		9,265
NAR operating agreement		1,578		827		1,578		751
Customer lists and relationships		1,041		912		1,041		865
Other		6,740		5,872		6,340		5,724


Total	$	41,922	$	25,792	$	41,504	$	24,789

Amortization expense for intangible assets was $0.5 million and $1.0 million, respectively, for the three and six months ended June 30, 2007 and $0.6 million and $1.3 million, respectively, for the three and six months ended June 30, 2006. Amortization expense for the next five years is estimated to be as follows (in thousands):


Years Ended December 31,	Amount

2007 (remaining 6 months)	$	1,020
2008		2,012
2009		1,737
2010		1,669
2011		1,666

6. Stock-Based Compensation and Charges

The Company accounts for stock issued to non-employees in accordance with the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 123 “Accounting for Stock-based Compensation” (“SFAS No. 123”) and EITF No. 96-18 “Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods and Services.”

The Company has granted restricted stock awards to members of its Board of Directors as compensation during the past four years. These shares will vest on the third anniversary of their issuance. There were 314,950 and 292,200 unvested shares of restricted stock issued to members of the Company’s Board of Directors as of June 30, 2007 and 2006, respectively.

The Company has granted restricted stock awards to its Chief Executive Officer in consideration for his service in 2003 and 2004. These shares have vested or will vest on the third anniversary of their issuance. There were 115,740 and 186,662 unvested shares of restricted stock issued to the Company’s Chief Executive Officer as of June 30, 2007 and 2006, respectively. The intrinsic value of these restricted stock awards was included in the results of operations in the period in which they were granted. During the three months ended June 30, 2007, the Company granted 232,018 shares of restricted stock to one of its officers as a “sign-on” bonus. These shares have a fair value of $1.0 million and vest fifty percent immediately with the balance vesting one year from the grant date subject to continued employment with the Company. The

fair value of the first fifty percent vesting was recognized as stock based compensation immediately with the remaining fifty percent being amortized over one year. The total costs recognized during the three and six months ended June 30, 2007 was $547,000 which is included in the stock based compensation and charges detailed below.

The Board of Directors has granted performance-based restricted stock units (“restricted stock units”) to certain of the Company’s executive officers beginning in fiscal year 2006. Based on the original terms of the awards, the officers were to earn shares of the Company’s common stock based on the attainment of certain performance goals relating to the Company’s revenues and EBITDA for the fiscal year ending December 31, 2008. In April of 2007, the Management Development and Compensation Committee of the Board of Directors approved a modification of the performance targets and the vesting period from the original awards, reducing the original restricted stock units available for vesting after the 2008 year end by 50% for each executive, and lowering the target financial performance for 2008 based on current market conditions and the Company’s expected performance within the market. At the same time, the committee also established financial performance targets for 2009, which will provide the potential for executives to earn the remaining 50% of the restricted stock units previously granted by attainment of those performance goals for the 2009 fiscal year. The 2008 and 2009 financial goals require a high level of financial performance in both years which the committee believes are challenging but achievable. The modification caused a new measurement date for the awards but caused no change in value of the previous awards. The remaining unamortized expense will be recognized over the remaining service periods.

The Board of Directors awarded 1,775,000 and 2,325,000 shares of restricted stock units during the three and six months ended June 30, 2007, respectively, and 4,395,000 shares during the three and six months ended June 30, 2006. Some of these awards have been forfeited due to terminations. As of June 30, 2007, there were 6,360,000 shares of restricted stock units outstanding with a fair value of $30.8 million which will be amortized over the service periods. Currently, the Company is assuming that 100% of the shares will be earned by the end of the performance periods. This assumption will be reviewed each reporting period and the total value of the awards may be adjusted accordingly. There was $1.4 million and $3.9 million in costs associated with these restricted stock units amortized during the three and six months ended June 30, 2007, respectively, and $0.2 million amortized during the three and six months ended June 30, 2006. These costs are included in the stock based compensation and charges detailed below.

The Company adopted the fair value recognition provisions of SFAS No. 123 (revised 2004) “Share Based Payment” (“SFAS 123R”) using the modified-prospective transition method. Under that transition method, compensation cost recognized includes: (a) compensation cost for all share-based payments granted prior to January 1, 2006, but not yet vested, based on the grant-date fair value estimated in accordance with the original provisions of SFAS 123; and (b) compensation cost for all share-based payments granted subsequent to December 31, 2005, based on the grant-date fair value estimated in accordance with the provisions of SFAS 123R. Compensation costs are recognized using a straight-line amortization method over the vesting period. Results for prior periods have not been restated.

The fair value of each option award is estimated on the date of grant using a Black-Scholes option valuation model that uses the ranges of assumptions in the following table. Our computation of expected volatility is based on a combination of historical and market-based implied volatility. Due to the unusual volatility of the Company’s stock price around the time of the restatement of its financial statements in 2002 and several historical acquisitions that changed the Company’s risk profile, historical data was more heavily weighted toward the most recent four years of stock activity. The expected term of options granted was derived by averaging the vesting term with the contractual term. The risk-free interest rates are based on U.S. Treasury zero-coupon bonds for the periods in which the options were granted.


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2007			2006			2007			2006
Risk-free interest rates		4.51 – 5.16	%		4.85 – 5.18	%		4.51 – 5.16	%		4.35 – 5.18	%
Expected term (in years)		6.06			6.06			6.06			6.06
Dividend yield		0	%		0	%		0	%		0	%
Expected volatility		70	%		80	%		70	%		80	%

The following chart summarizes the stock-based compensation and charges that have been included in the following captions for each of the periods presented (in thousands):


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2007		2006		2007		2006

Cost of revenue	$	33	$	29	$	77	$	158
Sales and marketing		416		371		970		928
Product and web site development		292		340		567		839
General and administrative		7,215		1,635		11,909		3,961


Total	$	7,956	$	2,375	$	13,523	$	5,886

In addition to costs related to stock options and restricted stock units, stock-based compensation and charges in sales and marketing includes costs related to vendor agreements and general and administrative includes costs related to the amortization of restricted stock grants to the Company’s board of directors.

7. Net Income (Loss) Per Share

The following table sets forth the computation of basic and diluted net income (loss) per share applicable to common stockholders for the periods indicated (in thousands, except per share amounts):


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2007			2006			2007			2006
Numerator:
Net income	$	(2,262	)	$	2,597		$	(867	)	$	1,438
Convertible preferred stock dividend and related accretion		(1,241	)		(1,181	)		(2,473	)		(2,355	)


Net income (loss) applicable to common stockholders	$	(3,503	)	$	1,416		$	(3,340	)	$	(917	)


Denominator:
Basic weighted average shares outstanding		154,885			150,769			154,614			149,865
Add: dilutive effect of options, warrants and restricted stock		—			14,358			—			—

Diluted weighted average shares outstanding		154,885			165,127			154,614			149,865


Net income (loss) per common share:
Basic net income (loss) per share applicable to common stockholders	$	(0.02	)	$	0.01		$	(0.02	)	$	(0.01	)

Diluted net income (loss) per share applicable to common stockholders	$	(0.02	)	$	0.01		$	(0.02	)	$	(0.01	)

Because their effects would be anti-dilutive for the periods presented, the above computation of diluted income (loss) per share excludes preferred stock, stock options and warrants of 60,210,711 for both the three and six months ended June 30, 2007, and 25,757,684 and 55,900,271 for the three and six months ended June 30, 2006, respectively.

In the second quarter of 2006, the amounts reported as “Dividends on convertible preferred stock” in the Company’s Form 10-Q omitted the related accretion of the discount that was derived from the issuance of the convertible preferred stock. The reported results for that quarter have been revised to reflect both the accretion and the dividends in arriving at “Net income (loss) applicable to common stockholders.” As a result of the revision, additional expense of $296,000 and $592,000 for the three and six months ended June 30, 2006, respectively, is reflected in the line “Convertible preferred stock dividends and related accretion.” As a result of this change, basic and diluted loss per share attributable to common stockholders for the six months ended June 30, 2006 decreased by $0.01 from $(0.00) to $(0.01).

8. Segment Information

Segment information is presented in accordance with SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information.” This standard is based on a management approach, which requires segmentation based upon the Company’s internal organization and disclosure of revenue and operating expenses based upon internal accounting methods. The Company’s management evaluates performance and allocates resources based on two segments consisting of Real Estate Services for those products and services offered to industry professionals trying to reach new movers and manage their relationships with them and Consumer Media for those products and services offered to other advertisers who are trying to reach those consumers in the process of a move. This is consistent with the data that is made available to our management to assess performance and make decisions. In June 2007, the Company changed the name of its former Move-Related Services segment to Consumer Media.

The expenses presented below for each of the business segments include an allocation of certain corporate expenses that are identifiable and benefit those segments and are allocated for internal management reporting purposes. The unallocated expenses are those corporate overhead expenses that are not directly attributable to a segment and include: corporate expenses, such as finance, legal, internal business systems, and human resources; amortization of intangible assets and stock-based

charges. There is no inter-segment revenue. Assets and liabilities are not fully allocated to segments for internal reporting purposes.

Summarized information, by segment, as excerpted from internal management reports is as follows (in thousands):


	Three Months Ended
	June 30, 2007											June 30, 2006
	Real											Real
	Estate		Consumer									Estate		Consumer
	Services		Media			Unallocated			Total			Services		Media		Unallocated			Total

Revenue	$	54,750	$	18,876		$	—		$	73,626		$	52,099	$	21,792	$	—		$	73,891
Cost of revenue		8,480		6,183			636			15,299			8,463		7,072		912			16,447


Gross profit (loss)		46,270		12,693			(636	)		58,327			43,636		14,720		(912	)		57,444

Sales and marketing		17,106		8,845			1,675			27,626			18,075		9,358		879			28,312
Product and web site development		7,153		1,887			284			9,324			6,508		1,269		1,016			8,793
General and administrative		8,206		4,345			12,546			25,097			7,674		3,770		7,934			19,378
Amortization of intangible assets		—		—			505			505			—		—		589			589


Total operating expenses		32,465		15,077			15,010			62,552			32,257		14,397		10,418			57,072


Income (loss) from operations	$	13,805	$	(2,384	)	$	(15,646	)	$	(4,225	)	$	11,379	$	323	$	(11,330	)	$	372


	Six Months Ended
	June 30, 2007											June 30, 2006
	Real											Real
	Estate		Consumer									Estate		Consumer
	Services		Media			Unallocated			Total			Services		Media			Unallocated			Total

Revenue	$	108,273	$	36,383		$	—		$	144,656		$	101,348	$	41,522		$	—		$	142,870
Cost of revenue		16,739		12,059			1,199			29,997			16,129		14,824			1,900			32,853


Gross profit (loss)		91,534		24,324			(1,199	)		114,659			85,219		26,698			(1,900	)		110,017

Sales and marketing		35,227		17,614			2,679			55,520			34,400		17,870			1,383			53,653
Product and web site development		13,880		3,469			797			18,146			12,442		2,299			2,407			17,148
General and administrative		15,393		8,404			22,007			45,804			15,401		7,783			17,170			40,354
Amortization of intangible assets		—		—			1,003			1,003			—		—			1,336			1,336


Total operating expenses		64,500		29,487			26,486			120,473			62,243		27,952			22,296			112,491


Income (loss) from operations	$	27,034	$	(5,163	)	$	(27,685	)	$	(5,814	)	$	22,976	$	(1,254	)	$	(24,196	)	$	(2,474	)

9. Income Taxes

As a result of historical net operating losses, we have generally not recorded a provision for income taxes. However, during the year ended December 31, 2006, we recorded certain indefinite lived intangible assets as a result of the purchase of Moving.com which creates a permanent difference as the amortization can be recorded for tax purposes but not for book purposes. A tax provision of $40,000 and $80,000 was recorded in the three and six months ended June 30, 2007, respectively, as a result of this permanent difference which cannot be offset against net operating loss carryforwards due to its indefinite life and an additional $129,000 and $173,000 tax provision was recorded in the three and six months ended June 30, 2007, respectively, as a result of federal alternative minimum taxes incurred in the utilization of net operating losses against our taxable income for the respective period.

The Company adopted the FASB’s Interpretation No. 48, “Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109” (“FIN 48”), effective January 1, 2007. FIN 48 clarifies the accounting for uncertainty in income taxes recognized in financial statements and requires the impact of a tax position to be recognized in the financial statements if that position is more likely than not to be sustained by the taxing authority. The adoption of FIN 48 did not have a material effect on the Company’s consolidated financial position or results of operations.

As of June 30, 2007, we do not have any accrued interest or penalties related to uncertain tax positions. The Company’s policy is to recognize interest and penalties related to uncertain tax positions in income tax expense. We do not have any interest or penalties related to uncertain tax positions in income tax expense for the three and six months ended June 30, 2007 and 2006. The tax years 1993-2006 remain open to examination by the major taxing jurisdictions to which we are subject.

10. Commitments and Contingencies

Form 10-K for the year ended December 31, 2006, the Company is not a party to any other litigation or administrative proceedings that management believes will have a material adverse effect on the Company’s business, results of operations, financial condition or cash flows, and except as provided in the following paragraph, there have been no material developments in the litigation or administrative proceedings described in Note 21.

On May 18, 2007, the Company entered into an agreement resolving the patent infringement claims brought against it by InternetAd Systems, LLC (“InternetAd”) in a lawsuit described in Note 21, “Commitments and Contingencies —Legal Proceedings,” to our Consolidated Financial Statements contained in Item 8 in our Annual Report on Form 10-K for the year ended December 31, 2006. Pursuant to the agreement, the Company paid cash and received a fully paid up worldwide license to the patents at issue in the case, and the claims against the Company were dismissed by InternetAd with prejudice.


Item 2.		*Management’s Discussion and Analysis of Financial Condition and Results of Operations*

This Form 10-Q and the following “Management’s Discussion and Analysis of Financial Condition and Results of Operations” include “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. This Act provides a “safe harbor” for forward-looking statements to encourage companies to provide prospective information about themselves so long as they identify these statements as forward-looking and provide meaningful cautionary statements identifying important factors that could cause actual results to differ from the projected results. All statements other than statements of historical fact that we make in this Form 10-Q are forward-looking. In particular, the statements herein regarding industry prospects and our future consolidated results of operations or financial position are forward-looking statements. Forward-looking statements reflect our current expectations and are inherently uncertain. Our actual results may differ significantly from our expectations. Factors that could cause or contribute to such differences include those discussed below and elsewhere in this Form 10-Q, as well as those discussed in our Annual Report on Form 10-K for the year ended December 31, 2006, and in other documents we file with the Securities and Exchange Commission, or SEC. This Form 10-Q should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2006.

Our Business

We have created an online service that enables consumers to find real estate listings and other content related to residential real estate, moving and relocation. Our web sites collectively have become the leading consumer destination on the Internet for home and real estate-related information based on the number of visitors, time spent on our web sites and number of property listings. We generate most of our revenue from selling advertising and marketing solutions to both real estate industry participants, including real estate agents, homebuilders, and rental property owners, and other local and national advertisers interested in reaching our consumer audience before, during or after a move. We also provide software solutions to real estate agents to assist them in managing their client interactions and architects’ home plans to consumers considering building a new home. We derive all of our revenues from our North American operations.

Our primary consumer web sites are Move.com^TM and REALTOR.com^®, the official site of the National Association of REALTORS^® (“NAR”), which provide new and existing homes, apartments, corporate housing, and self-storage listings and are home information resource sites with an emphasis on content related to mortgage financing, moving and storage, and home and garden activities. Our web sites also include SeniorHousingNet^TM.com, a comprehensive resource for seniors and Moving.com^TM which connects consumers with moving companies, van lines, truck rental providers and self storage facilities.

Basis of Presentation

Our unaudited Condensed Consolidated Financial Statements reflect the historical results of Move, Inc. and its subsidiaries. All significant intercompany accounts and transactions have been eliminated.

Business Trends and Conditions

In recent years, our business has been, and we expect will continue to be, influenced by a number of macroeconomic, industry-wide and product-specific trends and conditions:

•

Market and economic conditions. In recent years, the U.S. economy has experienced low interest rates, and volatility in the equities markets. Through 2005, housing starts remained strong, while the supply of apartment housing generally exceeded demand. For a number of years prior to 2006, owning a home became much more attainable for the average consumer due to the availability of flexible mortgage options, which required minimal down payments and provided low interest rates. During this period, home builders spent less on advertising, given the strong demand for new houses and homeowners who were looking to sell a home, only had to list it at a reasonable price in most areas of the U.S. to sell in 60 days or less. Conversely, demand for rental units declined and apartment owners did not spend as much money on advertising, as they have sought to achieve cost savings during the difficult market for rentals. These trends had an

impact on our ability to grow our business.

			Beginning in the second half of 2005, the market dynamics seemed to reverse. Interest rates rose and mortgage options began to decline. The housing market became saturated with new home inventory in many large metropolitan markets and the available inventory of resale homes began to climb as demand softened. The impact of the rise in interest rates caused demand for homes to decline into 2006 and the rental market improved. The change in economic factors created uncertainty on job creation and made it difficult to gauge whether these trends would continue. While interest rates appeared to stabilize as we entered 2007, housing starts and sales of existing homes slowed considerably in 2006 and have continued to slow into 2007.

			During the difficult period for rentals prior to 2006, we saw many rental owners reduce their overall advertising spending and shift their dollars from conventional offline channels, such as newspapers and real estate guides, to the Internet. Because of this trend, we believe a slowdown in the sale of new and existing homes could lead to increased spending on the Internet by home builders, real estate agents and brokers. This trend was confirmed in the first half of 2006. We saw many brokers move their spending online and many home builders increased their marketing spend to move existing inventory, even as they slowed their production and our business grew as a result. However, as the slow market continues into 2007, it is possible that a continued slowdown could cause our rate of growth to decline. While the advertising spend by many of the large home builders, agents and brokers appears strong, some of the medium and smaller businesses may have to reduce expenses to remain in business and this could cause our growth rate to decline.

	•		Investment Strategy: We have made substantial investments in our business in recent years in order to improve our ability to bring consumers and advertisers together. As a result of our greater understanding of both consumer and customer needs, we have concluded that we need to demonstrate strong capabilities in four core areas: size and quality of consumer audience; depth and breadth of content; enduring industry relationships; and scaleable business models. We recently announced significant changes to our branding, product and pricing strategies to better align our solutions with these core competencies and we plan to focus on performance and execution in the future.

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations is based upon our unaudited Condensed Consolidated Financial Statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these unaudited Condensed Consolidated Financial Statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to revenue recognition, uncollectible receivables, intangible and other long-lived assets and contingencies. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. There were no significant changes to our critical accounting policies during the six months ended June 30, 2007, as compared to those policies disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2006.

In June 2006, the Financial Accounting Standards Board (“FASB”) issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109” (“FIN 48”), which became effective for us beginning January 1, 2007. FIN 48 addresses the determination of how tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under FIN 48, we must recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. The impact of our reassessment of our tax positions in accordance with FIN 48 did not have a material impact on our results of operations, financial condition or liquidity. For additional information regarding the adoption of FIN 48, see Note 9 of Notes to Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q.

Recent Accounting Developments

In February 2007, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities — Including an Amendment of FASB Statement No. 115” (“SFAS 159”). This standard permits an entity to choose to measure many financial instruments and certain other items at fair value. Most of the provisions in SFAS 159 are elective; however, the amendment to FASB Statement No. 115, “Accounting for Certain Investments in Debt and Equity Securities,” applies to all entities with available-for-sale and trading securities. The fair value option established by SFAS 159 permits all entities to choose to measure eligible items at fair value at specified election dates. A business entity will report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date. The fair value option: (a) may be applied instrument by instrument, with a few exceptions,

such as investments otherwise accounted for by the equity method; (b) is irrevocable (unless a new election date occurs); and (c) is applied only to entire instruments and not to portions of instruments. SFAS 159 is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. Early adoption is permitted as of the beginning of the previous fiscal year provided that the entity makes that choice in the first 120 days of that fiscal year and also elects to apply the provisions of SFAS No. 157, “Fair Value Measurements.” The Company is currently evaluating whether the adoption of this statement will have a material effect on its financial conditions, its results of operations or its liquidity.

Legal Contingencies

We are currently involved in certain legal proceedings, as discussed in Note 21, “Commitments and Contingencies—Legal Proceedings,” to our Consolidated Financial Statements contained in Item 8 in our Annual Report on Form 10-K for the year ended December 31, 2006. Because of the uncertainties related to both the amount and range of loss in connection with legal proceedings, on the remaining pending litigation, we are unable to make a reasonable estimate of the liability that could result from an unfavorable outcome. As additional information becomes available, we will assess the potential liability related to our pending litigation and determine whether reasonable estimates of the liability can be made. Unfavorable outcomes or significant estimates of our potential liability could materially impact our results of operations and financial position.

Results of Operations

Three Months Ended June 30, 2007 and 2006

Revenue

Revenue decreased approximately $0.3 million, or less than 1%, to $73.6 million for the three months ended June 30, 2007 from $73.9 million for the three months ended June 30, 2006. The decrease in revenue was due to a decline of $2.9 million in the Consumer Media segment partially offset by an increase of $2.6 million in the Real Estate Services segment. These changes by segment are explained in the segment information below.

Cost of Revenue

Cost of revenue decreased approximately $1.1 million, or 7%, to $15.3 million for the three months ended June 30, 2007 from $16.4 million for the three months ended June 30, 2006. The decrease was primarily due to decreases in material and shipping costs of $1.1 million related to the elimination of magazines in our New Homes business and lower distribution in our Welcome Wagon business.

Gross margin percentage increased to 79% for the three months ended June 30, 2007 compared to 78% for the three months ended June 30, 2006. The increase is primarily due to an increase in margins in the Real Estate Services segment resulting from increased revenues in the segment.

Operating Expenses

Sales and marketing. Sales and marketing expenses decreased approximately $0.7 million, or 2%, to $27.6 million for the three months ended June 30, 2007 from $28.3 million for the three months ended June 30, 2006. The decrease was primarily due to a decrease in personnel related costs of $0.8 million offset by other increases of $0.1 million.

Product and web site development. Product and web site development expenses increased approximately $0.5 million, or 6%, to $9.3 million for the three months ended June 30, 2007 from $8.8 million for the three months ended June 30, 2006 primarily due to increased efforts to improve our product offerings in our REALTOR.com^®, Top Producer^®, and Welcome Wagon^® businesses.

General and administrative. General and administrative expenses increased approximately $5.7 million, or 29%, to $25.1 million for the three months ended June 30, 2007 from $19.4 million for the three months ended June 30, 2006. The increase was primarily due to a $5.3 million increase in expense during the three months ended June 30, 2007 for non-cash stock-based compensation due to one-time charges for stock options and restricted stock issued to a new executive officer that were immediately vested, a full quarter of amortization expense relating to restricted stock units originally granted in June 2006, as well as additional stock option and restricted stock unit grants. The remaining increase was due to an increase in insurance costs as a result of a one-time refund of $1.2 million received in the three months ending June 30, 2006, offset by a reduction in consulting expenses of $0.8 million resulting from the completion of the relocation of our data center in fiscal 2006.

Amortization of intangible assets. Amortization of intangible assets was $0.5 million for the three months ended June 30, 2007 and $0.6 million for the three months ended June 30, 2006. The decrease in amortization was primarily due to certain intangible assets becoming fully amortized.

Stock-based compensation and charges. The following chart summarizes the stock-based compensation and charges that have been included in the following captions for each of the periods presented (in thousands):


	Three Months Ended
	June 30,
	2007		2006
Cost of revenue	$	33	$	29
Sales and marketing		416		371
Product and web site development		292		340
General and administrative		7,215		1,635

	$	7,956	$	2,375

Stock-based compensation and charges increased for the three months ended June 30, 2007 compared to the three months ended June 30, 2006 primarily due to one-time charges for stock options and restricted stock issued to a new executive officer that were immediately vested, a full quarter of amortization expense relating to restricted stock units originally granted in June 2006, as well as additional stock option and restricted stock unit grants.

Interest Income, Net

Interest income, net, increased $0.7 million to $2.5 million for the three months ended June 30, 2007 compared to $1.8 million for the three months ended June 30, 2006, primarily due to increases in short-term investment balances and higher interest yields on those balances.

Other Income, Net

Other income, net, decreased $800,000 for the three months ended June 30, 2007 compared to the three months ended June 30, 2006, primarily due to $375,000 in expense resulting from the revaluation of an embedded derivative liability resulting from the sale of convertible preferred stock in December 2005. The remaining decrease was due to other income recognized in the three months ended June 30, 2006 from the receipt of shares of the Company’s common stock from an escrow related to the original iPlace acquisition.

Income Taxes

As a result of historical net operating losses, we have generally not recorded a provision for income taxes. However, during the year ended December 31, 2006, we recorded certain indefinite lived intangible assets as a result of the purchase of Moving.com which creates a permanent difference as the amortization can be recorded for tax purposes but not for book purposes. A tax provision of $40,000 was recorded in the three months ended June 30, 2007 as a result of this permanent difference which cannot be offset against net operating loss carryforwards due to the indefinite life and an additional $129,000 tax provision was recorded as a result of federal alternative minimum taxes incurred in the utilization of net operating losses against our taxable income for the period.

As of December 31, 2006, we had $942.0 million of net operating loss carryforwards for federal and foreign income tax purposes, which begin to expire in 2008. We have provided a full valuation allowance on our deferred tax assets, consisting primarily of net operating loss carryforwards, due to the likelihood that we may not generate sufficient taxable income during the carry-forward period to utilize the net operating loss carryforwards. A deferred tax liability has been established for the difference between tax amortization for financial statement purposes and for tax purposes.

Segment Information

Segment information is presented in accordance with SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information.” This standard is based on a management approach, which requires segmentation based upon the Company’s internal organization and disclosure of revenue and operating expenses based upon internal accounting methods. The Company’s management evaluates performance and allocates resources based on two segments consisting of Real Estate Services for those products and services offered to industry professionals trying to reach new movers and manage their relationships with them and Consumer Media for those products and services offered to other advertisers who are trying to reach those consumers in the process of a move. This is consistent with the data that is made available to our management to assess performance and make decisions. In June 2007, we changed the name of our former Move-Related Services segment to Consumer Media.

such as finance, legal, internal business systems, and human resources; amortization of intangible assets and stock-based charges. There is no inter-segment revenue. Assets and liabilities are not fully allocated to segments for internal reporting purposes.

Summarized information by segment, as excerpted from internal management reports, is as follows (in thousands):


	Three Months Ended
	June 30, 2007											June 30, 2006
	Real											Real
	Estate		Consumer									Estate		Consumer
	Services		Media			Unallocated			Total			Services		Media		Unallocated			Total

Revenue	$	54,750	$	18,876		$	—		$	73,626		$	52,099	$	21,792	$	—		$	73,891
Cost of revenue		8,480		6,183			636			15,299			8,463		7,072		912			16,447

Gross profit (loss)		46,270		12,693			(636	)		58,327			43,636		14,720		(912	)		57,444

Sales and marketing		17,106		8,845			1,675			27,626			18,075		9,358		879			28,312
Product and web site development		7,153		1,887			284			9,324			6,508		1,269		1,016			8,793
General and administrative		8,206		4,345			12,546			25,097			7,674		3,770		7,934			19,378
Amortization of intangible assets		—		—			505			505			—		—		589			589


Total operating expenses		32,465		15,077			15,010			62,552			32,257		14,397		10,418			57,072


Income (loss) from operations	$	13,805	$	(2,384	)	$	(15,646	)	$	(4,225	)	$	11,379	$	323	$	(11,330	)	$	372

Real Estate Services

Real Estate Services consists of products and services that promote and connect real estate professionals to consumers through our REALTOR.com^®, New Homes and Rentals on Move.com^TM and SeniorHousingNet^TM.com web sites, in addition to our customer relationship management applications for REALTORS^® offered through our Top Producer^® business. During the second quarter of 2006, we launched Move.com^TM as a real estate listing and move-related search site. Shortly after its launch, Move.com^TM replaced HomeBuilder.com^® and RENTNET^®.com and we began promoting those under the Move^TM brand. Our revenue is derived from a variety of advertising and software services, including enhanced listings, company and property display advertising, customer relationship management applications and web site sales which we sell to those businesses interested in reaching our targeted audience or those professionals interested in being more effective in managing their contact with consumers.

Real Estate Services revenue increased $2.6 million, or 5%, to $54.7 million for the three months ended June 30, 2007, compared to $52.1 million for the three months ended June 30, 2006. The revenue increase was primarily generated by an increase in our REALTOR.com^® business driven by increased customer count and higher average spending per customer on our Enhanced Listing Product. Additionally, there was an increase in our Top Producer^® product offerings as we launched the Top Website product as well as continued growth in our subscriber base for our online software. These increases were partially offset by decreased revenue from our Rentals business. Real Estate Services revenue represented approximately 74% of total revenue for the three months ended June 30, 2007 compared to 71% of total revenue for the three months ended June 30, 2006.

Real Estate Services expenses remained relatively stable, increasing $0.2 million, or less than 1%, to $40.9 million for the three months ended June 30, 2007, compared to $40.7 million for the three months ended June 30, 2006. The increase was primarily due to a $1.4 million increase in consulting costs resulting from increased product development efforts offset by a decrease of $1.2 million in personnel related costs primarily in sales and marketing.

Real Estate Services generated operating income of $13.8 million for the three months ended June 30, 2007, compared to operating income of $11.4 million for the three months ended June 30, 2006, primarily due to the increased revenue discussed above. We will continue to seek increased revenue through new product offerings and new market opportunities.

Consumer Media

Consumer Media, formerly Move-Related Services, consists of advertising products and lead generation tools including display, test-link and rich advertising positions, directory products, price quote tools and content sponsorships on Move.com^TM, Moving.com^TM, and other related sites which we sell to those businesses interested in reaching our targeted audience. In addition, it includes our Welcome Wagon^® new-mover direct mail advertising products and the sale of new home plans and related magazines through our Homeplans business.

Consumer Media revenue decreased $2.9 million, or 13%, to $18.9 million for the three months ended June 30, 2007, compared to $21.8 million for the three months ended June 30, 2006. The decrease was primarily generated by a decline in revenues from our Homeplans business, a decrease in the Welcome Wagon^® business primarily due to lower book

distribution, and a decline in our online advertising revenue. Consumer Media revenue represented 26% of total revenue for the three months ended June 30, 2007 compared to 29% of total revenue for the three months ended June 30, 2006.

Consumer Media expenses remained relatively stable, decreasing $0.2 million, or 1%, to $21.3 million for the three months ended June 30, 2007, compared to $21.5 million for the three months ended June 30, 2006. The decrease was due to a $1.0 million decrease in material and shipping costs and other operating cost decreases of $0.1 million, partially offset by an increase of $0.9 million in personnel related costs.

Consumer Media generated an operating loss of $2.4 million for the three months ended June 30, 2007, compared to operating income of $0.3 million for the three months ended June 30, 2006 primarily due to factors outlined above. We have announced plans for continued investments in our Welcome Wagon^® business that could negatively impact our operating results in this segment for the remainder of 2007.

Unallocated

Unallocated expenses increased $4.3 million, or 38%, to $15.6 million for the three months ended June 30, 2007, compared to $11.3 million for the three months ended June 30, 2006. The increase was primarily due to a $3.9 million increase in expense for non-cash stock-based compensation during the three months ended June 30, 2007 due to one-time charges for stock options and restricted stock issued to a new executive officer that were immediately vested, a full quarter of amortization expense relating to restricted stock units originally granted in June 2006, as well as additional stock option and restricted stock unit grants. The remaining increase was due to an increase in insurance costs as a result of a one-time refund of $1.2 million in the three months ending June 30, 2006, increases in personnel related costs of $0.4 million and other increases of $0.4 million. These increases were partially offset by a decrease in consulting expenses of $0.8 million resulting from the completion of the relocation of our data center in fiscal 2006 and other consulting cost reductions of $0.8 million.

Six Months Ended June 30, 2007 and 2006

Revenue

Revenue increased approximately $1.8 million, or 1%, to $144.7 million for the six months ended June 30, 2007 from $142.9 million for the six months ended June 30, 2006. The increase in revenue was due to increases of $6.9 million in the Real Estate Services segment partially offset by a $5.1 million decline in the Consumer Media segment. These changes by segment are explained in the segment information below.

Cost of Revenue

Cost of revenue decreased approximately $2.8 million, or 9%, to $30.0 million for the six months ended June 30, 2007 from $32.8 million for the six months ended June 30, 2006. The decrease was primarily due to decreases in material and shipping costs of $2.7 million related to the elimination of magazines in our New Homes business and lower distribution in our Welcome Wagon business and other cost decreases of $0.1 million.

Gross margin percentage increased to 79% for the six months ended June 30, 2007 compared to 77% for the six months ended June 30, 2006. The increase is primarily due to an increase in margin resulting from increased revenues and the reduced costs noted above.

Operating Expenses

Sales and marketing. Sales and marketing expenses increased approximately $1.8 million, or 3%, to $55.5 million for the six months ended June 30, 2007 from $53.7 million for the six months ended June 30, 2006. The increase was primarily due to an increase in distribution and online marketing costs of $0.7 million, increased consulting costs of $0.4 million and other increases of $0.7 million.

Product and web site development. Product and web site development expenses increased approximately $1.0 million, or 6%, to $18.1 million for the six months ended June 30, 2007 from $17.1 million for the six months ended June 30, 2006 primarily due to an increase of $1.5 million in consulting costs to improve our product offerings in our REALTOR.com^®, Top Producer^®, and Welcome Wagon^® businesses and other increases of $0.2 million, partially offset by a $0.7 million decrease in personnel related costs.

General and administrative. General and administrative expenses increased approximately $5.4 million, or 13%, to $45.8 million for the six months ended June 30, 2007 from $40.4 million for the six months ended June 30, 2006. The increase was primarily due to an increase of $7.6 million in non-cash stock-based compensation during the six months ended June 30, 2007 due to one-time charges for stock options and restricted stock issued to a new executive officer that were

immediately vested, additional amortization expense relating to restricted stock units originally granted in June 2006, as well as additional stock option and restricted stock unit grants. The remaining increase was due to an increase in insurance costs as a result of a one-time refund of $1.2 million received in the three months ending June 30, 2006, partially offset by a decrease of $1.6 million resulting from the completion of the relocation of our data center in fiscal 2006 and other consulting cost reductions of $1.8 million.

Amortization of intangible assets. Amortization of intangible assets decreased approximately $0.3 million to $1.0 million for the six months ended June 30, 2007 from $1.3 million for the six months ended June 30, 2006. The decrease in amortization was primarily due to certain intangible assets becoming fully amortized.


	Six Months Ended
	June 30,
	2007		2006
Cost of revenue	$	77	$	158
Sales and marketing		970		928
Product and web site development		567		839
General and administrative		11,909		3,961

	$	13,523	$	5,886

Stock-based compensation and charges increased for the six months ended June 30, 2007, compared to the six months ended June 30, 2006 primarily due to one-time charges for stock options and restricted stock issued to a new executive officer that were immediately vested, additional amortization expense relating to restricted stock units originally granted in June 2006, as well as additional stock option and restricted stock unit grants.

Interest Income, Net

Interest income, net, increased $1.4 million to $4.8 million for the six months ended June 30, 2007, compared to $3.4 million for the six months ended June 30, 2006, primarily due to increases in short-term investment balances and higher interest yields on those balances.

Other Income, Net

Other income, net, decreased $0.1 million for the six months ended June 30, 2007, compared to the six months ended June 30, 2006, primarily due to gains on sales of property and equipment in the six months ended June 30, 2007 and other income from the receipt of shares of the Company’s common stock from an escrow related to the original iPlace acquisition in the six months ended June 30, 2006.

Income Taxes

As a result of historical net operating losses, we have generally not recorded a provision for income taxes. However, during the year ended December 31, 2006, we recorded certain indefinite lived intangible assets as a result of the purchase of Moving.com which creates a permanent difference as the amortization can be recorded for tax purposes but not for book purposes. A tax provision of $80,000 was recorded in the six months ended June 30, 2007 as a result of this permanent difference which cannot be offset against net operating loss carryforwards due to the indefinite life and an additional $173,000 tax provision was recorded as a result of federal alternative minimum taxes incurred in the utilization of net operating losses against our taxable income for the period.

Segment Information

Summarized information by segment, as excerpted from internal management reports, is as follows (in thousands):


	Six Months Ended
	June 30, 2007											June 30, 2006
	Real Estate		Consumer									Real Estate		Consumer
	Services		Media			Unallocated			Total			Services		Media			Unallocated			Total

Revenue	$	108,273	$	36,383		$	—		$	144,656		$	101,348	$	41,522		$	—		$	142,870
Cost of revenue		16,739		12,059			1,199			29,997			16,129		14,824			1,900			32,853

Gross profit (loss)		91,534		24,324			(1,199	)		114,659			85,219		26,698			(1,900	)		110,017
Sales and marketing		35,227		17,614			2,679			55,520			34,400		17,870			1,383			53,653
Product and web site development		13,880		3,469			797			18,146			12,442		2,299			2,407			17,148
General and administrative		15,393		8,404			22,007			45,804			15,401		7,783			17,170			40,354
Amortization of intangible assets		—		—			1,003			1,003			—		—			1,336			1,336


Total operating expenses		64,500		29,487			26,486			120,473			62,243		27,952			22,296			112,491


Income (loss) from operations	$	27,034	$	(5,163	)	$	(27,685	)	$	(5,814	)	$	22,976	$	(1,254	)	$	(24,196	)	$	(2,474	)

Real Estate Services

Real Estate Services revenue increased $6.9 million, or 7%, to $108.2 million for the six months ended June 30, 2007, compared to $101.3 million for the six months ended June 30, 2006. The revenue increase was primarily generated by an increase in our REALTOR.com^® business driven by increased customer count and higher average spending per customer on our Enhanced Listing Product, increased featured CMA revenue and increased Featured Home revenue. Additionally, there was an increase in our Top Producer^® product offerings as we launched the Top Website product as well as continued growth in our subscriber base for our online software. These increases were partially offset by decreases in our New Homes and Rentals businesses. Real Estate Services revenue represented approximately 75% of total revenue for the six months ended June 30, 2007 compared to 71% for the six months ended June 30, 2006.

Real Estate Services expenses increased $2.9 million, or 4%, to $81.3 million for the six months ended June 30, 2007, compared to $78.4 million for the six months ended June 30, 2006. The increase was due to a $2.3 million increase in consulting costs related primarily to increased product development efforts and increased personnel related costs of $0.6 million within sales and marketing due to the increased revenues.

Real Estate Services generated operating income of $27.0 million for the six months ended June 30, 2007, compared to operating income of $23.0 million for the six months ended June 30, 2006, primarily due to the increased revenue discussed above. We will continue to seek increased revenue through new product offerings and new market opportunities.

Consumer Media

Consumer Media revenue decreased $5.1 million, or 12%, to $36.4 million for the six months ended June 30, 2007, compared to $41.5 million for the six months ended June 30, 2006. The decrease was partially generated by a decrease in the Welcome Wagon^® business primarily due to lower book distribution, a decline in revenues from our Homeplans business, and a decline in our online advertising revenue. Consumer Media revenue represented approximately 25% of total revenue for the six months ended June 30, 2007 compared to 29% for the six months ended June 30, 2006.

Consumer Media expenses decreased $1.2 million, or 3%, to $41.6 million for the six months ended June 30, 2007, compared to $42.8 million for the six months ended June 30, 2006. The decrease was primarily due to a $2.4 million decrease in material and shipping costs, partially offset by a $1.2 million increase in product development costs.

Consumer Media generated an operating loss of $5.2 million for the six months ended June 30, 2007 compared to operating loss of $1.3 million for the six months ended June 30, 2006 primarily due to factors outlined above. We have announced plans for continued investments in our Welcome Wagon^® business that could negatively impact our operating results in this segment for the remainder of 2007.

Unallocated

Unallocated expenses increased $3.5 million, or 14%, to $27.7 million for the six months ended June 30, 2007, compared to $24.2 million for the six months ended June 30, 2006. The increase was primarily due to an increase of $5.1 million in expense for non-cash stock-based compensation during the six months ended June 30, 2007 due to one-time charges for stock options and restricted stock issued to a new executive officer that were immediately vested, a full quarter of amortization

expense relating to restricted stock units originally granted in June 2006, as well as additional stock option and restricted stock unit grants. The remaining increase was due to an increase in insurance costs as a result of a one-time refund of $1.2 million in the three months ending June 30, 2006, along with a $1.3 million increase in personnel related expenses and other cost increases of $0.2 million. These increases were partially offset by a decrease of $1.6 million resulting from the completion of the relocation of our data center in fiscal 2006 and other consulting cost reductions of $2.7 million.

Liquidity and Capital Resources

Net cash provided by operating activities of $18.5 million for the six months ended June 30, 2007 was attributable to the net loss from operations of $0.9 million, plus non-cash expenses including depreciation, amortization of intangible assets, provision for doubtful accounts, gains on sales of fixed assets, stock-based compensation and charges, change in market value of embedded derivative liability and other non-cash items, aggregating to $20.0 million offset by changes in operating assets and liabilities of $0.6 million.

Net cash provided by operating activities of $4.6 million for the six months ended June 30, 2006 was attributable to the net income from operations of $1.4 million, plus non-cash expenses including depreciation, amortization of intangible assets, provision for doubtful accounts, stock-based compensation and charges and other non-cash items, aggregating to $12.5 million offset by changes in operating assets and liabilities of $9.3 million. This was negatively impacted in the six month period ended June 30, 2006 by the $9.4 million in payments for the settlement of litigation and former officers’ legal expenses.

Net cash provided by investing activities of $1.1 million for the six months ended June 30, 2007 was primarily attributable to proceeds from the sale of marketable equity securities of $15.7 million, proceeds from the surrender of a life insurance policy of $5.2 million, proceed from sales of property and equipment of $0.3 million, partially offset by $7.1 million in net purchases of short-term investments, capital expenditures of $12.6 million and purchases of intangible assets of $0.4 million. Net cash used in investing activities of $9.5 million for the six months ended June 30, 2006 was primarily attributable to $6.9 million in net maturities of short-term investments, offset by the acquisition of Moving.com of $9.6 million and capital expenditures of $6.8 million.

Net cash provided by financing activities of $2.8 million for the six months ended June 30, 2007 was attributable to proceeds from the exercise of stock options of $2.7 million and reductions in restricted cash of $1.0 million offset by payments on capital lease obligations of $0.9 million. Net cash provided by financing activities of $4.3 million for the six months ended June 30, 2006 was attributable to proceeds from the exercise of stock options of $4.8 million and reductions in restricted cash of $0.9 million offset by payments on capital lease obligations of $1.4 million.

We have generated positive operating cash flows in each of the last two years. We have stated our intention to invest in our products, our infrastructure, and in branding Move.com^TM although we have not determined the actual amount of those future expenditures. We have no material financial commitments other than those under capital and operating lease agreements and distribution and marketing agreements and our operating agreement with the NAR. Our existing cash and short-term investments, and any cash generated from operations will be sufficient to fund our working capital requirements, capital expenditures and other obligations for the foreseeable future.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

Our exposure to market rate risk for changes in interest rates relates primarily to our investment portfolio. We have not used derivative financial instruments in our investment portfolio. We invest our excess cash in money-market funds, auction rate securities, debt instruments of high quality corporate issuers and debt instruments of the U.S. Government and its agencies, and, by policy, this limits the amount of credit exposure to any one issuer.

Investments in both fixed rate and floating rate interest earning instruments carries a degree of interest rate risk. Fixed rate securities may have their fair market value adversely impacted due to a rise in interest rates, while floating rate securities may produce less income than expected if interest rates fall.

Item 4. Controls and Procedures

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 of the Securities Exchange Act of 1934 (the “Exchange Act”). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

There were no changes in our internal control over financial reporting during the period covered by this report that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We are currently involved in certain legal proceedings, as discussed in Note 21, “Commitments and Contingencies- Legal Proceedings”, to our Consolidated Financial Statements contained in Item 8 in our Annual Report on Form 10-K for the year ended December 31, 2006 (“Annual Report”). As of the date of this Form 10-Q and except as disclosed in Note 21 in our Annual Report, the Company is not a party to any other litigation or administrative proceedings that management believes will have a material adverse effect on the Company’s business, results of operations, financial condition or cash flows, and except as provided in Note 10, “Commitments and Contingencies,” to the Unaudited Condensed Consolidated Financial Statements contained in Item 1 of Part I of this Form 10-Q, there have been no material developments in the litigation or administrative proceedings described in Note 21 to the Consolidated Financial Statements contained in our Annual Report.

Item 1A. Risk Factors

You should consider carefully the risk factors below, and those presented in our Annual Report on Form 10-K for the year ended December 31, 2006, and other information included or incorporated by reference in this Form 10-Q. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we deem to be currently immaterial also may impair our business operations. If any of the stated risks actually occur, our business, financial condition and operating results could be materially adversely affected.

Risks Related to our Business

The emergence of competitors for our services may adversely impact our business

Our existing and potential competitors include web sites offering real estate related content and services as well as general purpose online services, and traditional media such as newspapers, magazines and television that may compete for advertising dollars. The real estate search services market in which our Real Estate Services division operates is becoming increasingly competitive. A number of competitors have emerged, including RealEstate.com (a division of InterActive Corp), HouseValues.com, AgentConnect.com (a division of Next Phase Media, Inc.), HomeGain (a division of Classified Ventures, LLC), ApartmentGuide.com, Rent.com, ForRent.com, Apartments.com, NewHomeGuide.com, NewHomeSource.com and more recently Google, Zillow, Trulia and Propsmart as well as general interest consumer web sites that offer home, moving and finance content, including ServiceMagic, Inc. (a division of InterActive Corp) and Gigamoves (a division of eBay).

The barriers to entry for web-based services and businesses are low. In addition, parties with whom we have listing and marketing agreements could choose to develop their own Internet strategies or competing real estate sites. Many of our existing and potential competitors have longer operating histories in the Internet market, greater name recognition, larger consumer bases and significantly greater financial, technical and marketing resources than we do. The rapid pace of technological change constantly creates new opportunities for existing and new competitors and it can quickly render our existing technologies less valuable. Developments in the real estate search services market may also encourage additional competitors to enter that market. See “We may not be able to continue to obtain more listings from Multiple Listing Services and real estate brokers than other web site operators” below.

We cannot predict how, if at all, our competitors may respond to our initiatives. We also cannot provide assurance that our new offerings will be able to compete successfully against these competitors or new competitors that enter our markets.

We may not be able to continue to obtain more listings from Multiple Listing Services and real estate brokers than other web site operators.

We believe that the success of REALTOR.com^® depends in large part on displaying a larger and more current listing of existing homes for sale than other web sites. We obtain these listings through agreements with MLSs that have fixed terms, typically 12 to 36 months. At the end of the term of each agreement, the MLS could choose not to renew their agreement with us. There are no assurances the MLSs will continue to renew their agreements to provide listing data to us. If they choose not to renew their relationship with us, then REALTOR.com^® could become less attractive to consumers and thus, less attractive to our advertising customers. Internet Data Exchange (“IDX”) technology makes it possible for other real estate web site operators to display MLS or cooperating broker’s listings on their web sites. NAR has adopted guidelines for MLSs that allow a broker to prevent MLSs from providing such broker’s listing data to other brokers’ web sites. These guidelines do not

apply to REALTOR.com^®. In a civil antitrust lawsuit brought against NAR in 2005, the United States Department of Justice (“DOJ”) challenged this policy by alleging that it is in violation of federal antitrust laws. It is possible that the ultimate resolution of this antitrust case, or independent initiatives by large brokers or others, could make it easier for other web sites to aggregate listing data for display over the Internet in a manner comparable to REALTOR.com^®. This could impact how consumers and customers value our content and product offerings on the REALTOR.com^® web site.

In the first quarter of 2007, Realogy Corporation, the owner of the largest brokerage in the country, NRT Incorporated, and franchisor of Coldwell Banker^TM, Century 21^TM, ERA^TM and Sotheby’s International^TM announced marketing agreements to have all of their real estate listings uploaded to Google and Trulia search engines. In addition, a small number of MLSs have also agreed to put their listings on Google and other prominent websites. We would expect this trend will continue and that more of our competitors will be able to obtain real estate listings that were previously only available to us. This trend could make our web sites less attractive and less unique than they have been in the past.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Submission of Matters to a Vote of Security Holders

The 2007 Annual Meeting of Stockholders of the Company was convened on June 14, 2007 at 9:30 a.m. The proposal to elect three Class II directors to hold office for a term through the annual meeting in 2008 and until each of their successors has been duly elected and qualified received the following votes:


Geraldine B. Laybourne	— votes for	149,771,247
	— votes withheld	10,200,661
William E. Kelvie	— votes for	82,842,908
	— votes withheld	77,128,999
Kenneth K. Klein	— votes for	144,468,847
	— votes withheld	15,503,061

As previously reported, (i) following the resignation of Alan Yassky, Thomas M. Stevens was elected by NAR on June 14, 2007 as a Class I director in accordance with NAR’s right, by virtue of its ownership of the Company’s sole outstanding share of Series A Preferred Stock, to elect one of the Company’s directors and to fill any vacancy in the office of such director, and (ii) Fred D. Anderson was re-elected by Elevation Partners, L.P. and Elevation Employee Side Fund, LLC (together, “Elevation”) on June 14, 2007 as a Class II director in accordance with Elevation’s right, by virtue of its ownership of the Company’s outstanding shares of Series B Convertible Participating Preferred Stock to elect two of the Company’s directors. In addition to the directors elected on June 14, 2007, our Board of Directors consists of Roger B. McNamee, V. Paul Unruh and Bruce G. Willison, our Class I directors whose terms expire in 2008, and Joe F. Hanauer, L. John Doerr, and W. Michael Long, our Class III directors whose terms expire in 2008.

Item 5. Other Information

On April 26, 2007, the Company and Lorna Borenstein, President, entered into an Executive Retention and Severance Agreement as previously described in a Current Report on Form 8-K filed by the Company on May 2, 2007.

Item 6. Exhibits

Exhibits


	10.1			W. Michael Long 2007 Executive Bonus Plan
	10.2			Jack Dennison 2007 Executive Bonus Plan
	10.3			Lewis R. Belote, III 2007 Executive Bonus Plan
	10.4			Lorna Borenstein 2007 Executive Bonus Plan
	10.5			Offer letter to Lorna Borenstein dated April 26, 2007 with form of Executive Retention and Severance Agreement attached as exhibit (Incorporated by reference to Exhibit 99.3 to our Current Report on Form 8-K filed May 2, 2007)
	10.6			Letter between Move, Inc. and Allan Dalton dated April 30, 2007 (Incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2007 filed May 3, 2007)


	10.7			Letter Agreement with Jack Dennison dated June 26, 2007 with form of Services Agreement as Attachment A (Incorporated by reference to Exhibit 99.1 to our Current Report on Form 8-K filed July 2, 2007)
	31.1			Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	31.2			Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	32.1			Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	32.2			Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	MOVE, INC.
	By:	/s/ W. MICHAEL LONG
		W. Michael Long
		Chief Executive Officer


	By:	/s/ LEWIS R. BELOTE, III
		Lewis R. Belote, III
		Chief Financial Officer

Date: August 3, 2007

EXHIBIT INDEX


Exhibit
Number		Description

	10.1	W. Michael Long 2007 Executive Bonus Plan
	10.2	Jack Dennison 2007 Executive Bonus Plan
	10.3	Lewis R. Belote, III 2007 Executive Bonus Plan
	10.4	Lorna Borenstein 2007 Executive Bonus Plan
	10.5	Offer letter to Lorna Borenstein dated April 26, 2007 with form of Executive Retention and Severance Agreement attached as exhibit (Incorporated by reference to Exhibit 99.3 to our Current Report on Form 8-K filed May 2, 2007)
	10.6	Letter between Move, Inc. and Allan Dalton dated April 30, 2007 (Incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2007 filed May 3, 2007)
	10.7	Letter Agreement with Jack Dennison dated June 26, 2007 with form of Services Agreement as Attachment A (Incorporated by reference to Exhibit 99.1 to our Current Report on Form 8-K filed July 2, 2007)
	31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents