Exceeding Expectations

Earnings for the first quarter of 2006 were announced this afternoon.

Our first quarter results were well ahead of expectations in all respects and reflect strong progress against our key business initiatives. These results were driven by strong consumer and customer demand for our real estate services along with growing traction in our newly acquired mortgage business.

The launch of HomePages demonstrates our ability to expand beyond lead generation into the broader marketing services category by providing advertising services to our agent customers. With 79 percent of consumers now using the Internet to search for a home, up from just 37 percent in 1999, we believe that it is inevitable that the billions spent on marketing by agents will follow these consumers online.

That is a core reason why we created HomePages. To more directly target the dollars that agents spend on offline vehicles such as newspapers, homes magazines, postcards, and flyers. HomePages is a vehicle by which we plan to create services that help agents address these needs in a more targeted, more accountable, and far more efficient way than was ever possible offline.

At a broader level, we see the launch of HomePages as the latest demonstration of our ability to leverage our valuable sales channel to successfully create and monetize new offerings. The creation and sale of new services to our customers is a strategy that we utilized first with JustListed, now with HomePages, and one that we plan to again deploy successfully in the quarters to come.

The opportunity in the mortgage lead generation space is a big one. By leveraging our real estate agent customers and network of real estate sites, we believe that HouseValues can become a leader in the mortgage space, and potentially the leader in monetizing consumer traffic across both the real estate and mortgage categories.

We significantly exceeded our financial expectations for the quarter and more importantly made strong progress against our key business initiatives. As a result of this progress, we are confident that we will achieve our 2006 goals, all while setting ourselves up for an even stronger 2007.