##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
  Form 10-K
  (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2008ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file number:
    000-52026
 LOOPNET, INC.
 (Exact name of registrant as
    specified in its charter)
  Delaware(State or other jurisdiction
    of
    incorporation or organization)

77-0463987(I.R.S. Employer
    Identification No.)   185 Berry Street, Suite 4000
 San Francisco, CA 94107
 (Address of principal executive
    offices)
  (415) 243-4200
 (Registrants telephone
    number, including area code)
  N/A
 (Former name, former address and
    former fiscal year, if changed since last report)
  Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Class

Name of Each Exchange on Which RegisteredCommon Stock

The NASDAQ Stock Market LLC   Securities registered pursuant to Section 12(g) of the
    Act:
 N/A
  o þ
  o þ
  þ o
  Regulation S-K 10-K Form 10-K. þ
  Rule 12b-2
  Large
    accelerated
    filer o
    Accelerated
    filer þ
    Non-accelerated
    filer o
    Smaller
    reporting
    company o (Do not check if a smaller
    reporting company)
  Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE
  Items 10 (as to directors), 11, 12, 13 and 14 of
    Part III incorporate by reference information from the
    Registrants Proxy Statement to be filed with the
    Securities and Exchange Commission in connection with the
    solicitation of proxies for the Registrants 2009 Annual
    Meeting of Stockholders.




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##### 





TABLE OF
    CONTENTS
   
 PagePART IItem 1.


Business


4Item 1A.


Risk Factors


14Item 1B.


Unresolved Staff Comments


25Item 2.


Properties


25Item 3.


Legal Proceedings


25Item 4.


Submission of Matters to a Vote of Security
    Holders


26PART IIItem 5.


Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


27Item 6.


Selected Financial Data


29Item 7.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


31Item 7A.


Quantitative and Qualitative Disclosures About
    Market Risk


43Item 8.


Financial Statements and Supplementary Data


44Item 9.


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


44Item 9A.


Controls and Procedures


44Item 9B.


Other Information


44PART IIIItem 10.


Directors Executive Officers, and Corporate
    Governance


45Item 11


Executive Compensation


45Item 12.


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


46Item 13.


Certain Relationships and Related Transactions
    and Director Independence


46Item 14.


Principal Accountant Fees and Services


46PART IVItem 15.


Exhibits and Financial Statement Schedules


47Signatures


48EX-10.10EX-23.1EX-31.1EX-31.2EX-32.1EX-32.2   2




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Statement
    regarding forward-looking statements
    
    our future financial results;
    our future growth and offering of new products or services;
    our future advertising and marketing activities;
    our future investment in technology; and
    trends in the commercial real estate market and the general
    economy.      Form 10-K
  Internet
    Site
  www.loopnet.com. Form 10-K, Form 10-Q, Form 8-K, Form 10-K.
  Where You
    Can Find Additional Information
  Form 10-K, 20549-0102. 1-800-SEC-0330. (http://www.sec.gov)
 3




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PART I  Item 1.
    Business.    www.LoopNet.com
      Managements Discussion
    and Analysis of Financial Condition and Results of
    Operations.
  Industry
    Background
     4




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The
    LoopNet Model
      Leading commercial real estate online
    marketplace.
 5




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Comprehensive member-generated content
    offering.
  Compelling member experience.
    The
    LoopNet Advantage
    Benefits
    to Property Listers
  Broad marketing exposure.
  Cost-effective and measurable marketing
    method.
 6




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Detailed and up-to-date property listing
    information.
  Benefits
    to Property Searchers
  Access to a large number of property
    listings.
  Real-time, comprehensive information.
  Customized search engine.
  Our
    Strategy
    Expand our base of registered members.
  Derive revenue from premium members.
 7




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Offer complementary products and services.
  Enhance the functionality of our
    marketplace.
  Expand into new markets.
  Increase opportunities to advertise to our member
    base.
  Products
    and Services
      Basic and premium membership.
 8




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Basic


PremiumMembership


MembershipListing BenefitsDetailed Property Listings


ü



üMyLoopNet  Listing Management Center


ü



üEnhanced Listing Exposure






üProspectList  Lead Generation






üMarketing Exposure Statistics






üControlled Access Marketing






üSearching BenefitsListings Search Engine


ü



üMyLoopNet  Searching Management Center


ü



üEnhanced Listings Access






üPropertyAlert  Email Alerts of New Listings


Weekly



DailyReporting and Map-Based Presentations






üMapSearch


ü



ü   
    Property listing.  Our property listing service
    allows customers to quickly and easily submit listings on
    properties available for sale or for lease, enabling them to
    reach a large audience of commercial real estate transaction
    participants. All listings submitted to the LoopNet online
    marketplace are processed through a listing quality assessment
    mechanism. Members can submit an unlimited number of listings
    and include detailed property listing information, including
    building description, financial and tenant information,
    photographs and key property characteristics. Our service
    automatically compiles this information into a
    professional-quality online brochure.
    MyLoopNet.  Members can use MyLoopNet to manage
    various features of their LoopNet membership, including managing
    their listings and tracking the exposure their property profiles
    have received.
    Enhanced Listing Exposure.  Property listings
    submitted by basic members can only be viewed by premium
    members. Property listings submitted by premium members are
    available for viewing by all registered members and have premium
    placement on search results.
    ProspectList.  Premium members have exclusive
    access to ProspectList, a reverse lookup search function that
    enables property listers to market listings to specific agents,
    buyers and tenants who have posted their property purchase or
    lease criteria on LoopNet and requested that they be contacted
    with property listings that match those criteria.
    Marketing Exposure Statistics.  Premium members
    have access in MyLoopNet to various statistics on the number of
    exposures being generated for their listings on LoopNet.
    Controlled Access Marketing.  Premium members
    can use Controlled Access Marketing to password-protect their
    listings. For example, a premium member might choose to limit
    access to a property listing such that searchers can only access
    the listing details after agreeing to a confidentiality
    agreement with the listing agent. 9




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
    Property searching.  We developed our property
    search engine specifically for the commercial real estate
    market. Members use our proprietary search engine to identify
    properties available for sale or for lease on our online
    marketplace that meet their criteria. Members can search for
    properties based on a broad scope of commercial real estate
    specifications, including property type and sub-type, location,
    building and lot size, and price range. Members can also search
    using map-based geographic searching combined with various
    property listing attributes, including a keyword search
    capability.
    MyLoopNet.  Members can use MyLoopNet to manage
    various features of their LoopNet membership, including saving
    links to multiple property profiles and detailed search
    parameters for future use. Members can also use MyLoopNet to
    specify the criteria for PropertyAlert emails.
    Enhanced Listings Access.  Basic members are
    able to view summary details of their search results but can
    only view property profiles submitted by premium members.
    Premium members have full access to all property listings and
    profiles.
    PropertyAlert.  Members can use PropertyAlert
    to receive email alerts with new property listings that meet
    their selection criteria. Premium members receive email alerts
    daily, while basic members receive email alerts weekly.
    Reporting and Map-Based Presentations.  Premium
    members can automatically generate professional-quality reports
    and maps of properties they have selected to use for
    presentations to clients and interested parties.
    MapSearch.  Members have access to MapSearch,
    an interactive and dynamic aerial and satellite image map
    interface for property searches.  LoopLink.
  RecentSales.
  Advertising and lead generation.
  BizBuySell.
 10




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REApplications.
  Sales and
    Marketing
            Competition
     11




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® ®
    Technology
    and Infrastructure
           12




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Intellectual
    Property
      Employees
    Executive
    Officers
    Name

Age

PositionRichard J. Boyle, Jr.


43


Chief Executive Officer and Chairman of the Board of DirectorsThomas Byrne


42


President and Chief Operating OfficerBrent Stumme


46


Chief Financial Officer and Senior Vice President, Finance and
    AdministrationJason Greenman


41


Chief Strategy Officer and Senior Vice President, Corporate
    DevelopmentWayne Warthen


45


Chief Technology Officer and Senior Vice President, Information
    Technology   Richard J. Boyle, Jr.
 13




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Thomas Byrne
  Brent Stumme
  Jason Greenman
  Wayne Warthen
  Item 1A.
    Risk
    Factors.    The
    ongoing decline in the commercial real estate market and overall
    economy could negatively affect our revenues, expenses and
    operating results.
   14




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
    periods of economic slowdown or recession globally, in the
    United States or locally;
    inflation;
    flows of capital into or out of real estate investment in the
    United States or various regions of the United States;
    rates of unemployment;
    interest rates;
    the availability and cost of capital;
    wage and salary levels; or
    concerns about any of the foregoing.    
    economic slowdown or recession;
    changes in levels of rent or appreciation of asset values;
    changing interest rates;
    tax and accounting policies;
    the availability and cost of capital;
    costs of construction;
    increased unemployment;
    lower consumer confidence;
    lower wage and salary levels;
    war, terrorist attacks or natural disasters; or
    the public perception that any of these conditions may occur.    Our
    business is largely based on a subscription model, and
    accordingly, any failure to increase the number of our customers
    or retain existing customers could cause our revenues to
    decline.
   15




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and/or
    We
    rely on our marketing efforts to generate new registered
    members. If our marketing efforts are ineffective, we could fail
    to attract new registered members, which could reduce the
    attractiveness of our marketplace to current and potential
    customers and lead to a reduction in our revenues.
    If we
    are unable to obtain or retain listings from commercial real
    estate brokers, agents, and property owners, our marketplace
    could be less attractive to current or potential customers,
    which could result in a reduction in our revenues.
   16




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We may
    be unable to compete successfully with our current or future
    competitors.
        ® ®
    Our
    operating results and revenues are subject to fluctuations that
    may cause our stock price to decline, and our quarterly
    financial results may be subject to seasonality, each of which
    could cause our stock price to decline.
  Form 10-K:
  
    rates of member adoption and retention;
    changes in our pricing strategy and timing of changes; 17




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
    changes in our marketing or other corporate strategies;
    our introduction of new products and services or changes to
    existing products and services;
    the amount and timing of our operating expenses and capital
    expenditures;
    the amount and timing of non-cash stock-based charges;
    the amount and timing of litigation related expenses;
    costs related to acquisitions of businesses or technologies; and
    other factors outside of our control.    and/or
  If we
    are unable to introduce new or upgraded services or products
    that our customers recognize as valuable, we may fail to attract
    new customers or retain existing customers. Our efforts to
    develop new and upgraded products and services could require us
    to incur significant costs.
      We
    could face liability for information on our website or general
    litigation claims.
   18




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If we
    are unable to convince commercial real estate brokers and other
    commercial real estate professionals that our services and
    products are superior to traditional methods of listing,
    searching, and marketing commercial real estate, they could
    choose not to use our marketplace, which could reduce our
    revenues or increase our expenses.
    Our
    business depends on retaining and attracting capable management
    and operating personnel.
     19




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If we
    fail to protect confidential information against security
    breaches, or if our members or potential members are reluctant
    to use our marketplace because of privacy concerns, we might
    face additional costs, and activity in our marketplace could
    decline.
          Our
    services may infringe the intellectual property rights of others
    and we may be subject to claims of intellectual property rights
    infringement.
   20




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If we
    are unable to enforce or defend our ownership and use of
    intellectual property, our business, competitive position and
    operating results could be harmed.
          If we
    are not able to successfully identify or integrate acquisitions,
    our managements attention could be diverted, and efforts
    to integrate acquisitions could consume significant
    resources.
   21




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
    difficulties in integrating the operations, technologies, and
    products of the acquired companies;
    diversion of managements attention from the normal daily
    operations of our business;
    inability to maintain the key business relationships and the
    reputations of acquired businesses;
    entry into markets in which we have limited or no prior
    experience and in which competitors have stronger market
    positions;
    dependence on unfamiliar affiliates and partners;
    insufficient revenues to offset increased expenses associated
    with acquisitions;
    reduction or replacement of the sales of existing services by
    sales of products or services from acquired lines of business;
    responsibility for the liabilities of acquired businesses;
    inability to maintain our internal standards, controls,
    procedures and policies; and
    potential loss of key employees of the acquired companies.        We may
    be unable to effectively manage our growth.
    Unless
    we develop, maintain and protect our brand identity, our
    business may not grow and our financial results may
    suffer.
   22




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Changes
    in or interpretations of accounting rules and regulations, such
    as expensing of stock options, could result in unfavorable
    accounting charges or require us to change our compensation
    policies.
  Share-Based Payment Accounting
    for Stock-Based Compensation Accounting for Stock
    Issued to Employees
  If our
    operating results do not meet the expectations of investors or
    equity research analysts, our market price may decline and we
    may be subject to class action litigation.
    If our
    website or our other services experience system failures, our
    customers may be dissatisfied and our operations could be
    impaired.
      Our
    internal network infrastructure could be disrupted or
    penetrated, which could materially impact our ability to provide
    our services and our customers confidence in our
    services.
     23




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We may
    be subject to regulation of our advertising and customer
    solicitation or other newly-adopted laws and
    regulations.
      Our
    stock price may be volatile and you may be unable to sell your
    shares at or above the purchase price.
  Form 10-K,
   24




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Our
    charter documents and Delaware law could prevent a takeover that
    stockholders consider favorable and could also reduce the market
    price of our stock.
    
    providing for a classified board of directors with staggered,
    three-year terms;
    not providing for cumulative voting in the election of directors
    or imposing a majority voting standard;
    authorizing the board to issue, without stockholder approval,
    preferred stock rights senior to those of common stock;
    prohibiting stockholder action by written consent;
    limiting the persons who may call special meetings of
    stockholders; and
    requiring advance notification of stockholder nominations and
    proposals.      Item 1B.
    Unresolved
    Staff Comments.    Item 2.
    Properties.    Item 3.
    Legal
    Proceedings.   25




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patents-in-suit patents-in-suit
    Item 4.
    Submission
    of Matters to a Vote of Security Holders.   26




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PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities.  Market
    information
    High

Low2008First Quarter

$
15.48


$
10.60Second Quarter

$
14.47


$
10.59Third Quarter

$
12.50


$
9.25Fourth Quarter

$
10.17


$
4.752007First Quarter

$
17.99


$
14.50Second Quarter

$
24.21


$
15.02Third Quarter

$
26.37


$
16.76Fourth Quarter

$
23.90


$
13.22     Dividend
    policy
   27




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Performance
    Graph
    
  Culmulative Total Return6/7/2006


12/29/2006


12/31/2007


12/31/2008LOOPNET, INC.



100.00




99.87
(1)



93.67
(1)



45.47
(1)NASDAQ STOCK MARKET (U.S)



100.00




112.25




123.26




73.29GOLDMAN SACHS INTERNET TRADING INDEX



100.00




116.95




127.45




67.32   (1)
    
    Based on the initial public offering price of $12.00 per share
    on June 6, 2006, the cumulative total return is $124.83,
    $117.08 and $56.83 on 12/29/06, 12/31/07 and 12/31/08,
    respectfully.    Issuer
    Purchases of Equity Securities
    (d) ApproximateDollarValue of Shares(c) Total Number of

ThatPurchased as Part

May Yet Be(a) Total Number

(b) Average

of Publicly

Purchasedof Shares

Price Paid Per

Announced Plans or

Under The Plans orPeriod

Purchased (#)(1)

Share ($)

Programs (#)

Programs ($)(1)October 1  October 31, 2008


1,076,671


$
9.25



1,076,671


$
54,556November 1  November 30, 2008


0



N/A



0


$
54,556December 1  December 31, 2008


0



N/A



0


$
54,556Total shares


1,076,671


$
9.25



1,076,671     (1)
    
    The shares repurchased were under our stock repurchase program
    that was announced on February 5, 2008 with an authorized
    level of $50 million. An additional authorized level of
    $50 million was announced on July 30, 2008. This
    program is subject to business and market conditions, and has no
    termination date, and may be suspended or discontinued at any
    time. Repurchases may also be made under a
    Rule 10b5-1
    plan, which would permit shares to be repurchased when the
    Company might otherwise be precluded from doing so under
    securities laws. 28




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Item 6.
    Selected
    Financial Data.  Form 10-K.
  Form 10-K. Form 10-K.
  Year Ended December 31,2004


2005


2006


2007


2008(In thousands, except per share data)Consolidated Statements of Operations Data:Revenues

$
17,036


$
30,977


$
48,411


$
70,729


$
86,074Cost of revenue(1)


2,562



3,825



5,599



8,033



10,858Gross profit


14,474



27,152



42,812



62,696



75,216Operating expenses(1):Sales and marketing


3,193



6,252



9,506



14,667



18,825Technology and product development


2,686



3,746



4,341



6,427



9,075General and administrative


4,889



5,955



7,803



12,253



18,739Total operating expenses


10,768



15,953



21,650



33,347



46,639Income from operations


3,706



11,199



21,162



29,349



28,577Interest and other income, net


132



494



2,883



5,046



1,998Income from continuing operations


3,838



11,693



24,045



34,395



30,575Income tax expense (benefit)


118



(7,243
)


8,550



13,268



12,297Net income

$
3,720


$
18,936


$
15,495


$
21,127


$
18,278Net income per shareBasic

$
0.06


$
0.58


$
0.42


$
0.55


$
0.51Diluted

$
0.04


$
0.54


$
0.40


$
0.52


$
0.49     (1)
    
    Stock-based compensation is allocated as follows:  Year Ended December 31,2004


2005


2006


2007


2008(In thousands)Cost of revenue

$
1


$
18


$
151


$
357


$
570Sales and marketing


251



146



686



1,358



2,198Technology and product development


236



350



195



600



1,311General and administrative


1,188



150



421



1,180



1,855Total

$
1,676


$
664


$
1,453


$
3,495


$
5,934   29




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Year Ended December 31,2004

2005

2006

2007

2008(In thousands)Consolidated Balance Sheet Data:Cash, cash equivalents and short-term investments

$
8,724


$
21,865


$
89,028


$
107,889


$
64,587Working capital


5,100



16,939



81,884



94,667



52,529Total assets


12,971



35,177



100,205



137,359



108,210Total liabilities


4,255



6,604



10,202



15,506



15,759Reedeemable convertible preferred stock


39,712



39,962











Total shareholders (deficit) equity


(30,996
)


(11,389
)


90,003



121,853



92,451   Year Ended December 31,2004

2005

2006

2007

2008(In thousands)Consolidated Statement of Cash Flows Data:Cash flow provided by operating activities

$
6,921


$
14,490


$
23,205


$
30,301


$
25,105Depreciation and amortization


278



505



611



1,154



2,199Capital expenditures


(500
)


(719
)


(665
)


(1,797
)


(1,319
)   Year Ended December 31,2004

2005

2006

2007

2008(In thousands)Other Operating Data (unaudited):LoopNet registered members at end of year


703,111



1,116,589



1,766,508



2,567,729



3,251,260LoopNet premium members at end of year


35,482



57,461



78,952



88,340



77,283  30




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Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations.  You should read the following discussion and analysis by our
    management of our financial condition and results of operations
    in conjunction with our consolidated financial statements and
    the accompanying notes included elsewhere in this Annual Report
    on Form 10-K
    . This discussion and other parts of this Annual Report on Form
    10-K contain
    forward-looking statements that involve risks and uncertainties,
    such as statements of our plans, objectives, expectations and
    intentions. Our actual results could differ materially from
    those discussed in the forward-looking statements. Factors that
    could cause or contribute to such differences include, but are
    not limited to, those discussed in Item 1A of Part I,
    Risk Factors.
  Overview
  www.LoopNet.com
   31




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Our
    Revenues and Expenses
    
    LoopNet premium membership fees;
    BizBuySell BrokerWorks membership fees and paid listings;
    advertising on, and lead generation from, our marketplaces,
    LoopLink product license fees; and
    LoopNet RecentSales membership fees.    
    the increased adoption of our premium membership services by the
    commercial real estate industry;
    increases in the average monthly subscription price of our
    premium membership product;
    the increased adoption of out RecentSales services by the
    commercial real estate industry, and
    our acquisition of BizBuySell in October, 2004, and the
    increased adoption of our services by the operating business for
    sale industry.  www.LoopNet.com www.BizBuySell.com
        Critical
    Accounting Policies and Estimates
   32




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Revenue
    Recognition
    Income
    Taxes
        Accounting for Uncertainty in Income Taxes
 33




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Website
    Development Costs
  EITF 00-2,
  Stock-Based
    Compensation
  Share-Based Payment Accounting for Stock-Based Compensation Accounting
    for Stock Issued to Employees
        Seasonality
    and Cyclicality
       34




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Results
    of Operations
    Year Ended December 31,2006


2007


2008Revenues


100.0
%


100.0
%


100.0
%Cost of revenue


11.6



11.4



12.6Gross profit


88.4



88.6



87.4Operating expenses:Sales and marketing


19.6



20.7



21.9Technology and product development


9.0



9.1



10.5General and administrative


16.1



17.3



21.8Total operating expenses


44.7



47.1



54.2Income from operations


43.7



41.5



33.2Interest and other income, net


6.0



7.1



2.3Income from continuing operations


49.7



48.6



35.5Income tax expense


17.7



18.8



14.3Net income


32.0
%


29.9
%


21.2
%   Comparison
    of Years Ended December 31, 2007 and 2008
  Revenues
  Year Ended December 31,Increase /

Percent2007

2008

Decrease

Change(Dollars in thousands)Revenues

$
70,729


$
86,074


$
15,345



21.7
%Premium members at year-end


88,340



77,283



(11,057
)


(12.5
%)     Cost
    of Revenues
  Year Ended December 31,Percent2007

2008

Increase

Change(Dollars in thousands)Cost of revenues

$
8,033


$
10,858


$
2,825



35.2
%Percentage of revenues


11.4
%


12.6
%      35




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Sales
    and Marketing
  Year Ended December 31,Percent2007

2008

Increase

Change(Dollars in thousands)Sales and marketing

$
14,667


$
18,825


$
4,158



28.3
%Percentage of revenues


20.7
%


21.9
%         Technology
    and Product Development
  Year Ended December 31,Percent2007

2008

Increase

Change(Dollars in thousands)Technology and product development

$
6,427


$
9,075


$
2,648



41.2
%Percentage of revenues


9.1
%


10.5
%         General
    and Administrative
  Year Ended December 31,Percent2007

2008

Increase

Change(Dollars in thousands)General and administrative

$
12,253


$
18,739


$
6,486



52.9
%Percentage of revenues


17.3
%


21.8
%    36




---



##### Table of Contents



Stock-Based
    Compensation
      Year Ended December 31,Percent2007


2008


Increase


ChangeCost of revenue

$
357


$
570


$
213



59.7
%Selling and marketing


1,358



2,198



840



61.9
%Technology and product development


600



1,311



711



118.5
%General and administrative


1,180



1,855



675



57.2
%Total

$
3,495


$
5,934


$
2,439



69.8
%   Interest
    Income
    Income
    Taxes
    Comparison
    of Years Ended December 31, 2006 and 2007
  Revenues
  Year Ended December 31,Percent2006

2007

Increase

Change(Dollars in thousands)Revenues

$
48,411


$
70,729


$
22,318



46.1
%Premium members at year-end


78,952



88,340



9,388



11.9
%    37




---



##### Table of Contents



Cost
    of Revenues
  Year Ended December 31,Percent2006

2007

Increase

Change(Dollars in thousands)Cost of revenues

$
5,599


$
8,033


$
2,434



43.5
%Percentage of revenues


11.6
%


11.4
%       Sales
    and Marketing
  Year Ended December 31,Percent2006

2007

Increase

Change(Dollars in thousands)Sales and marketing

$
9,506


$
14,667


$
5,161



54.3
%Percentage of revenues


19.6
%


20.7
%       Technology
    and Product Development
  Year Ended December 31,Percent2006

2007

Increase

Change(Dollars in thousands)Technology and product development

$
4,341


$
6,427


$
2,086



48.1
%Percentage of revenues


9.0
%


9.1
%      38




---



##### Table of Contents



General
    and Administrative
  Year Ended December 31,Percent2006

2007

Increase

Change(Dollars in thousands)General and administrative

$
7,803


$
12,253


$
4,450



57.0
%Percentage of revenues


16.1
%


17.3
%       Stock-Based
    Compensation
      Year Ended December 31,Increase/


Percent2006


2007


(Decrease)


ChangeCost of revenue

$
151


$
357


$
206



136.4
%Selling and marketing


686



1,358



672



98.0
%Technology and product development


195



600



405



207.7
%General and administrative


421



1,180



759



180.3
%Total

$
1,453


$
3,495


$
2,042



140.5
%   Interest
    Income
    Income
    Taxes
    Quarterly
    Consolidated Statements of Income Data
   39




---



##### Table of Contents



Form 10-K.
  Quarter EndedMar. 31,


June 30,


Sept. 30,


Dec. 31,


Mar. 31,


June 30,


Sept. 30,


Dec. 31,2007


2007


2007


2007


2008


2008


2008


2008(In thousands, except per share data)Revenues

$
15,515


$
17,022


$
18,627


$
19,565


$
20,590


$
22,027


$
22,403


$
21,054Cost of revenue(1)


1,780



1,874



2,072



2,308



2,414



2,704



2,876



2,864Gross profit


13,735



15,148



16,555



17,257



18,176



19,323



19,527



18,190Operating expenses(1):Sales and marketing


3,259



3,577



3,916



3,914



4,841



4,822



4,711



4,450Technology and product development


1,350



1,569



1,699



1,809



1,993



2,355



2,301



2,427General and administrative


2,569



2,849



3,211



3,623



4,056



4,949



5,227



4,507Total operating expenses


7,178



7,995



8,826



9,346



10,890



12,126



12,239



11,384Income from operations


6,557



7,153



7,729



7,911



7,286



7,197



7,288



6,806Interest and other income, net


1,193



1,313



1,242



1,298



975



478



459



85Income from continuing operations


7,750



8,466



8,971



9,209



8,261



7,675



7,747



6,891Income tax expense


3,201



3,367



3,193



3,508



3,407



3,141



2,927



2,821Net income

$
4,549


$
5,099


$
5,778


$
5,701


$
4,854


$
4,534


$
4,820


$
4,070Net income per shareBasic

$
0.12


$
0.13


$
0.15


$
0.15


$
0.13


$
0.13


$
0.14


$
0.12Diluted

$
0.11


$
0.13


$
0.14


$
0.14


$
0.12


$
0.12


$
0.13


$
0.12     (1)
    
    Stock-based compensation is allocated as follows:  Quarter EndedMar. 31,


June 30,


Sept. 30,


Dec. 31,


Mar. 31,


June 30,


Sept. 30,


Dec. 31,2007


2007


2007


2007


2008


2008


2008


2008(In thousands)Cost of revenue

$
67


$
94


$
96


$
100


$
115


$
139


$
153


$
163Sales and marketing


238



351



363



405



553



525



554



565Technology and product development


91



150



169



191



246



327



347



392General and administrative


159



280



365



375



438



515



465



437Total

$
555


$
875


$
993


$
1,071


$
1,352


$
1,506


$
1,519


$
1,557   40




---



##### Table of Contents



Quarter EndedMar. 31,


June 30,


Sept. 30,


Dec. 31,


Mar. 31,


June 30,


Sept. 30,


Dec. 31,2007


2007


2007


2007


2008


2008


2008


2008Revenues


100.0
%


100.0
%


100.0
%


100.0
%


100.0
%


100.0
%


100.0
%


100.0
%Cost of revenues


11.5



11.0



11.1



11.8



11.7



12.3



12.8



13.6Gross profit


88.5



89.0



88.9



88.2



88.3



87.7



87.2



86.4Operating expenses:Sales and marketing


21.0



21.0



21.0



20.0



23.5



21.9



21.0



21.1Technology and product development


8.7



9.2



9.1



9.2



9.7



10.7



10.3



11.5General and administrative


16.6



16.7



17.2



18.5



19.7



22.5



23.3



21.4Total operating expenses


46.3



46.9



47.4



47.8



52.9



55.1



54.6



54.1Income from operations


42.3



42.1



41.5



40.4



35.4



32.7



32.5



32.3Interest and other income


7.7



7.7



6.7



6.6



4.7



2.2



2.0



0.4Income before taxes


50.0



49.8



48.2



47.1



40.1



34.8



34.6



32.7Income tax expense


20.6



19.8



17.1



17.9



16.5



14.3



13.1



13.4Net income


29.3
%


30.0
%


31.0
%


29.1
%


23.6
%


20.6
%


21.5
%


19.3
%   Liquidity
    and Capital Resources
    Year Ended December 31,2006

2007

2008(In thousands)Cash provided by operating activities

$
23,205


$
30,301


$
25,105Cash used in investing activities


(665
)


(18,827
)


(14,903
)Cash provided (used in) by financing activities


44,485



7,300



(53,441
)         Operating
    Activities
    Investing
    Activities
   41




---



##### Table of Contents



Financing
    Activities
        Off-Balance
    Sheet Arrangements
    Tabular
    Disclosure of Contractual Obligations and Known Future Cash
    Requirements
            Payments Due by Period2013 and2009

2010

2011

2012

Thereafter

Total(Dollars in thousands)Operating lease obligations

$
2,693


$
2,778


$
2,462


$
2,116


$
5,341


$
15,390  42




---



##### Table of Contents



Advertising
    and Media Contracts
    Future
    Capital Requirements
    Recent
    Accounting Pronouncements
  Fair Value
    Measurements
  The
    Fair Value Option for Financial Assets and Financial Liabilities
  Business Combinations
  Noncontrolling Interests in Consolidated Financial Statements Consolidated
    Financial Statements,
  Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk.   43




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data.  10-K.
  Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure.    Item 9A.
    Controls
    and Procedures.  Evaluation of disclosure controls and
    procedures. Form 10-K.
  Managements Report on Internal Control over
    Financial Reporting. Rules 13a-15(f). Internal Control 
    Integrated Framework
      Changes in internal control over financial
    reporting. 10-K
  Item 9B.
    Other
    Information.   44




---



##### Table of Contents



PART III  Proxy
    Statement
  Item 10.
    Directors,
    Executive Officers and Corporate Governance.      
    Information regarding directors of the Company who are standing
    for reelection and any persons nominated to become directors of
    the Company is set forth under Nominees and Continuing
    Directors.
    Information regarding the Companys Audit Committee and
    designated audit committee financial experts is set
    forth under Corporate Governance  Board
    Committees  Audit Committee.
    Information regarding Section 16(a) beneficial ownership
    reporting compliance is set forth under Section 16(a)
    Beneficial Ownership Reporting Compliance.  Code
    of Business Conduct and Ethics
  www.loopnet.com The
    Companys web site address provided above is not intended
    to function as a hyperlink, and the information on the
    Companys web site is not and should not be considered part
    of this proxy statement and is not incorporated by reference
    herein.
    (415) 243-4200
  Item 11.
    Executive
    Compensation.    
    Information regarding the Companys compensation of its
    named executive officers is set forth under Executive
    Compensation.
    Information regarding the Companys compensation of its
    directors is set forth under Executive
    Compensation  Director Compensation. 45




---



##### Table of Contents



Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters.    
    Information regarding security ownership of certain beneficial
    owners, directors and executive officers is set forth under
    Common Stock Ownership of Certain Beneficial Owners and
    Management.  Equity
    Compensation Plan Information
    Number of SecuritiesAvailable forNumber of Securities



Issuance Underto be Issued

Weighted-Average

Equity CompensationUpon Exercise of

Exercise Price of

Plans (ExcludingOutstanding Options,

Outstanding Options,

Securities ReflectedPlan Name and Type

Warrants and Rights

Warrants and Rights

In The First Column)Equity compensation plans approved by stockholders2001 Stock Option and Purchase Plan


1,492,342


$
2.20



2006 Equity Incentive Plan


3,339,898


$
13.04



6,807,724Equity Compensation Plans not Approved by Stockholders


None



None



NoneTotal


4,832,240


$
10.10



6,807,724
(1)     (1)
    
    Excludes 1,371,708 shares authorized for issuance on
    February 3, 2009 in connection with our 2006 Equity
    Incentive Plan. The 2006 Equity Incentive Plan is subject to an
    automatic annual increase of the least of
    (a) 1,800,000 shares, (b) 4% of the shares
    outstanding as of the end of the prior fiscal year, and
    (c) a lesser number as determined by the Companys
    Board of Directors or Compensation Committee.  Item 13.
    Certain
    Relationships and Related Transactions and Director
    Independence.    Item 14.
    Principal
    Accountant Fees and Services.   46




---



##### Table of Contents



PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules.      Regulation S-K)
  2
.2

Amendment to Stock Purchase Agreement with Cityfeet.com
    (incorporated herein by reference to the registrants
    Form 10-K
    filed on March 4, 2008)3
.1

First Amended and Restated Certificate of Incorporation
    (incorporated herein by reference to the registrants
    Form 10-Q
    filed on August 4, 2006)3
.2

Amended and Restated Bylaws of LoopNet, Inc., effective
    December 10, 2008 (incorporated herein by reference to the
    registrants
    Form 8-K
    filed on December 12, 2008)4
.1

Specimen Common Stock Certificate (incorporated herein by
    reference to the registrants
    Form S-1/A
    filed on April 27, 2006)4
.2

Amended and Restated Investor Rights Agreement by and among
    LoopNet, Inc. and certain holders of preferred stock, dated as
    of November 30, 2001 (incorporated herein by reference to
    the registrants
    Form S-1
    filed on March 1, 2006)10
.1+

LoopNet, Inc. 2001 Stock Option and Purchase Plan (incorporated
    herein by reference to the registrants
    Form S-1
    filed on March 16, 2006)10
.2+

Form of Option Agreement under 2001 Stock Option and Purchase
    Plan (incorporated herein by reference to the registrants
    Form S-1
    filed on March 1, 2006)10
.3+

LoopNet, Inc. 2006 Equity Incentive Plan (incorporated herein by
    reference to the registrants
    Form S-1/A
    filed on June 6, 2006)10
.4+

Form of Option Agreement under 2006 Equity Incentive Plan
    (incorporated herein by reference to the registrants
    Form S-1/A
    filed on April 27, 2006)10
.5+

Form of Indemnification Agreement (incorporated herein by
    reference to the registrants
    Form S-1/A
    filed on April 27, 2006)10
.6

Lease, dated January 14, 2005, between S&F Huntington
    Millennium LLC and LoopNet, Inc. (incorporated herein by
    reference to the registrants
    Form S-1
    filed on March 1, 2006)10
.7

Office Lease, dated January 8, 2003, between
    PWREF/MCC-China Basin L.L.C. and LoopNet, Inc. (incorporated
    herein by reference to the registrants
    Form S-1/A
    filed on April 3, 2006)10
.8

First Amendment to Office Lease, dated August 16, 2005
    between Stockbridge/MCC-China Basin L.L.C. and LoopNet, Inc.
    (incorporated herein by reference to the registrants
    Form S-1/A
    filed on April 3, 2006)10
.9+

Director Compensation Policy (incorporated herein by reference
    to the registrants
    Form S-1/A
    filed on April 27, 2006)10
.10+*

Fiscal Year 2009 Bonus Plan10
.11+

Form of Restricted Stock Unit Agreement under 2006 Equity
    Incentive Plan (incorporated herein by reference to the
    registrants
    Form 8-K
    filed on February 5, 2008)10
.12+

Seventh Amendment to Office Lease, dated January 8, 2003
    between PWREF/MCC-China Basin L.L.C. and LoopNet, Inc.
    (incorporated herein by reference to the registrants
    Form 10-Q
    filed on May 9, 2008)10
.13+

Form of Change of Control Severance Agreement (incorporated
    herein by reference to the registrants
    Form 8-K
    filed on December 24, 2008)23
.1*

Consent of Ernst & Young LLP, independent registered
    public accounting firm24
.1*

Power of Attorney31
.1*

Rule 13a-14(a)
    Certification (CEO)31
.2*

Rule 13a-14(a)
    Certification (CFO)32
.1*

Section 1350 Certification (CEO)32
.2*

Section 1350 Certification (CFO)     *
    
    Filed herewith.+
    
    Management contract or compensatory plan. 47




---



##### Table of Contents



SIGNATURES      By:
    /s/  Richard
    J. Boyle, Jr.  Richard J. Boyle, Jr.
 Chief Executive Officer, and
 Chairman of the Board of Directors
    By:
    /s/  Brent
    Stumme  Brent Stumme
 Chief Financial Officer and
 Senior Vice President, Finance
 and Administration
   48




---



##### Table of Contents



POWER OF
    ATTORNEY
  Form 10-K,
    Signature

Title

Date/s/  Richard
    J. Boyle, Jr.Richard
    J. Boyle, Jr.

Chief Executive Officer, and Chairman of the Board of Directors
    (Principal Executive Officer)

February 27, 2009/s/  Brent
    StummeBrent
    Stumme

Chief Financial Officer and Senior Vice President, Finance and
    Administration (Principal Financial and Accounting Officer)

February 27, 2009/s/  Noel
    J. FentonNoel
    J. Fenton

Director

February 27, 2009/s/  Thomas
    E. UntermanThomas
    E. Unterman

Director

February 27, 2009/s/  Dennis
    ChookaszianDennis
    Chookaszian

Director

February 27, 2009/s/  Scott
    IngrahamScott
    Ingraham

Director

February 27, 2009/s/  William
    ByrnesWilliam
    Byrnes

Director

February 27, 2009  49




---



##### Table of Contents



INDEX TO
    FINANCIAL STATEMENTS
  PageReport of Independent Registered Public
    Accounting Firm on Internal Control Over Financial Reporting


51Report of Independent Registered Public
    Accounting Firm


52Financial StatementsConsolidated Balance Sheets


53Consolidated Statements of Income


54Consolidated Statements of Stockholders
    Equity


55Consolidated Statements of Cash Flows


56Notes to Consolidated Financial Statements


57  50




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
    ON INTERNAL CONTROL OVER FINANCIAL REPORTING  
              Ernst &
    Young LLP
    51




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM  
          Ernst &
    Young LLP
    52




---



##### Table of Contents



LOOPNET,
    INC.



CONSOLIDATED
    BALANCE SHEETS  December 31,


December 31,2007


2008(In thousands, except share data)ASSETSCurrent assets:Cash and cash equivalents

$
104,564


$
61,325Short-term investments


3,325



3,262Accounts receivable, net of allowance of $105 and $121,
    respectively


1,190



1,564Prepaid expenses and other current assets


796



1,530Deferred income taxes, net


298



607Total current assets


110,173



68,288Property and equipment, net


2,051



2,208Goodwill


15,233



23,056Intangibles, net


2,461



5,678Deferred income taxes, net, non-current


5,196



5,829Deposits and other noncurrent assets


2,245



3,151Total assets

$
137,359


$
108,210LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$
828


$
622Accrued compensation and benefits


2,479



2,759Accrued liabilities


1,964



2,020Income taxes payable


698



Deferred revenue


9,537



10,358Total current liabilities


15,506



15,759Commitments and contingenciesStockholders equity:Common stock, $.001 par value, 125,000,000 shares
    authorized; 38,908,302 and 39,218,665 shares issued,
    respectively; and 38,908,302 and 34,292,704 shares
    outstanding, respectively


39



39Additional paid in capital


107,866



114,915Other comprehensive loss


(103
)


(276
)Treasury Stock, at cost, 4,925,961 shares






(54,556
)Retained earnings


14,051



32,329Total stockholders equity


121,853



92,451Total liabilities and stockholders equity

$
137,359


$
108,210    53




---



##### Table of Contents



LOOPNET,
    INC.



CONSOLIDATED
    STATEMENTS OF INCOME  Year Ended December 31,2006


2007


2008(In thousands, except share data)Revenues

$
48,411


$
70,729


$
86,074Cost of revenue


5,599



8,033



10,858Gross margin


42,812



62,696



75,216Operating expenses:Sales and marketing


9,506



14,667



18,825Technology and product development


4,341



6,427



9,075General and administrative


7,803



12,253



18,739Total operating expenses


21,650



33,347



46,639Income from operations


21,162



29,349



28,577Interest and other income, net


2,883



5,046



1,998Income before tax


24,045



34,395



30,575Income tax expense


8,550



13,268



12,297Net income

$
15,495


$
21,127


$
18,278Net income per shareBasic

$
0.42


$
0.55


$
0.51Diluted

$
0.40


$
0.52


$
0.49Number of shares used in per share calculations:Basic


36,767



38,291



35,772Diluted


38,686



40,672



37,110    54




---



##### Table of Contents



LOOPNET,
    INC.



CONSOLIDATED
    STATEMENT OF STOCKHOLDERS EQUITY  AccumulatedAdditional


Deferred


Stockholders


Retained


Other








TotalCommon Stock


Paid-in


Stock-based


Notes


Earnings


Comprehensive


Treasury Stock


StockholdersShares


Amount


Capital


Compensation


Receivable


(Deficit)


Loss


Shares


Amount


Equity(In thousands)Balance at December 31, 2005


8,515


$
9


$
12,482


$
(827
)

$
(453
)

$
(22,571
)

$
(29
)





$



$
(11,389
)Exercise of stock options


549



1



135



























136Exercise of warrants


1,362



1



2



























3Interest on stockholders note receivable


















(3
)


















(3
)Collection of stockholders note receivable


















456



















456Unrealized loss on marketable securities


























(2
)










(2
)Conversion of reedemable convertible preferrred stock


24,000



24



40,387



























40,411SFAS 123R adoption










(827
)


827























Stock-based compensation expense










1,453



























1,453Tax benefit from exercise of stock options










1,131



























1,131Net proceeds from issuance of common stock, net of transaction
    costs


3,471



3



42,309



























42,312Net income






















15,495















15,495Total comprehensive income






































57,807Balance at December 31, 2006


37,897


$
38


$
97,072


$



$



$
(7,076
)

$
(31
)





$



$
90,003Exercise of stock options


1,011



1



1,611



























1,612Stock-based compensation expense










3,495



























3,495Tax benefit from exercise of stock options










5,688



























5,688Unrealized loss on marketable securities


























(72
)










(72
)Net income






















21,127















21,127Total comprehensive income






































21,055Balance at December 31, 2007


38,908


$
39


$
107,866


$



$



$
14,051


$
(103
)





$



$
121,853Exercise of stock options


311







356



























356Stock-based compensation expense










5,934



























5,934Repurchase of common stock






























4,926



(54,556
)


(54,556
)Tax benefit from exercise of stock options










759



























759Unrealized loss on marketable securities


























(173
)










(173
)Net income






















18,278















18,278Total comprehensive income






































18,105Balance at December 31, 2008


39,219


$
39


$
114,915


$



$



$
32,329


$
(276
)


4,926


$
(54,556
)

$
92,451    55




---



##### Table of Contents



LOOPNET,
    INC.



CONSOLIDATED
    STATEMENTS OF CASH FLOWS  Year Ended December 31,2006


2007


2008(In thousands)Cash flows from operating activities:Net income

$
15,495


$
21,127


$
18,278Adjustments to reconcile net income to net cash provided by
    operating activities:Depreciation and amortization expense


611



1,154



2,199Stock-based compensation


1,453



3,495



5,934Tax benefits from exercise of stock options






(5,688
)


(759
)Deferred income tax (benefit)


4,137



(527
)


(1,683
)Changes in assets and liabilities, net of effects of
    acquisitions:Accounts receivable


(608
)


129



23Prepaid expenses and other assets


(1,481
)


630



(678
)Income taxes payable


(16
)


6,387



61Accounts payable


103



615



(211
)Accrued expenses and other current liabilities


265



232



1,304Accrued compensation and benefits


917



221



198Deferred revenue


2,329



2,526



439Net cash provided by operating activities


23,205



30,301



25,105Cash flows from investing activities:Purchase of property and equipment


(665
)


(1,797
)


(1,319
)Purchase of investments






(38,303
)


(1,000
)Sale of investments






36,275



Acquisitions, net of cash






(15,002
)


(12,584
)Net cash used in investing activities


(665
)


(18,827
)


(14,903
)Cash flows from financing activities:Proceeds from sale of common stock, net of issuance costs paid


42,309







Net proceeds from exercise of stock options


139



1,612



356Net proceeds from exercise of warrants


450







Repurchase of common stock










(54,556
)Net proceeds from payment of notes receivable on options
    exercised and restricted stock purchased


456







Tax benefit from exercise of stock options


1,131



5,688



759Net cash provided by (used in) financing activities


44,485



7,300



(53,441
)Net increase (decrease) in cash and cash equivalents


67,025



18,774



(43,239
)Cash and cash equivalents at beginning of year


18,765



85,790



104,564Cash and cash equivalents at end of year

$
85,790


$
104,564


$
61,325Supplemental disclosures of cash flow information:Cash paid during the year for income taxes

$
4,115


$
6,154


$
14,444Settlement of contingent purchase price

$



$
1,300


$
    56




---



##### Table of Contents



LOOPNET,
    INC.



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS  (1)
    The
    Company and Summary of Significant Accounting Policies  Organization
    and Basis of Presentation
        Stock
    Split
    Use of
    Estimates
      Cash
    and Cash Equivalents
   57




---



##### Table of Contents



LOOPNET,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Short-term
    Investments
  Accounting for Certain
    Investments in Debt and Equity Securities.
  Concentration
    of Risk
      Fair
    Value of Financial Instruments
    Accounts
    Receivable
    Property
    and Equipment
    Website
    Development Costs
  EITF 00-2, Accounting for Web Site Development Costs,
  Long-Lived
    Assets Including Goodwill and other Intangible
    Assets
   58




---



##### Table of Contents



LOOPNET,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Goodwill and
    Other Intangible Assets
  Accounting for the Impairment of Long-Lived Assets and for
    Long-Lived Assets to Be Disposed.
    EstimatedUseful LifeBizBuySell Acquisition (October 1, 2004)Broker Relationships


8.3 yearsAdvertising Relationships


1.5 yearsTechnology


3 yearsDomain name


IndefiniteEstimatedUseful LifeCityfeet Acquisition (August 2, 2007)Newspaper Relationships


5 yearsAdvertising Relationships


3 yearsPay for Performance Relationships


2 yearsTechnology


3 yearsDomain name


5 yearsEstimatedUseful LifeREApplications Acquisition (April 7, 2008)Customer Relationships


7 yearsTechnology


5 yearsDomain name


7 yearsEstimatedUseful LifeLandAndFarm Acquisition (July 29, 2008)Customer Relationships


0.5 to 8 yearsTechnology


4 yearsNon-competition Agreement


3 yearsTrade names/Trademarks


Indefinite  59




---



##### Table of Contents



LOOPNET,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
      Income
    Taxes
    Accounting for Uncertainty in Income Taxes
  Business
    Segment
    Revenue
    Recognition
  Revenue Recognition
   60




---



##### Table of Contents



LOOPNET,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Cost
    of Revenues
    Sales
    and Marketing
      Technology
    and Product Development
    General
    and Administrative
    Comprehensive
    Income
    Stock-Based
    Compensation
  Share-Based
    Payment Accounting for Stock-Based Compensation Accounting for Stock Issued to Employees
  Recent
    Accounting Pronouncements
  Fair Value
    Measurements
 61




---



##### Table of Contents



LOOPNET,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    The
    Fair Value Option for Financial Assets and Financial Liabilities
  Business Combinations
  Noncontrolling Interests in Consolidated Financial Statements Consolidated
    Financial Statements,
  (2)
    Earnings
    per Share  No. 03-6, Participating Securities and the Two 
    Class Method under FASB Statement 128 No. 03-6 No. 03-6
  Earnings Per Share,
 62




---



##### Table of Contents



LOOPNET,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
      Year Ended December 31,2006

2007

2008Weighted average common shares outstanding(1)


8,028



38,291



35,772Weighted average shares outstanding used to compute basic net
    income per share after conversion of redeemable convertible
    preferred stock; one class of common shares was outstanding for
    the period from June 7 to June 30, 2006


36,767Weighted average common shares outstanding used to compute basic
    net income per share


23,913



38,291



35,772Add dilutive common equivalents:Stock options


2,562



2,101



1,270Warrants


259







Restricted stock units










8Unvested restricted stock(2)


568



280



60Redeemable convertible preferred stock


10,341







Redeemable convertible preferred warrants


1,043







Shares used to compute diluted net income per share


38,686



40,672



37,110     (1)
    
    For the year ended December 31, 2006 where the Company had
    two classes of equity securities, it followed EITF Issue
    No. 03-6,
    Participating Securities and the Two-Class Method under
    FASB Statement 128.(2)
    
    Outstanding unvested common stock purchased by employees is
    subject to repurchase by the Company and therefore is not
    included in the calculation of the weighted-average shares
    outstanding for basic earnings per share.    Year Ended December 31,2006


2007


2008Stock options


971



416



3,294Restricted stock units










  63




---



##### Table of Contents



LOOPNET,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Year Ended December 31,2006


2007


2008Calculation of basic net income per share (1):Net income

$
6,665



N/A



N/AAssumed preferred stock dividends


978



N/A



N/ANet income, net of assumed stock dividends

$
5,687



N/A



N/APercent of net income allocable to common shareholders(2)


26
%


N/A



N/ANet income allocable to common shareholders


1,479



N/A



N/AWeighted average common shares outstanding


8,028



N/A



N/ABasic net income per share  two-class method

$
0.18



N/A



N/ANet income for period during which single class of equity
    securities was outstanding

$
8,830


$
21,127


$
18,278Weighted average common shares outstanding


36,767



38,291



35,772Basic earnings per share for period during which single class of
    equity securities were outstanding

$
0.24Basic earnings per share

$
0.42


$
0.55


$
0.51Calculation of diluted net income per share:Net income

$
15,495


$
21,127


$
18,278Weighted average diluted shares outstanding


38,686



40,672



37,110Diluted net income per share

$
0.40


$
0.52


$
0.49     (1)
    
    For the year ended December 31, 2006 where the Company had
    two classes of equity securities, it followed EITF Issue
    No. 03-6,
    Participating Securities and the Two-Class Method under
    FASB Statement 128.(2)
    
    Calculation of percent of net income allocable to common
    shareholders:  Year Ended December 31,2006

2007

2008Weighted average common shares outstanding


8,028



N/A



N/AWeighted average redeemable convertible preferred shares
    outstanding


22,896



N/A



N/AWeighted average common shares and preferred shares outstanding


30,924



N/A



N/APercent of net income allocable to common shareholders


26
%


N/A



N/A   (3)
    Acquisitions   64




---



##### Table of Contents



LOOPNET,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Business Combinations
  Customer relationships

$
610Technology


98Domain name


850Goodwill


2,417$
3,975         Customer relationships

$
484Developed technology


510Domain name


410Deferred tax asset


1,913Net assets acquired


169Goodwill


12,816$
16,302        65




---



##### Table of Contents



LOOPNET,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    ,
  Customer relationships

$
120Domain name


480Developed technology


2,490Net assets acquired


38Deferred tax liability


(947
)Goodwill


6,994$
9,175         ,
  Customer relationships

$
497Trade names / Trademarks


254Developed technology


279Non-competition Agreements


63Net assets (liabilities) acquired


(19
)Deferred tax liability


(319
)Goodwill


1,355$
2,110  66




---



##### Table of Contents



LOOPNET,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    (4)
    Property
    and Equipment, net    As of December 31,2007


2008Computer equipment and purchased software

$
7,179


$
7,591Office equipment and furniture (includes leasehold improvements)


1,008



1,2708,187



8,861Less accumulated depreciation and amortization


(6,136
)


(6,653
)Property and equipment, net

$
2,051


$
2,208     (5)
    Goodwill
    and Intangible Assets, net    Balance as of December 31, 2006

$
2,417Goodwill acquired


12,816Balance as of December 31, 2007


15,233Goodwill acquired


8,349Goodwill adjustment


(526
)Balance as of December 31, 2008

$
23,056    67




---



##### Table of Contents



LOOPNET,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    As of December 31,2007


2008Cost:Customer relationships

$
1,094


$
1,711Technology


608



3,377Non-competition Agreement






63Domain name


1,260



1,994Total cost


2,962



7,145Accumulated amortization:Customer relationships


(298
)


(550
)Technology


(169
)


(741
)Non-competition Agreement






(9
)Domain name


(34
)


(167
)Total accumulated amortization


(501
)


(1,467
)Intangibles, net

$
2,461


$
5,678     2009

$
1,1912010


1,0792011


9342012


8362013 and thereafter


534$
4,574   (6)
    Income
    Taxes    Year Ended December 31,2006


2007


2008Current:Federal

$
3,631


$
11,056


$
11,136State


932



2,739



2,901Total

$
4,562


$
13,795


$
14,037Deferred:Federal

$
3,259


$
(447
)

$
(1,204
)State


728



(80
)


(536
)Total

$
3,987


$
(527
)

$
(1,740
)Income tax expense

$
8,550


$
13,268


$
12,297  68




---



##### Table of Contents



LOOPNET,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Year Ended December 31,2006


2007


2008Statutory federal tax rate


34.0
%


35.0
%


35.0
%State tax rate, net of federal benefit


4.6
%


5.1
%


5.0
%Change in valuation allowance


(4.9
)%


(2.1
)%


(1.9
)%Other adjustments


1.9
%


0.6
%


2.1
%Effective tax rate


35.6
%


38.6
%


40.2
%     As of December 31,2007


2008Deferred tax assets (liabilities):Net operating loss carryforwards

$
13,545


$
12,769Depreciation and amortization


(14
)


(469
)Stock-based compensation


722



2,401Accruals and allowances


284



357Tax credits


1,234



1,235Intangibles


(507
)


(1,750
)Valuation allowance


(10,114
)


(8,881
)Other


344



774Deferred tax assets, net

$
5,494


$
6,436         (7)
    Stock
    Option Plan   69




---



##### Table of Contents



LOOPNET,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
          Options Outstanding


Options ExercisableWeighted





WeightedAverage





AverageNumber of


Exercise


Number of


ExerciseShares


Price


Shares


PriceOutstanding at December 31, 2005


2,683,778


$
0.51



1,214,352


$
0.11Granted


1,803,976


$
9.40Exercised


(548,841
)

$
0.25Cancelled


(201,145
)

$
6.14Outstanding at December 31, 2006


3,737,768


$
4.53



1,349,454


$
0.76Granted


1,157,500


$
17.56Exercised


(1,011,172
)

$
1.59Cancelled


(245,714
)

$
12.84Outstanding at December 31, 2007


3,638,382


$
8.93



1,339,128


$
4.59Granted


1,600,496


$
11.62Exercised


(310,357
)

$
1.15Cancelled


(291,281
)

$
13.41Outstanding at December 31, 2008


4,637,240


$
10.10



2,175,935


$
7.96     Options Outstanding


Options ExercisableWeighted











WeightedAverage


Weighted





Weighted


AverageNumber


Remaining


Average





Average


RemainingOptions


Contractual


Exercise


Number


Exercise


ContractualExercise Prices

Outstanding


Life (Years)


Price


Exercisable


Price


Life (Years)$0.10


562,531



4.51


$
0.10



543,343


$
0.10$0.23  $4.08


929,811



6.89



3.47



590,715



3.31$5.70  $12.00


1,148,072



5.82



11.12



306,728



11.40$12.04  $12.98


465,792



5.85



12.19



118,712



12.20$13.00  $14.21


429,000



5.78



13.52



93,568



13.92$15.23  $15.58


136,321



4.32



15.28



83,756



15.27$15.61  $17.51


606,838



5.19



16.12



267,769



16.13$17.67  $19.09


138,375



5.05



18.71



97,302



18.82$19.35  $22.92


204,500



5.60



21.82



68,471



21.82$23.39  $24.40


16,000



5.55



24.17



5,571



24.184,637,240



5.72


$
10.10



2,175,935


$
7.96



5.45  70




---



##### Table of Contents



LOOPNET,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
      Year Ended December 31,2006


2007


2008Risk-free interest rate


4.76
%


4.43
%


2.80
%Expected volatility


53
%


44
%


42
%Expected life


5.3 years



4.6 years



4.6 yearsDividend yield


0
%


0
%


0
%             Unvested Restricted Stock UnitsWeightedWeighted

AverageAverage

RemainingNumber of

Grant Date

ContractualShares

Fair Value

Life (Years)Balance at December 31, 2007





$




Granted


195,000


$
11.47Vested





$
Cancelled





$
Outstanding at December 31, 2008


195,000


$
11.47



1.74  71




---



##### Table of Contents



LOOPNET,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
      Year Ended December 31,2006


2007


2008(In thousands)Cost of revenue

$
151


$
357


$
570Sales and marketing


686



1,358



2,198Technology and product development


195



600



1,311General and administrative


421



1,180



1,855Total

$
1,453


$
3,495


$
5,934   (8)
    Commitments
    and Contingencies  Leases
    2009

$
2,6932010


2,7782011


2,4622012


2,1162013 and thereafter


5,341$
15,390     Litigation
   72




---



##### Table of Contents



LOOPNET,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
        patents-in-suit patents-in-suit
    (9)
    401(k)
    Plan   73




---



##### Table of Contents



EXHIBIT INDEX
  2
.2

Amendment to Stock Purchase Agreement with Cityfeet.com
    (incorporated herein by reference to the registrants
    Form 10-K
    filed on March 4, 2008)3
.1

First Amended and Restated Certificate of Incorporation
    (incorporated herein by reference to the registrants
    Form 10-Q
    filed on August 4, 2006)3
.2

Amended and Restated Bylaws of LoopNet, Inc., effective
    December 10, 2008 (incorporated herein by reference to the
    registrants
    Form 8-K
    filed on December 12, 2008)4
.1

Specimen Common Stock Certificate (incorporated herein by
    reference to the registrants
    Form S-1/A
    filed on April 27, 2006)4
.2

Amended and Restated Investor Rights Agreement by and among
    LoopNet, Inc. and certain holders of preferred stock, dated as
    of November 30, 2001 (incorporated herein by reference to
    the registrants
    Form S-1
    filed on March 1, 2006)10
.1+

LoopNet, Inc. 2001 Stock Option and Purchase Plan (incorporated
    herein by reference to the registrants
    Form S-1
    filed on March 16, 2006)10
.2+

Form of Option Agreement under 2001 Stock Option and Purchase
    Plan (incorporated herein by reference to the registrants
    Form S-1
    filed on March 1, 2006)10
.3+

LoopNet, Inc. 2006 Equity Incentive Plan (incorporated herein by
    reference to the registrants
    Form S-1/A
    filed on June 6, 2006)10
.4+

Form of Option Agreement under 2006 Equity Incentive Plan
    (incorporated herein by reference to the registrants
    Form S-1/A
    filed on April 27, 2006)10
.5+

Form of Indemnification Agreement (incorporated herein by
    reference to the registrants
    Form S-1/A
    filed on April 27, 2006)10
.6

Lease, dated January 14, 2005, between S&F Huntington
    Millennium LLC and LoopNet, Inc. (incorporated herein by
    reference to the registrants
    Form S-1
    filed on March 1, 2006)10
.7

Office Lease, dated January 8, 2003, between
    PWREF/MCC-China Basin L.L.C. and LoopNet, Inc. (incorporated
    herein by reference to the registrants
    Form S-1/A
    filed on April 3, 2006)10
.8

First Amendment to Office Lease, dated August 16, 2005
    between Stockbridge/MCC-China Basin L.L.C. and LoopNet, Inc.
    (incorporated herein by reference to the registrants
    Form S-1/A
    filed on April 3, 2006)10
.9+

Director Compensation Policy (incorporated herein by reference
    to the registrants
    Form S-1/A
    filed on April 27, 2006)10
.10+*

Fiscal Year 2009 Bonus Plan10
.11+

Form of Restricted Stock Unit Agreement under 2006 Equity
    Incentive Plan (incorporated herein by reference to the
    registrants
    Form 8-K
    filed on February 5, 2008)10
.12+

Seventh Amendment to Office Lease, dated January 8, 2003
    between PWREF/MCC-China Basin L.L.C. and LoopNet, Inc.
    (incorporated herein by reference to the registrants
    Form 10-Q
    filed on May 9, 2008)10
.13+

Form of Change of Control Severance Agreement (incorporated
    herein by reference to the registrants
    Form 8-K
    filed on December 24, 2008)23
.1*

Consent of Ernst & Young LLP, independent registered
    public accounting firm24
.1*

Power of Attorney31
.1*

Rule 13a-14(a)
    Certification (CEO)31
.2*

Rule 13a-14(a)
    Certification (CFO)32
.1*

Section 1350 Certification (CEO)32
.2*

Section 1350 Certification (CFO)     *
    
    Filed herewith.+
    
    Management contract or compensatory plan. 74