Zillow shares fell after the company reported higher revenue and a smaller-than-expected second-quarter loss.
Zillow
(ticker: Z) posted total revenue of $506 million and a net loss of $35 million under generally accepted accounting principals, or GAAP. Analysts had expected revenue of $473 million and a GAAP loss of $63 million. The company’s adjusted earnings before interest taxes, depreciation, and amortization, or Ebitda, was $111 million.
“Zillow outperformed the broader industry for the fourth consecutive quarter as we navigate a tough real estate market,” Zillow CEO Rich Barton said in a statement. “I’m pleased with our steady progress on improving and integrating our customer and partner experiences, especially in touring, financing, and renting.”
The shares fell in after-hours trading despite an initial gain following the earnings report. Shares were down 1.35% to $53.50 at 5:23 p.m.
The decline could be attributed to the company’s guidance. Zillow says it expects total revenue in a range of $458 million to $486 million in its third quarter, lower than the $488 million FactSet consensus expects.
In a shareholder letter, Zillow cited its goal of becoming “the housing super app,” a central hub for real estate-related services. CEO Rich Barton and CFO Jeremy Hofmann wrote in the letter that the company expects the strategy to double Zillow’s share of customer transactions, to 6% from 3%, by the end of 2025.
The “super app” repositioning follows the company’s exit from its business buying and selling homes—a model often referred to as iBuying. Zillow announced an end to the program in November 2021 and reported the segment as a discontinued operation in November 2022.
A closer look at the company’s earnings show more resilient-than-expected revenue from its lead generation service, Premier Agent, which connects prospective buyers with agents who pay for the service. Zillow’s Residential segment, which houses its Premier Agent program, declined 3% from the year prior to $380 million, the company said. It had previously expected residential revenue in a range of $341 million to $361 million. Revenue from its Premier Agent program declined 4%, a shallower drop than the 9% to 13% decline the company previously expected.
“Residential revenue outperformed the industry and the high end of our outlook range by delivering a better-than-expected number of customer connections to our Premier Agent partners, and buoyed by favorable tailwinds relative to the industry,” Barton and Hofmann wrote in a shareholder letter.
Rentals also provided a boost. The company said revenue from rentals increased to $91 million, up from $71 million one year prior. Zillow benefited from a combination of lower rental demand and greater supply as new listings hit the market, driving landlords to the company to advertise, according to the shareholder letter.
Zillow’s earnings come during an unusual time for the housing market. Sales of previously owned homes, the majority of the market, have slumped below year-ago levels, while sales of new homes have been higher than a year prior. Zillow and
Redfin
earlier this week announced a partnership through which Redfin would syndicate Zillow’s new home listings.
Write to Shaina Mishkin at [email protected]
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