ZilloWednesday night’s second-quarter 2024 earnings call with investors marked a critical moment for the company. This is the first time since company co-founder Rich Barton announced his resignation as CEO.
Less than an hour before the call was connected, Zillo Group announced that it has promoted the company’s Chief Operating Officer Jeremy Wacksman to CEO. Barton will remain on Zillow’s board of directors and has been named co-executive chairman of the board, alongside Zillow co-founder and current executive chairman Lloyd Frink.
“I have served as CEO and/or chairman since Lloyd and I provided seed funding to the company in 2004, and I will continue to be involved,” Barton told investors and analysts listening to the call. “However, my role will shift towards supporting and consulting with Jeremy Wacksman and the leadership team rather than day-to-day operational leadership.”
Wacksman’s promotion was naturally a hot topic on the call, but the leadership team assured listeners that the change would not result in significant changes to Zillow’s business plans or strategies.
According to Barton, Zillow organized much of the company’s business around Wacksman when he was promoted to chief operating officer three years ago.
“He is backed by an outstanding team and has successfully positioned the company to pursue several tremendous opportunities,” Barton said.
These opportunities include the continued rollout of the Zillow “Housing Super App” and integrated consumer and agent partner experiences across the country. Waxman will also be responsible for expanding the “breadth of the company’s market coverage” and “the depth of transactional penetration in those markets” while growing its leasing and mortgage businesses.
Zillow executives say the company will continue to outperform the industry by focusing on these opportunities, which form some of the key components of Zillow’s five growth pillars.
Zillow reported second-quarter revenue rising 13% annually to $572 million, $39 million above the midpoint of its forecast range. While residential income grew 8% annually to $409 million, overall residential growth was largely due to a 29% annual increase in rental income to $117 million and a 42% increase in rental income. Zillow Home Loans Revenues reached $34 million.
The improved performance of Zillow’s mortgage division was attributed to a 125% annual increase in home purchase loan originations, which reached $756 million in the second quarter of 2024.
“We have been successful despite the continued challenging mortgage rate environment, as evidenced by our second quarter estimate for total industry purchase loan originations down single digits year over year,” Waxman said.
Despite the increase in revenue, Zillow reported a GAAP net loss of $17 million for the quarter, an improvement from the $35 million net loss reported in the second quarter of 2023.
Despite the losses, Wacksman said Zillow’s success to date gives him confidence that the company is on track to achieve its goal of double-digit revenue growth in 2024 and “deliver strong GAAP profitability over time.” .
Barton shared a similar sentiment, noting throughout the call that Zillow has “established its footing.”
“I’m very excited,” Barton said. “There’s a lot of clear water in front of the company – there’s a lot of opportunity. Maybe one day the wind will change direction and blow behind us. We certainly don’t need it, but I’m sure it will happen at some point.
To achieve its goals, Zillow executives said the company will continue to focus on five pillars of growth, including touring, financing, seller solutions, enhancing its agent partner network and integrating services.
Across Zillow’s first four enhanced marketplaces, which fully encompass its comprehensive services and Zillow’s “housing super app” vision, revenue per transaction has increased more than 80% since the beginning of 2023, the company said.
“As we expand, we continue to see signs of repeatable success,” Waxman said. “Across the 13 markets we entered at the end of the first quarter, we saw revenue growth per unit of total transaction value. As we roll out the remaining enhanced markets this year, we saw further improvements in conversion rates and total transaction value per Income opportunities.
Going forward, executives said Zillow will continue to focus on technology for agents and consumers in an effort to integrate and simplify the home-buying experience.
“We firmly believe that the rising digital wave will bring everyone with it,” Barton said. “Using our software, a more digital industry is better for consumers, our partners, and ultimately better for Zillow Group.” ”
Waxman added: “We continue to believe that our more important investments are in technology innovation that improves the customer experience, which has helped us earn and maintain a strong brand position and significant mover engagement.”
