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Zillow Group’s momentum continued into the second quarter, with the Seattle-based residential portal’s revenue rising 13% year over year to $572 million, a performance that put Zillow ahead of the midpoint of its outlook range of $533 million. ) leads by 7%.
Zillow’s mortgage business led the way in terms of percentage growth, with home loan originations increasing 125% year-over-year, driving the vertical’s overall revenue to increase 42% year-over-year to $34 million. The company’s rental business also saw double-digit growth, with multifamily revenue up 44%, driving total revenue up 29% year over year to $117 million.
While the company’s residential revenue still trails the rental and mortgage segment (+8%) in percentage growth, the segment (which includes Premier Agent, ShowingTime+ and Follow Up Boss) accounted for the lion’s share of Zillow’s success this quarter, Revenue reached $409 million.
Zillow’s net loss improved, falling to $17 million from $35 million in the second quarter of 2023. The company’s adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) rose about 20% year over year to $134 million as revenue from its residential business was higher than expected.
Jeremy Waxman | Image Source: LinkedIn
In his first statement as CEO of Zillow Group, Jeremy Wacksman said the company’s performance reflects the Zillow team’s commitment to creating “the digital future of real estate.”
“Zillow outperformed the residential real estate industry for the eighth consecutive quarter, with better-than-expected revenue across the business,” he said in a written statement. “We executed well as we built the digital future of real estate. , we continue to deliver exceptional products and services within Zillow’s Housing Super App.”
“With an increasingly diverse and growing business, we are on track to deliver strong GAAP profitability and meet our expectations of double-digit revenue growth and modest expansion of adjusted EBITDA margin in 2024,” he added. Well-positioned to capture more of the overall target market and help bring more people home.”
In a shareholder letter, Zillow co-founder and former CEO Rich Barton expressed his hopes for the company’s next chapter as it enters a new era filled with opportunities and challenges, including the National Association of Realtors buyer The impact terms of broker commission settlements and the intensifying portal wars.
“The Zillow business is in a strong position financially, strategically, operationally and organizationally to consistently outperform the residential real estate industry,” Patton said. “We are executing well within the Zillow Homes Super App, methodically delivering great software and services designed to Empowering consumers and partners by digitizing and integrating home buying, selling, financing and leasing.”
He added, “Jeremy made the right choice and is now ready to serve as CEO of Zillow, and I’m excited to support him as he leads us in the next chapter of building the digital future of real estate.”
The company said its growth strategy continues to produce strong results as it expands its digitally integrated trading experience to other Zillow enhanced markets (i.e., markets with access to integrated financing, curated partners, instant tours and more). As of the end of the second quarter, Zillow had 19 enhanced markets, with a goal of reaching 36 by the end of August and 40 by the end of 2024.
Like last season’s shareholder letter, Real-Time Touring and Zillow Showcase were the stars of the show, with the portal giant offering a value proposition to both buy-side and sell-side agents. Premium partners who connect with homebuyers through live tours have conversion rates three times higher than average, and homebuyers are embracing the introduction of short-term tour agreements.
The agreement, which is valid for seven days, enables buyers’ agents and consumers to comply with upcoming changes to commission procedures, including requiring buyers’ agents to sign a representation agreement with buyers before showing them a home.
“The early signs of success we’re seeing in the pilot give us confidence to integrate it into Zillow’s travel experience, and just last week, the agreement became part of the ‘request a tour’ process for nearly 80 percent of tours on Zillow,” the letter said. wrote. “We plan to roll this out to the remaining tourist routes in the coming months.”
On the seller side, Zillow says Showcase drives higher views, shares and savings than similar non-Showcase listings on the site, allowing agents using Showcase to win more listings and sell for an average of 9,000 These listings are sold at a dollar premium. With 1% of all new listings now using Showcase, Zillow is close to its Showcase listing coverage goal.
“We are on track to achieve our goal of 5% to 10% listing coverage, which represents an annual revenue opportunity of $150 million to $300 million,” the letter reads. “We believe the potential for future growth does not stop there.”
Wacksman said the company’s progress in real-time tours, listings and growth in the rental and mortgage space shows that as the portal’s mobile and app site traffic reaches expectations, Zillow is delivering a fully integrated “super app.” Experience”. The annual average number of unique visitors per month is 231 million. Although traffic growth was flat at 231 million visitors, total visits increased 4% year-over-year in the quarter to 2.5 billion.
“As you remember from previous calls and our investor presentation in February, approximately 80% of our users come to us organically and they use our app three times more than anyone else in the category. ,” he said on Wednesday’s evening earnings call. “Another way to measure traffic and brand strength is through ComScore, which is widely regarded by internet brands as a reliable, transparent third-party source as it is designed to capture the number of unique visitors while eliminating duplicate cookies.”
“Zillow groups apps and websites based on ComScore [were] The average number of unique monthly visitors in the second quarter was 116 million,” he added. “We are delighted with the progress we are making in transforming and digitizing the moving experience on behalf of buyers, sellers, tenants, agents and the wider industry.”
Wacksman said Zillow and its agent partners are ready for upcoming changes, the biggest of which is the Aug. 17 deadline to eliminate compensation for buyer’s agents in multiple listing services affiliated with real estate agents. , and require the buyer’s agent to sign a representation agreement to communicate with the buyer before showing them the home.
“Our Premier Agency partners represent some of the best and most professional agents in real estate, and we believe they are ready to share in the evolution the industry is undergoing,” he said. “We position Premier Agents as some of the best around Team…The top 20% of agent teams handle 80% of transactions, and nearly four out of five Zillow Premium Agent Partners are among the top agent partners.”
Waxman declined to predict how commissions will change after the deadline; however, he said Zillow and its agency partners have performed consistently across multiple market changes and he doesn’t expect that trend to change.
“We believe that we and our partners are huge beneficiaries of these changes that are coming to the industry. We have the most customers. We work with the best partners,” he said. “We offer the most technology and we want our premium agents to deliver and get paid because they provide a great service.”
“That’s how we see it,” he added. “This has been very consistent for some time and nothing has really changed our minds based on the latest developments that we’ve seen.”
Zillow’s stock (NASDAQ: Z ) rose after the earnings report, rising 12.52% to $47.00 per share. The company has a market capitalization of $3.47 billion.
Note: This article has been updated with comments from Zillow’s earnings call.
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