Zillow Group tops Q4 estimates with $789M in revenue as housing boom drives record traffic

Zillow Group CEO Rich Barton. (GeekWire File Photo / Kevin Lisota)

Seattle-based Zillow Group beat analyst estimates for its fourth quarter earnings, reporting $789 million in revenue and non-GAAP earnings per share of $0.44. Analysts expected revenue of $740 million and earnings per share of $0.27.

Zillow on Wednesday also announced that it will pay $500 million to acquire ShowingTime, a Chicago-based real estate company that sells software to facilitate home showings.

Zillow is benefiting from a strong U.S. housing market that gained nearly $2.5 trillion in value last year, the most since 2005, according to the company’s analysis. Median sale prices are up 13% year-over-year, and the number of homes sold is up 20%, according to Redfin data. Low mortgage rates coupled with strong demand and low supply are driving tailwinds for the real estate industry.

In March of last year, when the future of real estate was up in the air, Zillow laid out a coronavirus playbook with plans to slash expenses, freeze hiring, and cut marketing spend. But Zillow’s stock price has skyrocketed since then, trading at around $171/share on Thursday, up from $26/share in March. Zillow’s market capitalization has spiked to nearly $40 billion.

Zillow Group’s stock over the past year. (Google Finance screenshot)

After what CEO Rich Barton described as a “rollercoaster” year, the company’s annual revenue ended up increasing 22% from 2019, while overall traffic hit a record 9.6 billion page views, up 19%.

“Many Americans who had previously dreamed of moving now have the flexibility to do so, and they flocked to Zillow in record numbers,” Barton said in a statement. “We are investing aggressively in new technology and services to help them move.”

Shares were up 7% in after-hours trading Thursday following the earnings report.

In a shareholders letter, Barton said Zillow predicts an even stronger housing market in 2021, with home sales growing 21% to 6.8 million and double-digit home price appreciation.

“We are building a seamless transaction for customers to meet the desire for technology-enabled renting, buying, selling, and financing,” he said.

Traffic to Zillow’s mobile apps and websites reached a Q4 record of 201 million average monthly unique users, up 16% year-over-year. Total visits reached 2.2 million, up 27%.

Revenue from the company’s Premier Agent business last quarter was up 35% to $314 million, while revenue from the Mortgages segment was up a whopping 190% to $60.9 million.

(Via Zillow Group shareholders letter)

Zillow’s “Homes” segment, which includes its Zillow Offers home-buying and selling arm, brought in $304 million in revenue with a loss of $66.6 million before income taxes. Revenue was down 50% year-over-year for the segment due to a pause on home-buying activities earlier this year. Zillow stopped Zillow Offers as the COVID-19 outbreak began but the business is now active in all 25 markets.

The company sold 933 homes and purchased 1,789 homes, ending the quarter with 1,531 homes on its balance sheet, up from 665 last quarter.

Zillow recently added an in-house brokerage service for Zillow Offers transactions and is expanding its Zillow Closing Services product.

Overall revenue was down 16% from the year-ago quarter, mainly due to the slowdown with Zillow Offers.

Zillow Offers competes with companies such as Seattle-based Redfin and San Francisco-based Opendoor in the direct purchase and sale of homes. Opendoor shares are up since it went public in December via a SPAC deal.

Zillow, which will celebrate its 15th anniversary this month, has racked up some marketing wins over the past few months. The New York Times in December spotlighted the company as part a roundup of food, products, and other activities that people have turned to amid the pandemic. “No better way to channel your despair at having to stay home than by stalking someone else’s nicer home,” the Times quipped. It also highlighted “Zillow Surfing” in November.

“Zillow surfing has become a primary form of escapism for those who want to flee not just their homes but the reality of 2020,” wrote Taylor Lorenz.

Last weekend, the company was the subject of a viral Saturday Night Live skit that poked fun at how home-browsing on Zillow is a replacement for sex.

On the earnings call Wednesday, Barton also talked about the shift to remote work as it relates to Zillow’s own workforce. Zillow is one of many anchor tenants in downtown Seattle that are no longer providing revenue to nearby businesses as workers stay home amid the pandemic.

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