The Zillow Group has released its consolidated financial results for the quarter and full year ended December 31, 2015. While full year revenues were up 18% (on a pro forma basis) versus the previous year, it is the Q4 numbers that would have management a little concerned with revenues up just 7% (on a pro forma basis) over the previous year. Underlying this decrease in revenue growth was a decrease in display advertising revenues as the company changed its focus to market place revenues.
On a pro forma, both the net loss and Adjusted EBITDA moved in the wrong direction in Q4 when compared to the previous Q4. The net loss was USD 25.1 m compared to USD 11.3 m in the previous corresponding period. The Adjusted EBITDA decreased from USD 34.8 m in Q4 2014 to USD 20.4 m in Q4 2015. On an annual basis, there was an improvement in both the net loss and Adjusted EBITDA when looking at 2014 vs 2015.
On the non financial KPI side, the Group averaged 124 m visitors per month, up 61% over the previous corresponding period. Finally, ARPA averaged $438/month for the quarter, up 29% from $339 compared to the same period last year.
The bottom line is that, from a financial perspective, Q4 was not a great quarter for Zillow and may be an early indicator of a slowing in the business perhaps caused by the increased competition it is receiving from the News Corp owned Move.com.
The market agrees with Zillow Group shares trading down from a high of USD 19.79 the day before the announcement to a current price of USD 17.67.
Pro forma results exclude some items and assume the February 2015 acquisition of Trulia occurred on January 1, 2014, the beginning of the comparable prior year reporting period.
Here are the Q4 and Full Year Financial Highlights ...
Fourth Quarter 2015 Financial Highlights
Throughout this release, financial results are presented on both a reported and pro forma basis. Reported results were prepared in accordance with generally accepted accounting principles (GAAP) unless otherwise noted.
During the fourth quarter, nearly 124 million average monthly unique users visited Zillow Group consumer brands Zillow, Trulia, StreetEasy and HotPads, up 61% year over year. According to comScore, Zillow Group brands now represent approximately 70% market share of all mobile exclusive visitors to the category.
Zillow Group is benefitting from the combined audience scale of having several of the largest mobile and online real estate brands under one roof. Since January 2015, nearly 400 MLSs have signed agreements to send listings directly to Zillow and Trulia, providing their members access to the largest audience of home shoppers on mobile and Web.
On February 3, 2016, Zillow Group announced the planned acquisition of Naked Apartments, New York City's leading rentals-only platform, for $13 million in cash. The acquisition aligns with the company's strategic goals, extending Zillow Group's hyper-local market leadership in one of the largest and most important real estate markets in the world. The deal is expected to close in February 2016.
In the fourth quarter, Zillow Group's average monthly revenue per advertiser, or ARPA, was $438, up 29% from $339 compared to the same period last year on a pro forma basis. The increase in ARPA was primarily driven by high-performing agents buying more advertising inventory from us rather than by increasing the price for existing advertising inventory.
Zillow Group's agent advertisers totaled 92,366 as of December 31, 2015. The current advertiser count reflects the company's continued strategic focus on growing participation by high-performing agents who provide a superior consumer experience.