The release of the Q2 earnings data for Trulia excited investors and added over half a billion dollars to the value of the combined market cap of Zillow and Trulia. As seen in the stock chart below Trulia shares shot up to peak up 30% on the day with Zillow benefiting being pulled up 10% on the news.
The market cap of these companies now sits at just below US$3 billion for Zillow and just below US$1.5 billion for Trulia. Over the past 12 months these companies have seen their stock price double after some negative outlooks expressed in the fall of last year.
So what within the latest earnings figures excited analysts to see this strong surge? Here are the key performance indicators:
In terms of audience Trulia is driving consumer usage on both the desktop and mobile platforms. Average monthly unique visitors were up 49% in the quarter to 34.9 million with an average over the first half of the year up 50%.
The mobile component of traffic is particularly strong and growing the fastest. In the quarter mobile was up 100% over the prior year with 13 million unique visitors a month. Over the first half of the year mobile traffic is up 110% over the first half of 2012.
In revenue terms the business growth is strong with Q2 revenue of $29.7m up 77% on the same quarter of 2012. Within the revenue the main growth is coming from agents with marketplace revenue of $20.9m representing 70% of revenue and growing faster than media revenue which only grew by 55% in the year to fall from 35% of the total revenue last year to 30% this year.
This increase in the representation of agent revenue as opposed to media revenue is key to the future of the portal business. Media earnings whilst always a good earnings platform does not hold as much opportunity as the advertising opportunity of over a million agents in the US and their marketing needs.
Looking at the ability of company to drive this agent revenue is best assessed in the ARPU figure. This is a similar metric to the ARPA figure of comparable portals, the key difference is the US portals are addressing the revenue of individual sales agents as opposed to the international portals addressing the revenue of real estate offices.
The ARPU for Trulia at US$194 per month in the Q2 period was up a very strong 31% on the prior year which combined with the 49% increase in the marketplace base of paying users speaks to the analysts confidence to mark the stock higher.
However the true measure of the stock’s worth is in the earnings and the EBIDTA – Q2 showed a strong and positive movement in EBIDTA despite the net income remaining in the red. Earnings of $3.4m at EBIDTA was up on a negative $1.8m a year ago. In terms of EBIDTA % performance the Q2 figure of 11% is a strong year on year improvement, however has a long way to go to approach the level of Rightmove delivering 73% EBIDTA in their first half results for 2013.