Zillow has announced its results for the first quarter of 2021 with the Californian company exceeding its own revenue predictions for its advertising, iBuying and mortgage business segments over the period as it takes advantage of favourable market conditions on its journey towards the housing transaction.
Company revenue for the quarter was up by 8.3% year-on-year to $1.2 billion and adjusted EBITDA rose significantly from a pandemic hit Q1 of FY20 of $5.1 million to $181 million in FY21.
The results come as iBuying has started to pick up again stateside after a pandemic induced slowdown and as Zillow's mortgages and advertising businesses continue to see gains with traffic to the company's websites and mobile apps up 15% year on year, reaching 221 million monthly unique users. All of this is underpinned by a US housing market which is the midst of what Zillow CEO Rich Barton has termed "the great reshuffling".
Zillow's Homes segment which includes its iBuying operations generated $704 million which, although down from its pre-pandemic peak of $769 million in Q1 of 2020, is a significant ramp-up from the $187 million generated in Q3 of 2020. Zillow bought 1,856 homes in the quarter and sold 1,965 and although the segment is still not profitable, the company marked a milestone in the segment by tying its famous Zestimate value estimation tool to its iBuying Offers service. The improvement in segment EBITDA was attributed to house price appreciation in the markets in which Zillow is selling homes while those all-important operating costs rose slightly on Q4 numbers.
Zillow's core advertising business (IMT) which includes its premium portal listing service Premier Agent, saw big gains on the quarter with the $446 million in revenue generated representing a 35% year-on-year gain. The EBITDA figure of $209 was also a record for any quarter for the company and driven by Premier Agent sign-ups which, according to a company statement, "grew faster than traffic" despite the fear and suspicion generated amongst the realtor community when Zillow agreed to by viewing appointment scheduling platform ShowingTime for $500m.
Elsewhere in the IMT section, there was strong growth for Zillow's technology solutions business which saw a 26% uptick as agents looked to adapt their businesses to new realities. There was also strong demand in the hotly contested and more fragmented rentals sector which saw a 46% revenue increase in the quarter.
The mortgage business appears to be on solid ground as well and recorded its 4th straight EBITDA positive quarter fuelled by a big rise in refinancing which made up 90% of the business throughout Q1.
Like many tech stocks, Zillow's value has seen a pullback in recent weeks after reaching highs of $200 per share in February. Although the path to profitability for its iBuying business may appear shrouded for the moment and it will have to deal with a well-backed rival entering its residential space in the form of CoStar, Zillow continues to travel down the path towards becoming a one-stop-shop for all real estate needs in the United States. The company is clearly taking the long view and according to quotes from CEO Rich Barton today, Zillow has "just begun to scratch the surface of what is possible."