Zillow Group has released a report around its Q4 and full-year financials which will make for happy reading among its shareholders as shares in the company soared to over $190 in after-hours trading. Headline numbers from yesterday afternoon's report include:
Zillow's popularity among Americans looking for a new home is increasing on the back of pandemic-induced socio-economic trends as well as references to the company in popular culture, such as Saturday Night Live's recent skit, and the increased traffic is generating revenue from the company's IMT (marketing) and mortgage segments. Revenue from Zillow's core agent marketing product was up 35% on the quarter and revenue from rentals, new build, transaction and data services was up 27% as the core of Zillow's business rode the housing boom.
This trend is predicted to endure in 2021 and CEO Rich Barton said that his company is investing now (including the announcement of the $500 million acquisition of ShowingTime) to take advantage of the positive market tailwinds:
“Many Americans who had previously dreamed of moving now have the flexibility to do so, and they flocked to Zillow in record numbers. We are investing aggressively in new technology and services to help them move. Our customers are hungry for the kind of seamless experience that we can now provide at Zillow, and we are poised to capitalize on our strong position in 2021.”
Part of the reason for such strong numbers on Zillow's balance sheet was that its loss-making iBuying operations were heavily affected by COVID-19 across the year. Although the number of houses Zillow bought ramped up in the latter part of the fourth quarter to 2019 levels revenue generated was down 50%. Subdued levels of iBuying across the year meant that the company's balance sheet for 2020 reflected the same $241 million loss for the Homes segment as it did in 2019. While Zillow and others such as OpenDoor look to tackle the challenge of how to make iBuying profitable, the reduced volumes they are able to take on will mean healthier financials, especially for a diverse business such as Zillow's.
It is no secret that, like many portal companies, Zillow is trying to get into services adjacent to the real estate transaction itself. Company bosses will have been encouraged by the performance of the firm's mortgage segment which went from making a $23 million loss in 2019 to a $13 million gain in 2020. Also encouraging will have been the performance of Zillow's title and escrow services which generated revenue of $480,000 across 2020 with more than 50% of that coming in a fourth-quarter which bodes well for the segment going into 2021.