Zillow Continues its 'Year of Execution' with Positive Q2 Revenue

August 3, 2023
Share this Post: 

The US real estate portal giant Zillow has released its results for the second quarter of its 2023 financial calendar. Notable points from the company's operations for the period ended June 30th include:

  • Revenue stood at $506 million, above the midpoint of the company’s outlook range by $41 million.
  • Adjusted EBITDA was $111 million, above the midpoint of company expectations by $40 million. Net loss was $35 million for the quarter.
  • Traffic to Zillow Group’s mobile apps and websites in Q2 was 226 million average monthly unique users, down 3% year over
    year. Visits during Q2 were 2.7 billion, down 8% year over year.

Zillow's letter to investors sounded a positive note, pointing out that the company had outperformed a weak US housing market by 1900 basis points with Rich Barton reiterating that the company's residential revenue has outperformed the market for four straight quarters.

"We’re navigating well through a tough housing macro environment that is not in our control, maintaining our focus on what we can control: Steady progress across our growth pillars and prudent cost management, as we work towards driving profitable growth for our business."

As well as the relatively strong performance in its flagship Premier Agent residential segment, Zillow also saw revenue from its rentals segment increase 28% year-on-year to $91 million. The US rentals market has not been nearly as sluggish as the sales market and Zillow's rival CoStar saw a 23% bump in its Multifamily rentals business segment during the same period.

While CoStar remains the dominant force in so-called 'multifamily' apartment rentals, Zillow claims to have regained top spot in the single-family landlord segment.

As for traffic, Zillow said that visits during Q2 were 2.7 billion, down 8% year over year.

Although CoStar has highlighted the traffic performance of its residential network of portals sites (which includes Homes.com and Apartments.com) in recent market updates and now claims to be the number two overall player, Zillow is unlikely to be too worried by its rival's growth just yet.

The Seattle-based company claims that in Q2 80% of its traffic was direct branded traffic and nearly half of all visits came from its app.

Zillow's Mortgages segment saw 73% growth year-on-year in loan origination volume. The segment has historically been unprofitable with the company having ceased reporting its Adjusted EBITDA as of Q1.

The company remains committed to further embedding mortgages into the user experience in its so-called 'enhanced markets' where it is experimenting with different models. Barton noted that his company is seeing roughly one in three Premier Agent partners in the enhanced markets connect customers to Zillow Home Loans, up from roughly one in five at the end of last year.

Among several notable operational updates from Q2 including a new CFO and the launch of a paid enhanced listings service, Q2 also saw Zillow dip into the M&A market with the acquisition of Aryeo. The Boston-based company offers an online platform for managing real estate marketing media and will be integrated into Zillow's agent-facing ShowingTime+ division.

With acquisitions such as that of Aryeo, and its growing partnership with iBuyer Opendoor (now available in 25 regional markets) Zillow is continuing its journey towards its stated goal of growing the share of customer transactions from 3% to 6% by the end of 2025 via its integrated 'super app'. Barton took the opportunity to re-state the theory behind the company's big gamble:

"Our big strategic bet with the super app is that customers and partners alike want and need a much more digital, convenient and integrated housing transaction, and that Zillow is likely the only company in the industry with the technical skills, audience reach, and partner network to pull it off. We are clearly making progress on this long-runway growth strategy."

Zillow shares dipped in value initially in after-hours trading before rallying to stand at around $53 at the time of writing. The company's share price has grown consistently from just above $30 at the beginning of the year but is still a very long way down on the high point of over $200 per share in February 2021.

August 3, 2023
Since March 2020 Edmund's job has been to read about, write about, collect data on, analyse and generally know about real estate marketplaces and the companies that run them. Before that he worked at the aggregator Mitula Group (which became Lifull Connect) for five years.

Subscribe to our mailing list to get the famous, free Friday newsletter!

News and analysis to help build better online marketplace businesses, in your inbox, every Friday

Related News

Dutch Houses Netherlands
Mediahuis Shuts Dutch Portal Jaap Citing Fierce Competition

The Dutch real estate portal Jaap quietly shut down earlier this year after seeing its profits evaporate in the face...

Read More
Costar Vs Zillow Cowboys
CoStar's Homes.com May Not Need to Win Traffic Game to Out-Earn Zillow

It might be growing fast (and shouting about it) but CoStar-owned US  challenger real estate portal Homes.com is still a...

Read More
Untitled Design 10 1
Schibsted Successfully Detaches Media Business, Leaving Standalone Marketplaces Segment

The Norwegian media and marketplace operator Schibsted has had a busy month, with transactions worth approximately NOK 50 billion ($4.7...

Read More
Idealista Cinven
Private Equity Firm Cinven Takes the Lead in €3Bn Idealista Tug-Of-War

London-based, private equity firm Cinven has reportedly signed an exclusivity agreement to acquire Idealista for an estimated €3 billion. The...

Read More

Editor's Pick