Zillow's Share Price Jumps 8% on Strength of Q3 Numbers

The market reacted very favorably to yesterday’s earnings report from US real estate giant Zillow. Consolidated revenues for the quarter totalled $657 million and exceeded even high-end expectations leading to an 8% jump in share price in extended trading yesterday as the market reacted to earnings that the company believes can be sustained in the medium to long term.

“We believe these tailwinds are durable, supported by low-interest rates and demographic shifts” Zillow CEO Rich Barton.

Despite the continued gamble that is Zillow’s iBuying division losing some $76 million, quarterly EBITDA for the group was up at $152 million largely driven by the so-called IMT segment (which includes Zillow’s main Premier Agent advertising business), earnings from which were up 24% year on year to $140 million.

The much hyped ‘Zillow Homes’ iBuying business segment, which made national news when it controversially employed its own agents to sell houses back in September, has been ramping up its activity since a full shut down in March but is still lagging behind activity levels from 2019 with revenue down 51%. The reduction of loss-making iBuying activity here was the main reason for the company posting a profitable quarter with $40 million in consolidated net income.

As for traffic and engagement metrics, Zillow’s figures here reflected fellow market-leading portal company REA Group’s in showing significant growth buoyed by the post lockdown property boom seen in many markets around the world. Monthly unique users reached a record 236 million across the company’s website and mobile apps, representing growth of 36% year on year.

Looking ahead to 2021, Zillow will be hoping to make efficiency gains in its iBuying business to get closer to profitability and for the strength of its core adverting business to ride out any potential election or covid related market turbulence. Barton though believes that conditions remain favourable and that societal change will continue to drive housing demand:

"Many of us are re-evaluating where we live and how we live, which has kicked off a Great Reshuffling, and we need safe, digital ways to get to a better place. Given the duration of this pandemic, the concrete is setting on new digital solutions for life and work. This is driving record demand for housing and record engagement with Zillow's leading digital real estate brands. When combined with level-headed cost decisions, the result has been profitable growth."