Zillow revenue exceeds expectations, bolstered by rentals
Overall revenue was up from Q1 and slightly higher year-over-year, but net losses continued to mount.
Though net losses increased, Zillow posted better-than-expected numbers in many areas — particularly revenue — during the second quarter.
The company announced it brought in $506 million, which was in the upper area of Zillow's outlook range and beat the expectations of many financial forecasters. The company's net losses, however, increased to $35 million in the second quarter; a year ago, Zillow posted a net income of $8 million.
"Zillow outperformed the broader industry for the fourth consecutive quarter as we navigate a tough real estate market," said Zillow Co-founder and CEO Rich Barton. "I'm pleased with our steady progress on improving and integrating our customer and partner experiences, especially in touring, financing, and renting."
While revenue in the residential area declined 3% year-over-year, it remained at the upper end of the company's expectations, which Zillow attributed to a higher number of connections with Premier Agents than originally forecast.
Mortgage revenue was down 17% year-over-year as elevated interest rates continued to suppress mortgage applications. Rentals revenue, on the other hand, was a bright spot, increasing 28% from last year.
Zillow's stock dropped more than $3 to $50 a share in the first few minutes of after-hours trading. The company's stock had been trading at 52-week highs in recent weeks, hitting $54.59 earlier this summer.
Key numbers
Revenue: $506 million in the second quarter, up $37 million from the previous quarter, and also up slightly compared to $504 million in Q2 2022.
Cash and cash equivalents: $3.3 billion at the end of June 2023, down slightly from $3.4 billion in the first quarter after some stock share repurchases.
Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization): $111 million for the second quarter of 2023, up from $104 million in Q1, but down 23% year-over-year.
Net income/loss: A loss of $35 million, up from a $22 million loss the previous quarter. This time last year the company reported net income of $8 million.
Traffic and visits: 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.
Notable moves
Ahead of the earnings report, Zillow announced that it had acquired Aryeo, a real estate software and content management platform. Areyo's platform, which supports photography and media businesses across the U.S., is intended to complement and enhance Zillow's ShowingTime+ suite of products.
Zillow has been investing heavily in ShowingTime+ offerings this year, adding features and expanding to new markets. This week, Listing Showcase, one of the newest subscription-based products, was made available to more agents in Seattle, San Diego, Los Angeles, Chicago and Atlanta. ShowingTime+ plans to add a few more markets in September, with more to come through the end of the year.
On August 1, the company also announced a partnership with Redfin to share new construction single-family home listings.