Zillow continues to outperform industry, beat expectations
Revenue was up 13% in Q2, and the company — now with a new CEO — said it's in a strong position: “We have the most customers, we work with the best partners."
Zillow seems to be on an overachiever streak, again reporting better-than-expected revenue for the quarter, with solid growth in residential and a 29% increase in rentals revenue.
The company expects multifamily rentals — which was up 44% year-over-year — to be the primary driver of its overall rental growth. The mortgage division also performed well, posting a 42% annual revenue gain. Despite the increase in revenue, Zillow reported a net loss for the quarter, though losses have been improving.
In addition to the earnings report, the company shared some big leadership news, announcing that former COO Jeremy Wacksman was moving into the CEO role. Co-founder and former CEO Rich Barton will remain on the board and serve as co-executive chairman with Lloyd Frink.
In the first two hours of after-hours trading, Zillow's stock was up 12.7% as investors digested the leadership change and earnings news.
What Zillow had to say
During the earnings call, Barton said that from a company perspective, this was the right time to make a leadership transition because Zillow's performance has been strong.
"It's incredibly impressive to me how well we are executing as a company despite all of the kind of stormy weather that constitutes the real estate macro," Barton said. He added that on a personal level, he was looking forward to shifting from his role of "daily field general" to that of coach and advisor.
Wacksman also highlighted the company's largely positive results, noting that Zillow outperformed the residential real estate industry for the eighth consecutive quarter and is "well positioned to capture more of our total addressable market and help more people get a home."
Chief Financial Officer Jeremy Hofmann addressed the industry practice changes taking effect on August 17, saying the company expects to be an outsized beneficiary of the changes.
"We have the most customers, we work with the best partners," Hofmann said, adding that he's confident Premier Agents will continue to get paid because they provide a great service.
For his part, Barton expressed nothing but optimism for the future: "There is a ton of clean water in front of the company, lots of opportunities. Maybe the wind will change direction and come behind us one of these days, but we certainly don't need it," he said in his closing remarks.
Key numbers
Revenue: $572 million for the quarter, which was up 13% year-over-year and above the outlook range by $39 million.
Cash and investments: $2.6 billion, down from $2.9 billion at the end of Q1 2024.
Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization): $134 million in Q2, up from $125 million in the previous quarter. The most recent EBITDA represents 23% of total revenue.
Net income/loss: A net loss of $17 million in Q2, which was an improvement from the $23 million loss in the previous quarter and up from a net loss of $35 million a year ago.
Traffic and visits: Traffic across all Zillow Group websites and apps totaled 231 million average monthly unique users, which remained flat year-over-year, the company said. Total visits were 2.5 billion, which increased 4% year-over-year.
Notable moves
In June, Zillow reached a settlement agreement with MLS Aligned, the Arizona Regional MLS and Metro MLS in a lawsuit filed by the home search giant in December. Zillow had accused the MLSs of being anticompetitive when they opted to remove Zillow Group's ShowingTime product in favor of a proprietary touring platform.
Per the settlement, which was finalized on August 2, the MLSs will again offer their subscribers the option to use ShowingTime.
Zillow also announced a new version of its touring agreement this month, which the company says it will be rolling out in 24 states. An earlier version of the non-exclusive agreement was unveiled in April.