Zillow Group (Z 2.15%) (ZG 2.22%), the leading online real estate marketplace, reported first-quarter adjusted earnings that topped its estimates, though the company trimmed its outlook for second-quarter sales amid a housing market slowdown.
Adjusted EBITDA (earning before interest, taxes, depreciation, and amortization) of $125 million in the quarter exceeded the company's estimate by $25 million, Zillow said yesterday. In the year-ago period, EBITDA was $104 million. Revenue of $529 million topped analyst estimates of $508 million, according to FactSet.
However, the company, which has not reported a profit since the 2022 second quarter, posted a net loss of $23 million, or earnings per share (EPS) of $0.10, compared with a net loss of $22 million, or $0.9, in the year-earlier period.
The company also reduced its second-quarter sales estimate to between $525 million and $540 million, short of the average analyst estimate of $559 million, according to Yahoo Finance. The shares fell as much as 8% and ended the day down 4.8%.
| Metric | Q1 2024 Results | Analyst Estimates | Q1 2023 Results | Year-over-Year Change |
|---|---|---|---|---|
| Revenue | $529 million | $508.63 million | $469 million | 13% |
| Adjusted EBITDA | $125 million | N/A | $104 million | 20.2% |
| Net Loss | $(23) million | N/A | $(22) million | -4.5% |
| Residential Revenue | $393 million | N/A | $361 million | 9% |
| Rentals Revenue | $97 million | N/A | $74 million | 31% |
Data source: Company results from company. Analyst estimates from FactSet.
About Zillow
Zillow relies on its digital platform to simplify real estate transactions. Its large database and tools like the Zestimate have made it a favorite among both buyers and sellers. The company aspires to build a housing app that centralizes all real estate needs.
NASDAQ: Z
Key Data Points
But the company has struggled since it shut a venture known as iBuying, in which it would buy, fix up, and resale homes. The results were disappointing, costing the company hundreds of million of dollars. The company said in late 2021 it would exist the business, cutting about a quarter of its staff. Since peaking in February 2021, the shares have declined roughly 80%.
Quarter highlights
This quarter, Zillow showcased growth in its core segments, particularly residential and rentals, which reported revenue increases of 9% and 31% respectively. Despite a reported net loss, the company's operational efficiency, as evidenced by its adjusted EBITDA performance, underscores a potential path to profitability.
Investments in technology and partnerships underscored the quarter. The partnership with Redfin, the launch of ShowingTime+, and the implementation of AI-driven tools like ChatGPT for searches have enhanced platform capabilities and user experience.
However, the quarter also presented challenges, primarily reflected in the company's net loss. Zillow has tried to adjust in the face of an unpredictable real estate market, most notably in its decision to exit the iBuying venture. Legal and regulatory issues also remain as ongoing challenge.
Looking forward
Zillow's executive team expressed confidence in the company's strategic direction and technological investments. Emphasis on expanding its housing app's capabilities and acquisitions set the stage for sustained growth and market leadership.
Investors are encouraged to monitor Zillow's advancements in technology, market expansion efforts, and regulatory challenges.
