What happened
Shares of real estate technology company Zillow (Z +0.65%) (ZG +0.67%) jumped as much as 20.5% in trading on Thursday after the company reported fourth-quarter earnings. Shares held gains midday and were up 17.9% at 11:35 p.m. EST.
So what
Total revenue fell 16% to $789 million in the quarter on a 50% drop in Zillow Offers revenue. But the internet, media, and technology (IMT) segment saw a 33% jump in revenue. Net income was $46 million, versus a $101.2 million loss a year ago, driven by a more than quadrupling of income from the IMT segment.
Image source: Getty Images.
As far as outlook goes, management expects first-quarter 2021 revenue to be between $1.07 billion and $1.11 billion with adjusted EBITDA of $114 million to $138 million.
The drop in revenue was due to a reduction of home inventory coming into the fourth quarter. But after buying 1,789 homes in the fourth quarter we should see Zillow Offers revenue pick up in 2021.
Now what
There's a lot to like from this earnings report, driven by a hot housing market. Zillow's digital business continues to see both increased usage and more advertising from real estate agents. And with the Offers business starting to generate solid revenue and a gross profit of $29,547 per home, this is a growth stock that has a bright future.
