Technology-based brokerage and referral company ZipRealty turned a profit of $324,000 in the second quarter, as revenues grew 7 percent from a year ago to $21.7 million — the best growth pace for the company in three years.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were $1.1 million, ahead of expectations.
Growth image via Shutterstock.
In an earnings call today, ZipRealty Chief Financial Officer Eric Mersch said the company’s second-quarter performance “signals that we are entering a seminal period marked by sustained growth.”
ZipRealty has gone through extensive restructuring in recent years, including transitioning all of its agents to independent contractors, closing brokerage operations in 15 of 35 markets, and launching its “Powered by Zip” referral network.
In today’s call, ZipRealty CEO Lanny Baker said that now that the company has moved beyond restructuring, it anticipates its financial results will become “more predictable” and “stronger.”
The company expects stronger revenue growth in the second half of the year than in the first half, he said. Projections for third quarter revenue stand in the range of $20.7 million to $21.7 million, representing 5 to 10 percent growth on an annual basis. Revenue for the full year is expected to be in the range of $76.5 million to $78.5 million, reflecting mid-single-digit growth compared to revenue of $73.8 million in 2012, ZipRealty said.
The company anticipates adjusted EBITDA to range from $0.1 million to $0.5 million this quarter and to be positive for the full year.
ZipRealty said it boosted its agent count 7 percent from a year ago, to 1,611 as of June 30 — a 21 percent year over year increase. That’s the biggest jump in year-over-year agent count since late 2010, and the company expects to finish the year with more than 1,700 agents — a double-digit percentage rise compared to 2012.
The number of agents in the “Powered by Zip” network rose 119 percent on an annual basis and included agents with existing brokerage partners as well as agents with new brokerage partners.
Counting Powered by Zip, a total of 2,095 agents relied on ZipRealty’s technology platform to serve consumers in 35 markets, the company said.
Now that ZipRealty is “back on track” and “in growth mode again,” the company is ideally positioned to fuel growth of Powered By Zip, Baker said.
“Our three primary objectives within Powered by Zip are broadening the client base with additional brokerage clients, more deeply penetrating the agent bases within our existing partners, and working on our product, lead gen and marketing to bring more transaction on the PbZ platform,” he said.
Earlier this year, ZipRealty hired Xavier Zang as president of Powered by Zip to take charge of the growing network, which currently includes brokerages in 16 markets.
Ninety percent of ZipRealty’s revenue comes from its brokerage operations. Baker declined to disclose what percentage of the company’s overall revenue Powered by Zip comprises, but said it was a component of the 10 percent of second-quarter revenue that did not come from brokerage operations. Other components of non-brokerage revenue were revenue from marketing alliances and advertising services.
“We’ve grown Powered by Zip from idea to a multimillion dollar business,” Baker said.
The transaction revenue generated by ZipRealty’s owned and operated brokerages rose by 5 percent on an annual basis — the highest growth rate since second-quarter 2010. The company’s Powered by Zip revenue grew 29 percent year over year.
In terms of closed transaction volume, Powered by Zip is about one tenth the size of the brokerage business, Baker said: $78 million vs. $781 million.
A record 20 percent of the company’s transaction volume was on the seller side in the second quarter, partially due to low inventory and short days on market prompting more sellers to list, Baker said.
In a bid to attract more listings, in June ZipRealty launched a “Seller Center” that provides property value estimates and a tool for identifying comparable sales, and offers to connect sellers to an agent who can help them refine their asking price and develop a marketing strategy. Baker said the company expects to continue to build out a “full-featured seller experience.”
“In the long term we think this business ought to be balanced pretty evenly between buyer and seller,” he added.
Total unique visitors to ZipRealty’s website and mobile applications grew 13 percent year-over-year last quarter, to a monthly average of 2.8 million consumers, the company said.
On an annual basis, the company’s new registered users rose 37 percent and leads per agent rose 17 percent, ZipRealty said.