In its first quarter 2019 earnings report released on Thursday, Seattle-based Zillow Group, the operator of listing portals Zillow, Trulia, StreetEasy and RealEstate.com, posted a net loss of $67.5 million in the first quarter and announced the expansion of its iBuyer program Zillow Offers to six additional markets.
That net loss is nearly three times higher than it was in first-quarter 2018 (up 263 percent), when the company posted an $18.6 million net loss.
The company’s first quarter revenue rose 51 percent year over year, to $454.1 million, beating Zillow’s own projections that it would bring in between $417 million and $443 million for the period. Revenue also beat the Zacks Consensus Estimate of $431.58 million.
Investors seemed pleased with the growth. As of 6:43pm Eastern Thursday, Zillow’s stock had risen 17.6 percent in after-hours trading to $40.31 a share.
“We delivered strong first quarter results that met or exceeded our own expectations in all segments as our plan to streamline the real estate transaction comes together,” said Rich Barton, co-founder and CEO of Zillow Group, in a statement.
“The Zillow Group portfolio is more than just the sum of our business segments. We are aligning our entire portfolio to deliver a seamless, integrated transaction experience to help today’s on-demand consumers buy, sell, rent and finance homes faster and easier than ever before.”
The revenue growth was driven by demand for Zillow Offers, which has attracted more than 100,000 offer requests from sellers since launch and is now up to one request every two minutes, compared to one request every five minutes in Q4, the company said.
“It’s still early days, but Zillow Offers is working,” Barton told investors in an earnings call Thursday afternoon.
Zillow’s “new mission” is to “transform the [real estate] transaction” and create “one integrated transaction experience,” he added.
Zillow sold 414 homes in the first three months of 2019, nearly twice as many as in the the last three months of 2018. The company bought 898 homes in the first quarter, up 80 percent from the fourth quarter, and had a total of 993 homes in inventory at the end of March.
“Every month we’re going to buy more homes than we sell. You’ll see that total inventory balance grow as we’re continuing to push for scale,” said Jeremy Wacksman, Zillow brand president and co-head of Zillow Offers, during the investor call.
Zillow Offers brought in $128.5 million in revenue for Zillow’s “Homes” segment, beating the company’s expectations of bringing in between $100 million and $115 million.
The average fee Zillow charged sellers for its Offers service was 7 percent in the first quarter, same as in the fourth quarter. Barton said the company is currently pricing homes to break even as it scales up the Offers business.
The company’s Internet, Media & Technology segment, which includes its Premier Agent advertising program as well as rental, new construction and display ads and its dotloop transaction management platform, posted $298.3 million in revenue in the first quarter, up 6 percent year over year.
Premier Agent revenue accounted for $217.7 million of that, up 2 percent from first-quarter 2018, and in line with the company’s expectations that Premier Agent would bring in between $215 million and $220 million in revenue first-quarter 2019.
Premier Agent revenue, which has long accounted for around 70 percent of the company’s overall revenue, fell to 47.9 percent of revenue in Q1. This is largely due to growth in the Homes segment as well as some growth in the Mortgages segment, which brought in $27.4 million in revenue last quarter, up 44 percent from Q1 2018.
After some increased agent turnover following changes in the Premier Agent program that were later reversed, the company said the program “is stabilizing and churn is returning to historical levels.”
The company’s revenue expectations stand between $568 million and $594 million for second-quarter 2019. Zillow Group did not provide a revenue forecast for full-year 2019. The company also did not provide a forecast of its expected profit or loss in the second quarter or in all of 2019.
Zillow Group expects its Premier Agent program to bring in between $228 million and $233 million in revenue second-quarter 2019 and between $910 million and $930 million for all of 2019.
Meanwhile, Zillow expects its Homes segment to bring in between $230 million and $245 million in revenue in second-quarter 2019 — potentially even or higher than its Premier Agent revenue. The company did not forecast full-year revenue for the segment.
Zillow Group also reported that traffic to its mobile apps and websites reached more than 181 million average monthly unique users in the first quarter, up 3 percent year over year.
The company ended the first quarter with 4,514 full-time employees, according to a letter to shareholders.
Editor’s note: This story has been updated.