The Seattle-based real estate tech giant also reported an overall net loss of $71.9 million in the second quarter of 2019.

Real estate technology giant Zillow on Wednesday reported $599.6 million in revenue, an increase of 84 percent, year-over-year. The company also reported an overall net loss of $71.9 million in the second quarter of 2019, an increase from the $3 million net loss it posted in the second quarter of 2018.

The company beat expectations of $585 million in revenue, according to financial resources firm Zacks. It also beat expectations on a per-share basis, reporting an adjusted $0.35 loss per share vs. the consensus estimate of a $0.38 loss per share.

“Our second-quarter results reflect the momentum we are seeing across our businesses,” Rich Barton, co-founder and CEO of Zillow Group, said in a statement. “The demand signal for Zillow Offers is incredibly impressive as seen in the annualized revenue run rate going from zero to $1 billion in just a year.”

Zillow has seen its losses balloon this year – it posted a $67.5 million net loss in the first quarter – as it moves towards scaling its Zillow Homes segment, a much more capital-intensive business of buying and selling homes.

Zillow Homes – the segment of the business under which Zillow Offers, the company’s home buying and selling platform exists – generated $248.9 million in revenue, nearly double last quarter’s revenue of $128.5 million. That segment of the business operated at net loss of $56.5 million, before interest, taxes, depreciation, and amortization in the second quarter.

Since launching Zillow Offers in April 2018, more than 170,000 homeowners have requested an offer through the program. In the second quarter alone, there were 70,000 requests.

Zillow reported that it made $1,578 on each home it sold in the second quarter before interest expenses are calculated. After interest expenses, the company, on average, lost $2,916 per home. Barton believes that, eventually, the company will earn 400-500 basis points of return before interest expenses on homes it sells.

It’s an improvement, however, over the company’s first-quarter numbers, where it lost, on average, $3,268 per home it sold, after interest expenses.

“Over time, our unit economics should benefit more from other adjacent services, like mortgage origination, title and escrow,” Barton said in a letter to shareholders. “We expect to be able to leverage these services to support Zillow Offers and improve the consumer’s overall transaction experience, while also generating cost savings for Zillow and our customers.”

Zillow also announced today that its Zillow Offers platform will be coming to Cincinnati, Jacksonville, Oklahoma City and Tucson, bringing it to a total of 26 markets in 2020.

Graphic credit: Zillow

“It’s been incredible to watch demand for Zillow Offers continue to exceed our expectations,” Zillow Brand President Jeremy Wacksman said in a statement. “Homeowners in these four additional cities will soon have another option when it comes to selling their home – with a cash offer from Zillow, they can sell with more control and certainty, on their timeline. It’s all part of the seamless, tech-enabled experience that we’re building for home buyers and sellers across the country.”

The platform is currently live in 15 markets and has previously announced plans to launch in Austin, Los Angeles, Miami, Sacramento, San Antonio, San Diego and Tampa.

Zillow’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, reported $323.7 million in revenue in the second quarter, up from last quarter’s $298.3 million.

The company also announced it’s taking its flex pricing model – where agents pay a portion of their commission to Zillow for leads they close on from Zillow – to Phoenix and Atlanta, both Zillow Offers markets, in the fourth quarter of 2019. Flex pricing will replace the current Premier Agent – where agents pay upfront for a share of leads based on their ZIP code – model in those markets.

The fee that agents pay is roughly 35 percent, the industry average, according to Greg Schwartz, president of media and marketplace, but the platform is still in the testing phase, so they haven’t settled on a number.

Zillow executives, on an earnings call, said the goal was to get better lead distribution to better agents – which works in conjunction with the ‘Best of Zillow’ platform – which creates a better experience for the consumer and overall drives more transactions through Premier Agent.

Premier Agent alone accounted for $232 million of the segment’s revenue. After experiencing greater-than-expected advertiser churn in the past year, Barton reported that advertiser retention has returned back to historic norms for the company.

“Our Premier Agent business is performing well, and our partnerships with the highest performing and most client-focused agents position us well to deliver a truly seamless transaction experience for home buyers and sellers,” Barton said. “We’re in the early stages of a bold expansion of our company that opens up exciting opportunities for our customers, partners, shareholders and employees.”

In after-market trading the company’s stock had dropped $6 – or roughly 12 percent – to $43.75 at 4:50 p.m.

Developing…

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