The coverage of Zillow’s latest results is fantastically uninspiring. Lots of big numbers, devoid of context. But when the dots are connected they reveal a rich story about the business’s evolution to Zillow 2.0.

This story was republished with permission from the author.

The coverage of Zillow’s latest results is fantastically uninspiring. Lots of big numbers, devoid of context. But when the dots are connected they reveal a rich story about the business’s evolution to Zillow 2.0.

Perhaps most impressively, Zillow just had its third consecutive profitable quarter. For a business that’s basically operated at a net loss since inception, this is a noteworthy achievement.

The move toward profitability is driven by Zillow’s premier agent program — the engine room of the company — which is firing on all cylinders and back to impressive growth (fueled by record-breaking demand during the pandemic).

On an absolute revenue basis, Zillow’s premier agent program has set a succession of all-time record quarters for the past 12 months. Zillow is generating more money from its premier agent program than ever before, which is especially noteworthy after the program ground to a halt in early 2019.

Zillow’s iBuyer business is back to growth mode, purchasing and selling houses at pre-pandemic levels and still operating at a loss. But the net loss per home has dropped to its lowest level yet, a reflection of improving economics at scale.

Last week, I looked at the ecosystem disruption in mortgage and how global leaders Zillow and REA Group have spent hundreds of millions of dollars expanding into mortgage through the acquisition of broker-heavy, 20-year-old traditional businesses — and not technology companies.

Zillow’s mortgage business continues to grow, but it’s being driven by refinancing (90 percent) — not new purchase (10 percent) — business. To fully believe the one-stop-shop Zillow 2.0 narrative, new purchase volumes should grow in the future.

But while overall mortgage revenues increased, the business remains unprofitable. This is another sign that mortgage is hard, difficult to scale profitably, and tough to “reinvent” with technology. Like the Zillow Offers business, Zillow Mortgage appears to be another high revenue, low margin operation.

The evidence reveals a business — in my humble opinion — that is still in the early innings of reinventing real estate. Zillow is clearly benefiting from the current red-hot real estate market, with its Premier Agent program leading the charge and funding the evolution to Zillow 2.0.

But the promise of new adjacent services is still an aspirational goal. The various pieces are being built, but they still need to be assembled in a credible way that reinvents the transaction at a meaningful scale. Momentum is on its side, and Zillow’s evolution continues.

Mike DelPrete is a strategic adviser and global expert in real estate tech, including Zavvie, an iBuyer offer aggregator. Connect with him on LinkedIn.

iBuyers | mortgages | Zillow
Show Comments Hide Comments

Comments

Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Success!
Thank you for subscribing to Morning Headlines.
Back to top
×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription