Zillow saw its revenue jump 250 percent during the first three months of 2022, helping the company reverse the losses of the previous quarter and turn a profit, even as it described the market outlook as “choppy.”
The company’s latest earnings report, published Thursday after markets closed, showed that in total Zillow earned $4.3 billion in revenue between January and March. That’s a major jump from the $1.2 billion in revenue the company earned during the same period in 2021.
The report also shows that Zillow made a profit of $16 million during the first quarter of 2022. That’s down from a profit of $52 million during the opening months of last year, but it is still a reversal from the final quarter of 2021 when the company lost $261 million.
Zillow’s Homes segment, which is the arm of the business that includes iBuyer Zillow Offers, brought in $3.7 billion in revenue, up from $704 million one year prior. The Homes segment also lost $68 million, a slight increase from the $58 million it lost during the first quarter of 2021. However, the most recent quarter’s iBuying losses are a marked improvement from the final quarter of 2021, when Zillow lost $342 million on its Homes segment.
Zillow announced last fall that it would get out of the iBuying business. Ever since, the company has been working to sell off its remaining inventory of homes. A shareholder letter, published Thursday, shows that the Zillow Offers wind-down is still underway, with the company finishing the quarter with about 1,300 homes in its inventory. Zillow sold 8,891 homes during the quarter and bought 231 — though purchases concluded on Jan. 31.
The letter notes that during the first quarter “we experienced higher home resale prices than we previously expected.”
Significantly, the letter also reveals that since the quarter ended, Zillow has either sold or entered contracts to sell most of its remaining homes, with only about 100 now left. The company believes most of the remaining homes will be sold by the end of the current quarter — meaning Zillow Offers has now truly entered its final days.
Zillow overall struck an upbeat tone in the report, with CEO Rich Barton saying that “today’s first-quarter results, together with our strong brand, audience, and balance sheet, demonstrate how well-positioned and prepared Zillow is to forge ahead.” However, Barton also said the “the housing market outlook may be choppy in the near term” and indicated there could be challenges on the horizon.
Rich Barton | Photo credit: Zillow Group
“While mindful of macro challenges,” Barton said, “our eyes are focused on the future as we develop new products and services that bring us closer to realizing the housing super app vision of delivering an integrated end-to-end experience for our customers and partners.”
Barton made a similar reference to a “super app” during Zillow’s previous earnings report in February, saying the goal is to create an “integrated digital experience in which Zillow brings together” the various pieces of a real estate transaction. Since the demise of Zillow Offers, such efforts have come to represent the company’s pivot to find new growth opportunities as part of its “Zillow 2.0” project — for which iBuying had originally been a major part of the equation.
In a call with investors Thursday afternoon, Barton further explained that the goal going forward is to increase engagement from users, increase transactions and increase the revenue it earns from transactions, among other things. Specific areas of focus to achieve those goals will be expanding seller services, enhancing the company’s partner network with real estate agents, beefing up its ancillary service offerings and focusing on making it easier for consumers to tour homes.
“We believe touring is the key point of sale in real estate,” Barton said.
Going into Thursday’s report, Zillow’s stock was trading at just above $39 per share, which was down compared to recent days and weeks. Zillow stock hit an all-time high last February, when shares briefly surpassed $200. However, like many real estate companies, Zillow’s share price has since been declining.
Zillow’s stock fell sharply in after hours trading following the publication of Thursday’s earnings report, ultimately setting at around $35.30 per share.
Credit: Google
Zillow had a market cap of just under $10 billion as of Thursday afternoon.
In addition to revenue and profit numbers, Thursday’s earnings report also revealed that Zillow had on average 211 million unique monthly visitors to its websites and mobile apps, which is a drop of 5 percent year-over-year. However, total visits to Zillow’s digital sites during the quarter was up 5 percent year-over-year to 2.6 billion.
The report further notes that revenue during the quarter from Premier Agent rose 9 percent year-over-year to $363 million. Premier Agent allows real estate professionals to pay Zillow for leads. Last month, the company embarked on an experiment in two markets that will cull the program’s ranks and shift participants to a “post pay” model in which they pay for the leads when they close deals.
During his call with investors, Barton described the experiment as Zillow “working hard to enhance our partner network and try out all kinds of new stuff.” He also hinted that there could be other tests with the Premier Agent program in the future.
“We will continue to run interesting experiments in different cities,” he noted.
Rising challenges in the housing market also came up during the call. Zillow chief financial officer Allen Parker noted that “there’s a lot of uncertainty out there” and mentioned the rise of “macro headwinds.” Barton, while bullish on Zillow’s specific prospects, also mentioned headwinds and growing “uncertainty,” adding that “people don’t know what to expect, it isn’t all doom and gloom, but it is foggy.”
“While we know people are still eager to move,” he said, “market conditions are making it increasingly difficult.”
Update: This post was updated after publication with additional information from Zillow’s earnings report and from a call company leaders held with investors.
