Zillow and Realtor.com’s Q1 results shine a light on two key factors: overall revenue growth is slowing in a cooling market, and Zillow’s next-gen lead gen business, Zillow Flex, is building momentum.

Are you receiving Inman’s Agent Edge? Make sure you’re subscribed here.

This post has been republished with permission from Mike DelPrete.

 

Zillow and Realtor.com’s Q1 results shine a light on two key factors: overall revenue growth is slowing in a cooling market, and Zillow’s next-gen lead gen business, Zillow Flex, is building momentum.

Why it mattersZillow is going all in on next-gen lead gen; it’s an important evolution of the real estate portal business model, and perhaps the singularly most critical component of Zillow’s future growth (Zillow 3.0: Back to Basics).

  • Revenue growth in Zillow’s Premier Agent business, which includes Flex, has slowed and is projected to remain relatively flat in the months ahead.

Zillow’s plan is to double Premier Agent revenue by 2025.

  • It’s far too early to pass judgment, but the results highlight future challenges — and that Zillow will need to do something new to re-accelerate its business.

Comparatively, Realtor.com’s revenues are also flat, and its next-gen lead gen business accounts for a similar amount of revenue as at Zillow (28 vs 25 percent).

But growth rates are radically different. Zillow’s Flex revenues increased 200 percent from the same period last year, compared to an 18 percent increase at realtor.com.

  • Meanwhile, revenue in Zillow’s traditional lead gen business dropped 10 percent during the same time, compared to growth of 3 percent at Realtor.com.

The evidence supports the narrative that Zillow is going all-in on next-gen lead gen.

  • It’s extremely unlikely that Zillow will hit its 2025 targets with traditional, market-based pricing; it’s all about Flex.

Yes, but: Even though traffic and lead volumes are down at the portals (22 percent lower for realtor.com), overall lead gen revenues are up (7.5 percent at realtor.com and 9 percent at Zillow).

  • The portals always win: In a slowing market, agents are paying more money for fewer leads.

The bottom line: It won’t happen overnight, but the future of Zillow appears very much tied to the future of Flex.

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

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
Inman Connect Las Vegas Memorial Day sale – 44% off exclusively for Select subscribers!Register Now To Save×
Limited Time Offer: Get 1 year of Inman Select for $199SUBSCRIBE×
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