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01/10 23:28
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call presents a mixed but overall positive sentiment. While economic factors and competitive pressures pose challenges, Zillow's financial performance shows strong revenue growth across key segments, particularly in Rentals and Mortgages. The significant share repurchase program further supports shareholder value. Although management's guidance on market conditions is cautious, the company's strategic investments and audience engagement are promising. The Q&A section reveals some uncertainties, but the overall outlook remains optimistic, especially with the substantial share buyback authorization and improved EBITDA margin.
Total Revenue $598 million, up 13% year-over-year, driven by strong performance in both For Sale and Rentals categories.
For Sale Revenue $458 million, up 8% year-over-year, outperforming industry growth of 3% due to growth in Premier Agent and Zillow Showcase.
Residential Revenue $417 million, up 6% year-over-year, benefiting from continued growth in Premier Agent and new construction marketplace.
Mortgages Revenue $41 million, up 32% year-over-year, driven by increased adoption of Zillow Home Loans.
Rentals Revenue $129 million, up 33% year-over-year, primarily driven by Multifamily revenue growth of 47%.
Adjusted EBITDA $153 million, with an EBITDA margin of 26%, a 200 basis point year-over-year improvement due to effective cost management.
GAAP Net Income $8 million, representing 1% of revenue, marking a significant milestone for the company.
Cash and Investments $1.6 billion, down from $1.9 billion, primarily due to share repurchases and a payment to Redfin.
Convertible Debt Outstanding $419 million, expected to settle before the end of Q2.
Share Repurchases Approximately $2.3 billion of shares repurchased at a weighted average price of $47, with an additional $1 billion share repurchase authorization approved.
Unique Monthly Users 227 million average monthly unique users, indicating strong audience engagement.
Multifamily Properties 55,000 properties, up 38% year-over-year, contributing to increased Rentals revenue.
Operating Cash Flow $104 million, up from $80 million in Q1 2024.
Zillow Home Loans: 70% of movers choosing financing through Zillow Home Loans are also working with a Premier Agent partner, up from 60% a year ago.
Showcase: Showcase listings sell faster and for more money, typically netting a 2% higher sales price than similar non-Showcase listings on Zillow.
Real Time Touring: Real Time Touring now accounts for 36% of all connections compared with just 12% a year ago.
BuyAbility: More than 1.5 million customers have enrolled in BuyAbility since it launched a year ago.
Enhanced Markets: We launched more new markets in April, and we expect to keep increasing the share of connections within Enhanced Markets to more than 35% by the end of this year.
Rentals: Rentals revenue reached an all-time high in Q1, with an estimated 25 billion total addressable market.
Multifamily Properties: We ended Q1 with 55,000 multifamily properties on Zillow Rentals, up 38% from 40,000 at the same time last year.
Redfin Partnership: The multifamily listing partnership with Redfin just went live last week, expected to enhance our value proposition with advertisers.
EBITDA Margin: We delivered a $153 million of adjusted EBITDA in Q1 and expanded our EBITDA margin by 200 basis points year-over-year to 26%.
Cost Management: Q1 EBITDA expenses totaled $445 million below our implied outlook of $450 million.
Share Repurchases: We ended Q1 with $1.6 billion of cash and investments, down from $1.9 billion at the end of Q4, primarily driven by share repurchases of $250 million in Q1.
Housing Super App Strategy: We are executing well on our differentiated housing super app strategy.
Integration of Services: We are increasingly confident in our work to integrate Premier Agent with our Zillow Home Loans offering.
Expansion of Services: We are expanding and improving our services to meet the needs of buyers and sellers.
Regulatory Issues: The company acknowledges that forward-looking statements are subject to risks and uncertainties, and encourages consideration of risk factors described in SEC filings.
Economic Factors: The company expects challenging housing market conditions and macro uncertainty to continue, which may impact revenue growth.
Competitive Pressures: Zillow faces competition in the real estate market, with a need to maintain its leading position against other companies in the category.
Supply Chain Challenges: The company is expanding its services and scaling its housing super app, which may face challenges in execution and integration.
Market Conditions: The high-end market contributed to growth, but the rest of the market was largely flat year-over-year, indicating potential risks in overall market performance.
For Sale Revenue Growth: For Sale revenue grew 8% year-over-year in Q1 to $458 million, outperforming industry growth of 3%.
Rentals Revenue Growth: Rentals revenue growth accelerated in Q1, increasing 33% year-over-year to $129 million, driven primarily by Multifamily revenue, which grew 47%.
Enhanced Markets Strategy: Zillow aims to increase the share of connections within Enhanced Markets to more than 35% by the end of this year, up from 24% in Q1.
Showcase Feature: Showcase is expected to reach 5% to 10% of all US listings in the intermediate term, enhancing agent visibility and sales.
Redfin Rentals Partnership: The partnership with Redfin is expected to enhance value proposition and drive substantial growth in leads, leases, and revenue.
Q2 Revenue Guidance: Expect total revenue to be between $635 million and $650 million, implying a year-over-year increase of 11% to 14%.
Q2 EBITDA Guidance: Expect EBITDA to be between $140 million and $155 million, equating to a 22% to 24% margin range.
Full Year 2025 Revenue Growth: Continue to expect low to mid-teens revenue growth, including approximately 40% Rentals revenue growth.
Full Year 2025 EBITDA Margin: Expect expanded EBITDA margins and positive net income for the full year 2025.
Share Repurchase Program: In Q1, Zillow repurchased $250 million worth of shares and an additional $36 million in April, with $95 million remaining on the current authorization. The board approved an additional $1 billion share repurchase authorization, totaling approximately $2.3 billion of shares repurchased at a weighted average price of $47.
Zillow's earnings call indicates strong revenue growth projections, particularly in Rentals and Home Loans, with strategic investments fueling future expansion. Despite challenging market conditions, management remains optimistic, expecting EBITDA margin expansion and positive net income. The Q&A reveals confidence in overcoming FTC-related concerns and enhancing the transaction experience through AI integration. While some responses lacked specifics, the overall sentiment is positive, driven by strong growth metrics and strategic initiatives. The lack of market cap data suggests a cautious approach, but the positive outlook supports a 2%-8% stock price increase.
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