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01/10 16:57
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The strong financial performance, including 13% revenue growth and a 31% increase in Rentals revenue, indicates a robust business trajectory. The Q&A section highlights confidence in future growth, driven by enhanced markets and strategic initiatives like Listing Showcase and touring expansion. Despite some concerns about first-time homebuyers, the overall sentiment remains optimistic, supported by effective cost management and a positive outlook for Rentals. The lack of specific guidance details slightly tempers the rating, but the overall market reaction is likely positive, within 2% to 8%.
Q1 Revenue $529 million, up 13% year-over-year, driven by strong performance across all business segments.
Rentals Revenue $97 million, up 31% year-over-year, primarily due to growth in multifamily properties, which increased to 40,000.
Mortgages Revenue $31 million, up 19% year-over-year, with purchase mortgage origination volume growing more than 130% year-over-year.
Q1 Net Loss $23 million, representing 4% of revenue.
EBITDA $125 million, resulting in a 24% EBITDA margin, a year-over-year margin expansion of 200 basis points.
Residential Revenue $393 million, up 9% year-over-year, benefiting from investments in top and mid-funnel experiences.
Multifamily Revenue Grew 46% year-over-year, contributing significantly to the overall Rentals revenue growth.
Total Listings in Rentals Marketplace 1.8 million listings in March, up 20% year-over-year.
Cash and Investments $2.9 billion, up from $2.8 billion at the end of Q4.
Outstanding Convertible Debt $1.6 billion.
Share Repurchases $100 million of shares repurchased year-to-date.
Rentals Revenue: Rentals revenue grew 31% year-over-year in Q1 to $97 million, primarily driven by Multifamily revenue, which grew 46% year-over-year.
Listing Showcase: Listing Showcase is an AI-powered product that elevates agents' brand presence on Zillow, leading to homes listed with Showcase selling for 2% more than similar non-showcase listings.
Real-Time Touring: Real-time touring is rolling out to an additional 34 markets by the end of May, totaling 124 markets, expected to account for approximately 20% of connections by year-end.
Zillow Home Loans: Purchase mortgage origination volume grew more than 130% year-over-year, reaching $601 million in Q1.
Multifamily Properties: Zillow's multifamily property count increased to 40,000 at the end of Q1, up from 37,000 at the end of December.
Enhanced Markets: Zillow is expanding to a total of 19 enhanced markets, aiming for 40 by year-end.
EBITDA Margin: Q1 EBITDA was $125 million, resulting in a 24% EBITDA margin, a year-over-year margin expansion of 200 basis points.
Cost Management: EBITDA expenses in Q1 totaled $404 million, flat sequentially from Q4, reflecting ongoing cost management.
NAR Settlement: The proposed NAR settlement is seen as a positive evolutionary step for the industry, with Zillow positioned to assist and benefit from this evolution.
Growth Strategy: Zillow aims to grow customer transaction share from 3% to 6% by the end of 2025, alongside revenue growth.
Regulatory Risks: The ongoing class action suit against NAR and select brokerages has reached a proposed settlement, which is seen as a positive evolutionary step for the industry. However, there are still several steps required to implement the settlement requirements, which could lead to uncertainty in the market.
Competitive Pressures: Zillow faces significant competition in the real estate market, particularly from other platforms that may offer similar services. The company must continue to innovate and enhance its offerings to maintain its competitive edge.
Economic Factors: The housing market remains challenging, with first-time homebuyer activity underperforming the overall mortgage buyer market. Recent increases in interest rates have also created headwinds for the company, as Premier Agent partners may adopt a wait-and-see approach.
Supply Chain Challenges: Zillow's growth in the Rentals segment is dependent on the availability of rental listings. The company is working to increase its inventory, but the fragmented nature of the rental market presents ongoing challenges.
Market Volatility: The overall residential real estate industry is experiencing volatility, with transaction values expected to be flat year-over-year. This could impact Zillow's revenue growth and market share.
Revenue Growth: Q1 revenue of $529 million grew 13% year-over-year, outperforming the residential real estate market.
Rentals Business: Rentals revenue reached $97 million in Q1, up 31% year-over-year, with a focus on expanding multifamily properties.
Zillow Housing Super App: The strategy involves integrating the entire moving process into a single app, enhancing customer experience.
NAR Settlement: The proposed settlement is seen as a positive evolution for the industry, allowing Zillow to assist and benefit from changes.
Longtail Rentals: Zillow is focusing on Longtail Rentals, which represent a significant portion of the rental market.
Listing Showcase: AI-powered product that enhances agent visibility and improves sales outcomes.
Q2 Revenue Outlook: Total company revenue expected between $525 million and $540 million, implying a year-over-year increase of 5%.
Rentals Revenue Growth: Expected to grow in the mid-20% range year-over-year.
Mortgages Revenue Growth: Expected to grow in the high 20% range year-over-year.
Full Year Revenue Growth: Expecting double-digit revenue growth for 2024.
Q2 EBITDA Outlook: Expected to be between $85 million and $100 million, equating to a 17% margin at the midpoint.
Share Repurchase Program: Zillow repurchased $9 million of shares during Q1 and an additional 2.1 million shares for $91 million in April, totaling $100 million of shares repurchased year-to-date.
The earnings call reveals strong financial performance with 13% YoY revenue growth, a 26% EBITDA margin, and a $1 billion share repurchase authorization. Despite macroeconomic challenges and competitive pressures, Zillow's strategic partnerships and marketplace strategy drive growth, particularly in Rentals. While management was vague on some Q2 forecasts, the overall sentiment is positive, bolstered by the company's substantial share repurchase plan and revenue growth exceeding industry averages. The lack of clear guidance on some issues is a minor concern but doesn't overshadow the strong financials and strategic initiatives.
The earnings call highlights strong financial performance with Q2 revenue up 13% YoY, exceeding expectations, and a 23% EBITDA margin. Despite a net loss, the company's financial health is supported by significant cash reserves and share repurchases. Positive developments include growth in rentals and mortgages, and a strategic focus on Enhanced Markets. The Q&A section shows management's confidence in navigating challenges and leveraging industry changes. The optimistic guidance and share repurchase plan suggest a positive stock price movement over the next two weeks.
The strong financial performance, including 13% revenue growth and a 31% increase in Rentals revenue, indicates a robust business trajectory. The Q&A section highlights confidence in future growth, driven by enhanced markets and strategic initiatives like Listing Showcase and touring expansion. Despite some concerns about first-time homebuyers, the overall sentiment remains optimistic, supported by effective cost management and a positive outlook for Rentals. The lack of specific guidance details slightly tempers the rating, but the overall market reaction is likely positive, within 2% to 8%.
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