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01/10 16:57
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
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.
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% as reported by NAR, primarily 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 expansion of Zillow Showcase.
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, supported by 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 at the end of Q4, primarily due to share repurchases and a payment to Redfin.
Convertible Debt Outstanding $419 million, expected to be settled 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.
Zillow Showcase: Zillow Showcase features AI-powered rich media technology that generates a seamless 3D model of the home with an interactive floor plan, helping listings stand out and providing an immersive shopping experience.
BuyAbility feature: Zillow Home Loans’ BuyAbility feature helps buyers shop based on affordability and adapt to market changes, with over 1.5 million customers enrolled.
Real Time Touring: Real Time Touring accounts for 36% of all connections, up from 12% a year ago, enhancing the booking experience for home tours.
Enhanced Markets: Zillow is expanding its Enhanced Markets, aiming for over 35% of connections by year-end, with 24% achieved in Q1.
Rentals Marketplace: Zillow Rentals is rapidly becoming a comprehensive marketplace with over 2 million active listings, aiming for significant growth in the rental market.
EBITDA Margin: Zillow expanded its EBITDA margin by 200 basis points year-over-year to 26% in Q1.
Cost Management: Effective cost management helped deliver better-than-expected EBITDA of $153 million in Q1.
Partnerships: Zillow announced partnerships with Redfin and Appfolio to enhance its Rentals business and improve lead generation.
Share Repurchase Program: Zillow's board approved an additional $1 billion share repurchase authorization, reflecting confidence in its financial position.
Earnings Expectations: Zillow Group, Inc. missed earnings expectations with a reported EPS of $0.41, below the expected $0.43.
Regulatory Issues: The company mentioned the importance of aligning its business model with consumer interests, which may involve navigating regulatory standards in the real estate industry.
Competitive Pressures: Zillow faces competitive pressures in the real estate market, particularly from other companies in the category, as indicated by their significant app engagement metrics.
Economic Factors: The company acknowledged challenging housing market conditions and macroeconomic uncertainty that could impact future performance.
Supply Chain Challenges: While not explicitly stated, the mention of managing costs and the impact of partnerships suggests potential supply chain challenges in delivering services.
Partnership Costs: The partnership with Redfin involves payments for Rentals leads, which could affect EBITDA in the second half of 2025.
Investment Costs: Zillow expects fixed investment costs to grow modestly with inflation, indicating potential financial strain if not managed properly.
Q1 Revenue Growth: Total Q1 revenue of $598 million, up 13% year-over-year.
EBITDA Margin Expansion: Adjusted EBITDA of $153 million with a margin of 26%, a 200 basis point year-over-year improvement.
GAAP Profitability: Achieved positive GAAP net income of $8 million, representing 1% of revenue.
Enhanced Markets Strategy: Expect to increase connections in Enhanced Markets to over 35% by year-end 2025.
Zillow Showcase: Aiming for Showcase to reach 5% to 10% of all US listings in the intermediate term.
Rentals Revenue Growth: Rentals revenue reached an all-time high of $129 million, up 33% year-over-year.
Partnerships: New partnerships with Redfin and Appfolio to enhance Rentals offerings.
Q2 Revenue Guidance: Expect total revenue between $635 million and $650 million, a year-over-year increase of 11% to 14%.
Q2 EBITDA Guidance: Expect EBITDA between $140 million and $155 million, equating to a 22% to 24% margin range.
Full Year 2025 Revenue Growth: Expect low to mid-teens revenue growth, including approximately 40% Rentals revenue growth.
Rentals Revenue Growth: Expect Rentals revenue growth to accelerate to approximately 40% for full year 2025.
Share Repurchase Program: In Q1, Zillow repurchased $250 million worth of shares. In April, they repurchased over 600,000 shares for $36 million. They have $95 million remaining on their current authorization. The board approved an additional $1 billion share repurchase authorization, with approximately $2.3 billion of shares repurchased to date at a weighted average price of $47.
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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