Zillow Group beats 2Q estimates, revenue climbs 20%
Beat company's own expectations
It was a profitable second quarter for the recently created Zillow Group (Z), with the online real estate company reporting that its revenue increased 20% to $171.3 million from pro forma revenue of $142.8 million in the second quarter of 2014.
This exceeded the high end of the company's outlook by $2.3 million, along with beating analyst revenue expectations by $2.58 million.
Excluding market leader revenue, revenue increased 25% to $158.7 million from $126.8 million in the second quarter of 2014 on a pro forma basis.
"Zillow Group had a strong second quarter, beating our own expectations for revenue and EBITDA," said Zillow Group CEO Spencer Rascoff.
"We've been very focused operationally on the integration of Trulia, and made great progress on a number of fronts. As with most mergers of any scale, it has required a great deal of time, attention and energy. We're pleased to share today that we will have successfully combined all advertising products by the end of the third quarter, well ahead of the timetable we shared on our May 12th conference call,” he continued.
The company did face some financial drawback from its recent acquisition of Trulia, recording a GAAP net loss of $38.7 million in the second quarter of 2015. This included the impact of $1.7 million of acquisition-related costs and $6.7 million of restructuring costs due to acquiring Trulia and the related restructuring plan.
Zillow purchased Trulia for $2.5 billion earlier this year, after lots of industry buzz about the proposed deal.
The deal was delayed several times by the Federal Trade Commission, which investigated the deal for potential anti-trust violations.
The earnings come after a recent report by Barclays (B) that cited slowing traffic for Zillow, and in particular Trulia, as a cause for concern, and downgraded Zillow for the second time in three months.
According to the Barclays report, Zillow’s slowing traffic growth is the result of “category saturation” and increased competition from Realtor.com.
Barclays pulled traffic data on Zillow, Trulia and Realtor.com from comScore and found that Zillow’s growth is slowing significantly.
The comScore data also showed that Realtor.com’s traffic in June surpassed Trulia’s traffic for the first time in two years.
However, Zillow Group also referred to comScore data in its earnings, noting that its brands now represent 72% market share of all mobile exclusive visitors to the real estate category, according to comScore.
Looking at recent business highlights, Zillow announced Monday that it is promoting Kathleen Phillips, who has served as the company’s chief operating officer since 2013, to the role of chief financial officer.
Additionally, back in July, Zillow Group acquired DotLoop, a Cincinnati-based company that aims to simplify real estate transactions by enabling brokerages, real estate agents, and their clients to share, edit, sign and store documents digitally.
Zillow Group CEO Spencer Rascoff said that Zillow intends to invest in DotLoop’s platform and make more widely available, adding that homebuyers, sellers and real estate professionals all want to see real estate transactions move online.