Zillow-Trulia deal receives FTC approval, will close in days

Zillow reports record revenue in 2014

[Correction: The price of Zillow's acquistion of Trulia has been corrected from $2.9 billion, a previous estimate, to $2.3 billion, a current estimate. The actual price will be determined based upon the trading price of Zillow's stock when the deal is finalized.]

Zillow (Z) reported record revenue in both the fourth quarter of 2014 and for the entire year, the company announced late Friday.

The online real estate giant posted revenue of $92.3 million in the fourth quarter, up 58% over the fourth quarter of 2013.

But perhaps most importantly, the company announced that its proposed $2.3 billion merger with Trulia (TRLA) is expected to close within days, perhaps as early as Feb. 17, following notification that the Federal Trade Commission closed its investigation of the merger.

Shareholders recently approved the deal, but here were a few hold-ups from regulators, including a delay from the FTC over potential anti-trust violations.

But now, those hurdles have been cleared and the merger is nigh.

"Simply stated, 2014 was a remarkable year for Zillow with record revenue, record mobile usage and record Premier Agent advertiser revenue," said Spencer Rascoff, Zillow CEO. "And we expect to close the acquisition of Trulia as early as February 17."

And with the markets closed Monday for President’s Day, expect the stocks of both Zillow and Trulia to skyrocket when trading reopens on Tuesday.

Zillow’s stock closed Friday at $106.50, and Trulia’s stock closed at $46.89.

The two companies will remain separate entities, though real estate agents will be able to advertise on both sites and gain access to combined tech efforts, the company's CEOs said when the deal was announced.

The jump in 4th quarter revenue continued a positive trend for the company, which posted revenue of $88.6 million in the third quarter, up 66% from the same time period in 2013.

The company posted a negative earnings and a net loss in the second quarter of $10.48 million in the second quarter of 2014, driven primarily by sales and marketing expenses that topped $48 million in the quarter.

For the year, the company increased its revenue by 65%, rising from $197.5 million in 2013 to $325.9 million in 2014.

According to Zillow, its Marketplace revenue increased 73% to a record $267.2 million from $154.7 million in 2013. Additionally, its real estate revenue grew 80% to a record $239.0 million from $132.9 million in 2013.Its mortgages revenue grew 29% to a record $28.2 million from $21.8 million in 2013. And its display revenue increased 37% to a record $58.7 million from $42.8 million in 2013.

According to Zillow, its basic and diluted GAAP net loss per share was $1.09 in 2014 compared to basic and diluted GAAP net loss per share of $0.35 in 2013. The 2014 results include the impact of approximately $0.54 on basic and diluted GAAP net loss per share from acquisition-related costs, primarily due to the company's acquisition of Trulia.

Zillow’s adjusted EBITDA was a record $49.8 million in 2014, or 15% of revenue, which compares to $30.1 million in 2013, or 15% of revenue.

According to Zillow, its 58% increase in revenue in the fourth quarter was driven by:

  • Marketplace revenue increasing 69% to a record $78.2 million from $46.2 million in the fourth quarter of 2013
  • Real estate revenue growing 73% to a record $70.8 million from $40.9 million in the fourth quarter of 2013
  • Premier agent revenue growing 76% year over year
  • Mortgages revenue growing 38% to a record $7.4 million from $5.3 million in the fourth quarter of 2013
  • Display revenue increasing 17% to $14.1 million from $12.1 million in the fourth quarter of 2013

Zillow also reported a 41% increase in its unique users in 2014, rising to nearly 77 million.

During the fourth quarter of 2014, visits to Zillow via a mobile device increased 57% year-over-year, and in December 2014, 420 million homes were viewed on Zillow via a mobile device, which equates to 157 homes per second, Zillow said. Nearly two-thirds of Zillow's visits come from a mobile device; on weekends it's more than 70%, the company added.

The company also reported a “remarkable” in crease in its mortgage business.

“Zillow Mortgages continues to grow remarkably in the face of challenging trends across the mortgage industry. While the Mortgage Bankers Association reported a year-over-year decline in total originations of 39%, Zillow Mortgages saw loan requests grow 66% year over year to approximately 7.4 million during the fourth quarter,” the company said. “The vast majority of these requests were for purchase loans, which also include Zillow pre-approval submissions. As of the end of the fourth quarter, consumers have submitted over 125,000 lender reviews to Zillow Mortgages.”

Additionally, Zillow reported a record amount of revenue from its Premier Agent advertisers.

“Premier Agent advertisers spent a record amount with Zillow in the fourth quarter of 2014. Premier Agent revenue reached an annualized run rate of more than $268 million in the quarter, compared to a $157 million run-rate at this time last year,” the company said.

“Zillow added 1,428 net new Premier Agent advertisers in the fourth quarter for a total of 62,305 as of December 31, 2014, with average revenue per advertiser reaching a record $359, up from $271 in the same period last year,” the company added. “Premier Agent advertisers who have been on the platform more than 12 months spent 59% more in the fourth quarter this year than a year ago. In the fourth quarter, 60% of Premier Agent bookings came from existing agents buying more impressions.”

Other highlights of Zillow’s 2014 include:

  • The Zillow Partnership Platform more than doubled the amount of participating MLSs in 2014, accounting for an additional 300,000 listings coming directly to Zillow
  • Zillow Pro for Brokers added 3,800 new brokers to the program, bringing more than 100,000 listings to Zillow during the year
  • Zillow Tech Connect added 45 new technology solutions in 2014 for the agents and brokers who use Zillow to manage their contacts

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