Zillow CEO: 2016 can’t come quickly enough

Rascoff calls 2015 a “year of transition;” stock plummets on revenue projection

In the months since Zillow (Z) first announced its plans to acquire its biggest rival, Trulia, a chorus of industry observers questioned how quickly the once-fierce competitors would be able to integrate their businesses.

In a call Tuesday morning with investors, Zillow Group CEO Spencer Rascoff provided an update on the Zillow-Trulia integration, and while the company has made “great strides” in the eight weeks since the merger was completed, Rascoff called 2015 a “transition year” and disclosed that the company expects 2015 revenue of $690 million, well below the market consensus of $753 million.

The news led to Zillow’s shares being halted and sent Zillow’s stock plummeting once it opened. At one point in early trading, Zillow’s stock was down 11%.

As of 10:40 Eastern, Zillow is trading at $87, down $5.94 for the day.

“This is a transition year for us,” Rascoff told investors Tuesday morning. “These remain early days for us. 2016 can’t come quickly enough from my perspective.”

Rascoff said that the company is trending “a couple quarters” behind where it hoped to be due to the protracted investigation Federal Trade Commission, which investigated the Zillow-Trulia deal for potential anti-trust violations.

Rascoff said that the work that the Zillow Group is doing in 2015 will set the company up for a strong 2016 and 2017.

Rascoff also discussed the recent ending of the relationship between the Zillow Group and ListHub, which is owned by the Zillow Group’s largest competitor, Move, which operates for the National Association of Realtors.

Rascoff said that the company anticipated the transition away from receiving listing data from ListHub to be “very rocky,” but said the company is very pleased by the progress it’s made in signing direct listing agreements with multiple listing servicers and brokerages.

“Zillow and Trulia now have more active listings than we would have if the ListHub agreement continued,” Rascoff said. “In short, we did it.”

Rascoff reiterated his plans to capture more advertising dollars going forward and cited the improving listing data a driving force behind that plan.

“We’ll see improvement in listing accuracy and breadth with these MLS connections,” Rascoff said. “By the end of 2015, you’ll be hard-pressed to claim that Zillow and Trulia doesn’t have accurate and updated data.”

And with better data, comes an growing audience, Rascoff said.

“Advertisers follow audience,” Rascoff said, adding that Zillow and Trulia eventually sharing an advertising program will help to increase the migration of advertising spend to online platforms.

“The lion’s share of advertising is going to whoever has the largest mobile audience,” Rascoff said.

When asked if there have been any issues with Move since the termination of the ListHub agreement, Rascoff said no, “despite their best efforts.”

Recently, Move accused Zillow of failing to remove ListHub-provided listing data on the date the agreement ended.

ListHub made the accusation in a letter sent last week to its customers. In the letter, which was obtained by HousingWire, ListHub Vice President and General Manager Celeste Starchild says that Zillow is “still allowing the widespread presentation of outdated listing data that should have been removed from its website and mobile apps on April 7.”

Move also stated in a recent court filing obtained by HousingWire, that it received a letter from an anonymous whistleblower who appears to work at Zillow. In that letter, which was also obtained by HousingWire, the whistleblower says that Zillow has copies of Move’s private MLS contact database, listing count database and other databases stolen from Move.

“The plaintiffs have complained for months that the defendants are systematically hiding evidence in secret non-Zillow email accounts and file-sharing services,” Move said in the court filing. “The defendants have denied the claims, deriding them as ‘silly’ conspiracy theories and claim they have produced everything. The whistleblower’s letter appears to confirm, however, the plaintiffs’ worst fears.”

Despite those claims, Rascoff said that Zillow is moving forward as planned.

“We’re off to a great start. We’re running extremely fast,” Rascoff said. “We haven’t seen anything at or News Corp that has impacted our business, despite their efforts.”

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