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Zillow posts biggest profit ever

Back in the black for first time since 4th quarter of 2013

Don’t look now, but Zillow Group just turned in its best quarter ever.

The online real estate giant said Tuesday that it brought in record revenue in the third quarter, earning $224.6 million in the quarter, which represents a 35% increase over 2015.

And even more than record revenue, Zillow revealed that it ended a nearly three-year run in the red, as the company posted a profit in the third quarter, its first quarterly profit since the fourth quarter of 2013.

And even more than that, Zillow’s profit during the third quarter was its largest quarterly profit ever.

For the record, Zillow went public in 2011, posting its first quarterly results in August 2011 for the second quarter of 2011. 

According to Zillow, it posted GAAP net income of $6.8 million, or 3% of its revenue, in the third quarter of 2016, compared to GAAP net loss of $26 million, or 15% of revenue, in the same period last year.

The third quarter’s profit represents a 126% year-over-year increase from last year.

Zillow’s adjusted EBITDA was $59.5 million in the third quarter, an increase of 102% year-over-year.

“Our third-quarter performance was terrific,” said Zillow Group CEO Spencer Rascoff.

“We delivered another quarter of record revenue, and Adjusted EBITDA exceeded our expectations,” Rascoff continued.

“Traffic to Zillow Group's mobile apps and websites increased year-over-year and revenue growth in our Premier Agent marketplace accelerated,” Rascoff added. “With all of our marketplaces performing strongly, we expect to end 2016 in a strong position to continue executing on our strategic priorities.”

The Zillow Group websites, which include brands like Zillow, Trulia, SreetEasy, HotPads and Naked Apartments, saw more than 164 million average monthly unique users, an increase of 16% year-over-year.

According to Zillow, its websites captured “nearly three quarters of total market share for the mobile-only real estate category.”

Zillow also said that its market share in September 2016 was nearly two-thirds of the total online real estate category, according to comScore.

Zillow’s marketplace revenue increased 45% to $206.9 million from $142.3 million in the third quarter of 2015. Its Premier Agent revenue increased 33% to $158.3 million from $119.4 million in the third quarter of 2015.

According to Zillow, leads to the company’s Premier Agent advertisers grew nearly 40% year-over-year to 4.6 million during the third quarter.

Zillow also said that the total sales to Premier Agent advertisers who have been customers for more than one year increased 59% year-over-year. Sales to existing Premier Agent advertisers accounted for 71% of total bookings.

The number of of Premier Agent advertisers who spend more than $5,000 per month increased 80% year-over-year on a total dollar basis, and increased 79% year-over-year in the number of agent advertisers.

Additionally, Zillow said that its “other real estate revenue,” which includes agent services, dotloop, StreetEasy, Naked Apartments, rentals and other offerings to endemic advertisers that are not traditional display advertising, increased 182% to $28.8 million from $10.2 million in the third quarter of 2015.

Zillow’s mortgage revenue increased 57% to $19.8 million from $12.6 million in the third quarter of 2015.

The company said that its display revenue fell by 25% to $17.7 million from $23.5 million in the third quarter of 2015. The company said that this decline is primarily a result of the “company's strategy to deemphasize display advertising and improve the user experience.”

Riding the wave of these positive results, Zillow said that it is raising its revenue outlook to the range of $837 million to $842 million.

That’s up from the company’s second-quarter revenue outlook, which had the company placing its outlook for revenue within a range of $830 million to $840 million.

Zillow said that its 2016 revenue outlook represents a 30% year-over-year increase at the midpoint of the guidance range, compared to a 24% increase from 2014 to 2015, on a pro forma basis and excluding revenue from Market Leader, which was divested in 2015. 

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