At the end of 2023, Zillow pointed to the consistency of its earning results to paint a rosy picture of the company’s future. Reported revenue was up year-over-year in Q4 2023 ($474 million), though there was a net loss of $74 million, about the same as the year before.
In its first quarterly report of 2024 (released Wednesday, May 1, 2024), Zillow was singing the same song. It had reason too, as the company’s revenue was up ($529 million, $55 million higher than the last quarter and $26 million higher than the midpoint of their expectations, according to Chief Financial Officer Jeremy Hofmann on the earnings call), while they reduced its net loss to $23 million on a GAAP (generally accepted accounting principles) basis.
Zillow Co-Founder and CEO Richard Barton stressed the “hostile housing market and noisy industry environment” in his opening remarks, while describing Zillow as “outperforming.” He explained:
“The simple answer is that Zillow is wholly-focused on solving real consumer problems with software in a giant industry that has historically had very little R&D investment.”
Multi-family rentals were also consistently named as an area Zillow is concentrating more on during the call; $97 million of the company’s revenue came from its rental business, up $31 million year-over-year. Offsetting the stall in the single-family home market with investment in rentals does give Zillow an edge over brokerages focused on the former.
Turning his attention to NAR’s settlement of recent class-action lawsuits (which has received preliminary approval), Barton said:
“The substance of the settlement is what we characterized as a very reasonable middle path forward for the industry, where commissions are negotiated and communicated between sellers and buyers and both parties are better educated. This is a positive evolutionary step for the industry.”
Chief Operating Officer Jeremy Wacksman added:
“We don’t see a ton of revolutionary change here. We see more evolutionary change that results in more educated and more transparent consumers, which we see as leading to higher quality, higher intent leads and connections for our partners.”
Barton cited Zillow’s material resources and trusted brand name as reasons why it is well-positioned as the industry evolves. As a listing portal, Zillow will still be useful for buyers to make their selection even as broker compensation evolves. However, traffic was down on Zillow’s website and mobile apps, with an average of 217 million monthly users (down from 224 million in Q4 2023) and 2.3 billion visits (down from 2.6 billion in Q4 2023). Due to the aforementioned “hostile” market, this could be indicative of there simply being less interested buyers and thus less people browsing Zillow.
Zillow is offering a new resource to agents, brokers and buyers for the post-Burnett world; a “consumer first” touring agreement. Per the agreement’s language, “Buyer and broker agree that they are not entering into an agency relationship and buyer is not a client.” The buyer is thus protected from the exclusivity that carries while still early in the buying process.
Fielding a question about Zillow’s touring agreement, Wacksman stressed the agreement is optional even for agents who use Zillow technology suite ShowingTime+.
“At some point in the experience, the agent is going to have a conversation with the customer about services and start an agreement and a relationship. We’re trying to help facilitate that. So we don’t expect any fall-off for friction because it’s an optional experience,” Wacksman said.
Touring was described on the call as one of Zillow’s five growth pillars, alongside financing, seller solutions, enhancing the partner network, and integrating services. Zillow’s long term growth goal is to increase customer transaction share from 3% to 6% by the end of 2025.
For the full Zillow earnings report, click here.
