Zillow Group flew by analyst expectations for its second quarter revenue as the Seattle real estate giant voiced confidence in the housing market and posted record traffic numbers amid the pandemic.
The company reported $768 million in revenue, up 28% year-over-year, and non-GAAP earnings per share of -$0.17. Wall Street estimated revenue of $615 million and EPS of -$0.55.
Shares were up more than 10% in after-hours trading. Zillow’s stock price has more than doubled since mid-March after a nosedive that began in February.
“Zillow’s second quarter results are even better than we had hoped, and firm up our belief that powerful tailwinds in both real estate and technology are rapidly converging, with Zillow at the nexus,” Zillow Group co-founder and CEO Rich Barton said in a statement. “I believe we are at the dawn of a Great Reshuffling, as COVID and work-from-home policies are inspiring people to rethink their homes and consider moving. In addition, real estate, like other industries, is experiencing an acceleration in technology adoption, as people move their shopping habits from offline to online. We’re lucky to be in a position to serve our customers no matter how they want to move, whether through a seamless Zillow Offers transaction or in partnership with our best-in-class Premier Agents.”
Fellow Seattle real estate giant Redfin also beat estimates for its quarterly earnings last week as the U.S. housing market rebounds. Redfin and Zillow are riding a trend of increased home ownership driven in part by record-low mortgage rates. The U.S. Census reported last week that home ownership rates increased year-over-year from 64% to 68%, the highest level since 2008 and one of the largest increases in history.
Traffic to Zillow’s mobile apps and websites in the quarter reached a record 218 million average monthly unique users, up 12%, and a total of 2.5 billion visits.
Revenue from the company’s Premier Agent business was down 17% to $192 million. The decrease was primarily due a discount Zillow offered agents in March.
Zillow paused its Zillow Offers business of buying and selling homes, a strategy that rolled out last year, as the COVID-19 outbreak began. It began restarting the business in June and is now active in all 24 markets where Zillow Offers operates.
Zillow’s “Homes” segment, which includes Zillow Offers, brought in $454 million in revenue with a loss of $80 million, before income taxes. The company sold 1,437 homes and purchased 86 homes, ending the quarter with 440 homes on its balance sheet.
Zillow now has a market capitalization of nearly $16 billion.
Barton went into more detail about the company’s business in a shareholders letter, again using the “Great Reshuffling” phrase.
“The second quarter of 2020 has proven that people’s desire for home is resilient,” he wrote in the letter, penned with CFO Allen Parker. “The unprecedented health and economic crisis we have experienced over the past few months has caused many to rethink what home could be, serving as a catalyst for a Great Reshuffling.”
Here’s more from the letter:
“The meaning of home is evolving. It used to be a place where we slept and did a little bit of a lot of things – cooking and eating, family time, some work and homework, and possibly some exercise. It has now also become our office, school, gym, staycation, and base for social connections whether they be virtual or socially distanced. The changing needs of our homes has served as a catalyst for the pent up inherent demand in peoples’ desire to move.”
As part of its coronavirus playbook, Zillow said in March that it was slashing expenses by 25% this year, freezing hiring across the company, and cutting nearly all marketing spend.
Zillow last week introduced a new policy allowing about 90% of its employees the option of working from home, at least some of the time, indefinitely. It significantly extends a move the company made at the end of April in response to the coronavirus pandemic.
GeekWire reported Thursday about the impact of remote work policies on downtown Seattle where Zillow and other tech companies are based.
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Zillow Group CEO Rich Barton at a Zillow Premier Agent Forum event. (Geekwire Photo/Kevin Lisota)
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