Zillow posts record revenue, buys real estate upstart Diverse Solutions for $7.8M

In its second report as a publicly traded company, Zillow today announced record revenues and said it has acquired Diverse Solutions, an Irvine, Calif.-based company that helps real estate agents with marketing and websites, for $7.8 million in cash and stock.

The Seattle online real estate company says revenues increased 132 percent year-over-year during the third quarter to $19.1 million, buoyed in part by rapid growth in its marketplace business, which consists of subscriptions sold to real estate agents and cost-per-click advertising sold to mortgage lenders.

Zillow’s marketplace revenues of  $11.8 million were up 226 percent year-over-year, surpassing its display ad revenue — which rose 57 percent to $7.2 million for the quarter.

On the bottom line, Zillow reported a net loss of $570,000, but that included a charge of $1.7 million for a facilities move designed to give the company room for future expansion. Excluding that charge, the company’s profits were $1.1 million, or 5 cents a share.

On the acquisition front, Diverse Solutions has 6,000 customers, primarily real estate agents. The company, founded in 2005, offers software and services for real-estate listings and property search on the web and mobile devices. Its 18 employees will join Zillow and remain in Irvine. Zillow had about 275 employees at last count.

It’s Zillow’s second acquisition, following the purchase of online listing service Postlets in April. Diverse Solutions’ founder and CEO, Justin LaJoie, has become vice president of industry solutions at Zillow, reporting to Zillow CEO Spencer Rascoff.

Looking ahead, Zillow raised its outlook for 2011 to a range of about $63 to $64 million, which would represent a growth rate of about 108 percent compared with its 2010 revenues of $30.5 million.