In its first earnings report since acquiring rival Trulia for $2.5 billion, Zillow today reported pro-forma revenue of $162.5 million for the first quarter, up 35 percent year over year. The Seattle online real estate company’s pro forma net loss came in at $17.9 million, compared to a pro forma net loss of $23.8 million in the same period last year.
In a conference call with analysts, Zillow CEO Spencer Rascoff called 2015 a “transition year,” and said that they remain focused on the successful integration of Trulia.
The financial results include the results of Trulia’s operations for a part of the quarter, from the acquisition date of February 17 to March 31. The company said it expects pro forma revenue for 2015 to be $690 million, including $40 million from Market Leader. (Zillow is evaluating whether it will hold on to Market Leader going forward, and it is not actively selling the product at this time). It also said it expects adjusted EBITDA of $80 million to $85 million for the year, and it is hoping to reach greater than 40 percent margins in the future.
For the month of March, Zillow reported 139.6 million unique visitors across all of its properties, including HotPads, StreetEasy and Trulia. This marks the first time that Zillow has reported its monthly audience since the Trulia deal closed, with Rascoff saying today that its “category leadership” is evident.
Even still, Rascoff called the 140 million visitor count number “pretty abstract,” adding that he prefers to think about the advertising dollars the company is attracting versus the entire addressable real estate advertising market.
Zillow itself plans to spend more than $100 million this year advertising its properties in a continued push to grow audience, with most of the advertising spend coming in the second half of the year. Zillow also continues to sign up Multiple Listing Services as partners, now with more than 235 partners across the country sending for sale listings direct to Zillow.
“The combined team at Zillow Group is executing extremely well across all of our brands and marketplaces,” said Rascoff in a release. “Our already massive audience of home shoppers continues to grow throughout our network of brands, and we are rapidly recognizing the benefits of scale. We have integrated the Zillow mortgage and rentals products into Trulia, giving our advertisers and partners access to an even wider consumer audience. And most importantly, we are on track to combine our agent advertising business by the end of 2015, setting us up to fully realize the potential of Zillow Group’s huge and growing audience.”
Combining the agent advertising technology will set up the company for a “really exciting 2016,” said Rascoff in an interview with GeekWire.
“Zillow Group only has about $500 million of real estate agent ad budgets out of the $13 billion that is spent in our category, so we have less than five percent of what agents spend on advertising,” he said. “By the end of this year, an agent will be able to buy advertising on Zillow Group and have those ads served on Zillow, Trulia, Yahoo, MSN, AOL, Legu in China, HGTV’s Web site, all of which we own or power. That will allow advertisers to reach huge audiences at scale — an audience that will dwarf any other online or offline advertising outlet that an agent might choose to spend money on.”
Shares of Zillow are down seven percent so far this year, trading at $97.98. The company, which now employs 2,062 people, is valued at $5.7 billion. The shares were up nearly three percent in after hours trading today.
Here’s a look at how Zillow performed versus analysts’ estimates.
