Trending: IBM sues Zillow, accuses the real estate giant of building key features using Big Blue’s tech
Zillow CEO Spencer Rascoff

Another day, another acquisition for Zillow.

The fast-growing online real estate company today announced that it has entered into an agreement to purchase Mortech, a 25-year-old Lincoln, Nebraska software and services company that provides mortgage-related solutions to lenders, bankers and credit unions. It marks Zillow’s fifth acquisition in the past two years, and the first for Zillow in the mortgage area.

Mortech, with 39 employees, will continue to be based in Nebraska. Zillow is paying $12 million in cash, plus 150,000 shares in restricted stock units for the company.

Interestingly, Mortech is the provider that powers Trulia’s newly-launched mortgage center. Zillow CEO Spencer Rascoff said they plan to honor all commitments to its competitor as it relates to Mortech, but it is nonetheless quite interesting to see Zillow gobble up the vendor of one of its rivals.

“The deal hasn’t closed yet … so it is unclear exactly how this will unfold,” said Rascoff, noting that irony that they are now a technology vendor to their largest rival.

You may recall that Zillow sued Trulia earlier this year for patent infringement related to the automated home valuation tool known as the Zestimate.

“You know that the technology industry has a lot of ‘frenemy’ relationships,” Rascoff said in an interview with GeekWire. “There are a lot of complicated relationships in this industry, as in any.”

Here’s more of what Rascoff had to say in a statement:

“We are following our proven strategy of building home-related marketplaces. In the case of Zillow Mortgage Marketplace, we first innovated on behalf of consumers by creating a transparent marketplace where the borrowers’ needs come first, then we connected borrowers with lenders, and now we are investing in tools to help lenders be even more successful serving consumers. Enhancing the capabilities of mortgage lenders ultimately leads to a more vibrant and transparent consumer experience.”

The acquisition announcement was made in conjunction with Zillow’s third quarter earnings report in which it posted record revenue of $31.9 million, up 67 percent compared to the same period last year. It also posted record net income of $2.3 million. 

Shares of Zillow are getting hammered in after hours trading. Click on chart for interactive version.

Those may appear to be solid results, but not good enough for Wall Street. Zillow’s shares are getting hammered in after hours trading, down more than 22 percent.

One reason is that Zillow just isn’t growing as fast as it once was. During the second quarter, Zillow’s growth came in at 75 percent year-over-year.

Its display advertising business also is seeing a substantial slow down, with a growth rate of just 16 percent year-over-year during the third quarter.

Rascoff said that the display advertising business slowed in part because they had a very successful effort in the third quarter of 2011. “Basically, it was because it was off such a tougher comp,” he said. But Zillow, which recently lost a big advertiser in, also is deemphasizing its display advertising.

“We made no secret of the fact that our marketplace revenue is more additive to the consumer experience than display revenue,” he said. “Ad units which help home shoppers connect with local mortgage professionals and real estate agents are more valuable to the user than display units. Ever day, every week we continue to make choices to allocate more and more of our ad inventory to marketplace revenue at the expense of display revenue.”

Zillow also said that more than one billion home views have been recorded on its mobile properties in the first nine months of the year.

Zillow went public last year at $20 per share. It closed Monday at $34.37, after falling more than five percent. Zillow maintained a market value of just over $1 billion, as of Monday’s last trade. Its total unique visitor count stood at 37 million for July.

Can Zillow keep making acquisitions to push growth?

Rascoff thinks so, saying they’ve evaluated more than 100 companies in recent years.

“The nice thing about this category is that it has essentially been bereft of an acquirer for the last 10 to 15 years,” he said. “Zillow benefits from a pretty greenfield opportunity here in terms of M&A.”

[Editor’s note: This post has been updated]

Previously on GeekWireZillow makes another buy, gobbles up NYC’s Buyfolio

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