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Seattle Great Wheel Zillow
The Seattle Great Wheel spins with a Zillow “Z” on Feb. 9. (Zillow.com)

Zillow Group’s recent acquisition spree appears to be paying off, with the Seattle-based online real estate juggernaut posting first quarter revenue that exceeded analysts’ expectations.

The company — which completed its $2.5 billion acquisition of Trulia in February 2015 — reported quarterly revenues of $186 million, a 25 percent gain over the same period last year. It also boosted its revenue projections for the year to $825 million to $835 million, up from a previously stated range of $805 million to $815 million.

Meanwhile, Zillow’s market share in the online real estate segment continued to grow, reaching 63 percent during March. And the company’s traffic hit an all-time high of 166 million unique users in March.

Zillow CEO Spencer Rascoff testifies in King County Superior Court in Seattle on Wednesday. (GeekWire Photo)
Zillow CEO Spencer Rascoff testifies in King County Superior Court in Seattle on Wednesday. (GeekWire Photo)

However, headwinds remain in the form of an ongoing legal battle with rival Move Inc., a contentious suit that is costing Zillow tens of millions of dollars.

In today’s earnings report, Zillow noted that its non-GAAP loss per share came in at 13 cents, higher than expected due to litigation, headcount expenses and sales costs.

In fact, the company’s litigation costs during the quarter tallied $15.7 million, $4 million higher than Zillow expected. Total loss for the quarter was $47.6 million.

For the full year, Zillow expects to spend $50 million to $55 million defending itself in the case involving Move Inc.

“We will continue to vigorously defend ourselves in this matter. In the meantime, we remain focused on the daily operations of our business and, as our Q1 results show, the fundamentals of our business are outstanding and unaffected by this litigation,” said Zillow CFO Kathleen Philips in prepared remarks on Zillow’s earnings call today. She added that the company is asking a judge to dismiss the bulk of Move Inc.’s claims, which he described as “baseless.”

In testimony last month, Zillow CEO Spencer Rascoff said that the company did not steal trade secrets from Move Inc. when it hired two former Move executives, Errol Samuelson and Curt Beardsley.

Move has dubbed the actions of Zillow and the co-defendants “corporate espionage” and said that Zillow engaged in a “very regrettable act of executive poaching.” Move, part of Rupert Murdoch’s News Corp. and operator of Realtor.com, alleges damages totaling as much as $2 billion, about half of Zillow’s market value.

Even with the legal headaches, Zillow’s business is growing, thanks in part to its acquisition of Trulia. Rascoff said that the company is “off to an incredible start” with strong growth across all of its brands. One are that is not growing is display advertising, with Zillow saying display ad revenue dropped 34 percent to $17 million during the quarter, part of a strategy to “deemphasize display advertising and improve the user experience.”

Overall, Wall Street liked that news, sending shares of Zillow up more than 11 percent in after market trading.

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