Zillow Group beat estimates for Q1 revenue and profit as it deals with a slumping housing market.
The Seattle real estate giant reported Q1 revenue of $469 million, down 13% year-over-year. Analysts expected revenue of $424 million. Shares were up slightly in after-hours trading.
U.S. home prices and home sales continue to trend downward amid higher mortgage rates and a lack of supply. Pending home sales were down 26.6% in March; median sale prices were down 3.3%; and new listings were down 23.3%, according to a recent Redfin report.
Some highlights from Zillow’s Q1 earnings:
- Revenue from Premier Agent, Zillow’s advertising service for real estate agents, was down 16% from the year-ago quarter. Premier Agent is closely tied to the housing market, as transaction volume plays a role in how much agents are spending.
- Zillow’s mortgage business saw revenue decline 43% to $26 million.
- Rentals revenue was up 21% to $74 million.
- Traffic to Zillow’s mobile apps and websites stayed flat in Q1, at 212 million average monthly unique users. Visits were down 5% to 2.5 billion.
- Zillow reported non-GAAP earnings per share of $0.37, which also beat expectations of $0.12.
“We feel quite good about the progress we’ve made on factors we can control, but, of course, we continue to live in a very challenging housing macro environment, with no clear indications of a turn,” Zillow CEO Rich Barton wrote in a shareholders letter.
Since abandoning its big bet on iBuying, Zillow has shifted its focus on building a “housing super app” that addresses various aspect of real estate including buying, selling, and renting.
“Our goal is to increase engagement, customer transactions, and revenue per customer transaction by investing across five growth pillars: touring, financing, seller solutions, enhancing our partner network, and integrating our services,” Barton wrote in the letter.
Zillow ended the quarter with $3.4 billion in cash and short-term investments, which stayed flat compared to the previous quarter, with $86 million in share repurchases in Q1.
After reaching record highs in 2021, Zillow’s stock fell steadily until the end of last year. Now shares are up 30% in 2023.
Zillow expects revenue for Q2 between $451 million and $479 million.
