Zillow reporting losses once again
Boston Condos for Sale and Apartments for Rent
Zillow reporting losses once again
Zillow’s stock drops 4% after real-estate company lowers revenue outlook.
Zillow Group Inc. and other real estate stocks plunged after a Missouri jury struck a fresh blow against the battered industry, finding that the National Association of Realtors colluded to maintain high brokerage commissions.
The jury awarded nearly $1.8 billion in damages in the case, one of several recent lawsuits concerning how real estate agents are paid. The Justice Department is also scrutinizing the commission-sharing system, which typically puts home sellers on the hook for a 5% to 6% cut of the sale price, split between their agent and the representative for the buyer.
Updated: Boston condo for sale website Fall 2023
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Zillow reported more losses in the second quarter, but executives sounded an optimistic note for the second straight period.
The company posted a net loss of $35 million, up from the $22 million loss posted in the previous quarter, but said its revenue of $506 million and EBITDA of $111 million surpassed expectations.
Performance in the quarter was boosted by a strong rental market and a relatively mild year-over-year decline in home sales (3 percent), compared to an industry-wide decline of 22 percent. But higher expenses compared to the first quarter pushed the company in the red.
“You’ve heard me say many, many times that 2023 is a crucial year for Zillow,” said CEO Rich Barton. “We’re pleased with what we accomplished so far.”
Expenses jumped $67 million quarter-over-quarter to $469 million, but recently appointed CFO Jeremy Hoffmann said he believes Zillow’s annual fixed expenses of $1.1 billion will not “materially expand … as we scale our current growth initiatives.”
“While we expect variable costs to grow as we scale our business, we intend to drive operational leverages over time,” he said, adding that Zillow’s annual variable expenses are roughly $400 million.
The company’s pursuit of a “housing super app” that integrates more aspects of the homebuying process will “set us up for long-term profitable growth,” according to Barton. The chief executive also claimed a number of “incremental improvements” have resulted in “better than expected” Premier Agent connections, Zillow’s lead generation program.
The site’s new construction marketplace also saw “strong growth,” which Barton called a “bright spot.”
Zillow in June closed Zillow Closing Services, its title and escrow provider built for its iBuying operation, which it closed last year. The company announced shortly before the conference call its purchase of Aryeo, a platform for real estate photographers, for $35 million in cash and stock.
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Zillow, despite losing $72 million last quarter, beat analysts expectations following last year’s volatile housing market, with the company’s mortgage segment’s revenues falling 65 percent year-over-year.
“The unprecedented housing macro volatility continued, this time to the downside — the scenario we feared could happen,” Zillow co-founder and CEO Rich Barton said
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Zillow Group posted a quarterly loss of $53 million.
The company reported during its earnings call that it lost $53 million last quarter as the market slowed. The news comes a week after it jettisoned 300 employees, the second major round of layoffs at the proptech giant this year.
Losses better than expectations
Despite the declines, it exceeded expectations, which had company executives sounding upbeat on the call. Revenue from the rental side was another positive, increasing 10 percent over the third quarter last year, as would-be buyers are increasingly pushed back into the rental market by rising mortgage rates
But things could get worse before they get better, executives said. Revenue from Premier Agent — a lead-generation tool that lets brokers pay to supplant the listing agent when buyers view a listing — fell 27 percent last quarter from a year ago.
“The set-up to begin 2023 in housing looks challenged,” Barton said, before adding, “Sixty million homes should trade hands over the next 10 years and that’s the basis of the long-term opportunity in front of us.”
