Despite a $35 million net loss in the second quarter, Zillow saw a slight annual increase in revenue to $506 million, beating Wall Street’s estimates. As a result, the company’s executives told investors and analysts that they were pleased with the firm’s second quarter performance, especially in touring, financing, and renting.
“Zillow outperformed the broader industry for the fourth consecutive quarter as we navigate a tough real estate market,” said Zillow cofounder and CEO Rich Barton on the firm’s second-quarter earnings call Wednesday evening. “I’m pleased with our steady progress on improving and integrating our customer and partner experiences, especially in touring, financing, and renting. The housing super app is coming into focus, opening up significant transaction TAM for the company and our shareholders.”
With the resilient but still slower housing market conditions of the second quarter of 2023, Zillow reported that traffic to its apps and site was at 226 million average monthly unique users, down from 234 million a year ago.
Zillow executives attribute much of this improvement to a healthy top of funnel relative to the weak housing market, and consistent organic traffic to their apps and sites.
Meanwhile, Premier Agent, Zillow’s residential segment, reported a 3% annual decrease in revenue, outperforming both the 22% drop in U.S. home transactions and the high end of the company’s expectations. It also marked the fourth consecutive quarter of outperformance, noted Barton.
According to the executives, the company was able to deliver a better-than expected number of connections to Premier Agent partners, and had strong performance relative to the macroeconomic tailwinds in housing.
Zillow’s mortgage arm, Home Loans, on the other hand, recorded a 17% year-over-year decline in revenue to $24 million. Purchase loan origination volumes in Q2 2023 grew 30% sequentially from Q1 2023 and 73% year over year from Q2 2022. Finally, rental revenue increased 28% year over year to $91 million as the company continued to see strong traffic and growth in multifamily properties.
Although rival CoStar has made noise in overtaking Realtor.com in web traffic, Barton stressed that Zillow has remained the most-visited rental platform since May 2022, according to Comscore.
Barton also touched on its fabled “housing super app.” He reiterated the five growth pillars of the app, touring, financing, seller solutions, enhancing our partner network, and integrating our services.
“The expected output of this strategy is to grow our share of customer transactions from 3% to 6% by the end of 2025,” he said.
Barton also presented Zillow’s product roadmap, touching on different updates and projects underway. He highlighted the launch of Listing Showcase by ShowingTime+ last June in select markets. The product, an AI-powered “super listing” available exclusively on Zillow, was made to allow listing agents to present their brand and properties in a distinctive manner.
Zillow on Wednesday also announced the acquisition of Aryeo, a marketing media solution for agents and brokerages. Aryeo will become a part of ShowingTime+.
Barton also spoke of Zillow’s partnership with Opendoor, which allows sellers on Zillow to request a cash offer from Opendoor, stating that it is now present in 25 markets, compared to 2 when they first launched in February.
The company said it’s projecting third-quarter revenue of $458 million to $486 million.