A year after revealing its plans to create a “housing super app,” Zillow’s vision is becoming clearer. Since infamously shuttering its iBuying program in November 2021, Zillow has refocused itself on its “Five Growth Pillars”: financing, touring, seller solutions, enhancing partnerships and integrating services.
After 12 months of homing in on these areas of growth and improvement, and launching several new products in its test markets of Atlanta, Denver, Raleigh and Phoenix — as well as announcing a partnership with former arch rival Opendoor — Zillow’s end goal of creating a platform for a seamless home buying experience from first searches through closing has started to take shape.
“We do believe mover customers really want this magic application that integrates all of these disparate pieces of the move,” Rich Barton, Zillow’s CEO told investors and analysts on the firm’s fourth-quarter 2022 and full-year 2022 earnings call Wednesday evening. “It seems very logical to us that we ought to bring that all into a single application experience where we plug partners and services into that app in order to make that move much easier and more efficient and more enjoyable. We are really focused on building out what I would call a reference platform of sorts in these test markets to get it working so we can prepare to scale nationwide.”
The firm hopes that these new offerings, as well as a more integrated platform, will allow the firm to grow its share of transactions from 3% to 6% by the end of 2025.
In the meantime, Zillow is also dealing with a cooling and volatile housing market. But despite the headwinds created by the housing market conditions, the firm had a better fourth quarter and full year 2022 than in the year prior.
During the fourth quarter of 2022, Zillow generated $435 million in revenue, down 19% year over year. However, the firm’s net loss of $72 million was markedly better than the $261 million loss recorded in Q4 2021.
For the full year 2022, revenue was also down, dropping 8% year over year to $2.0 billion, but the net loss for the year was down from $528 million in 2021 to $101 million in 2022.
The firm attributes much of these differences to the impact of shuttering its iBuying program at the end of 2021.
As Zillow looks ahead to 2023 and beyond, executives are committed to fine tuning the programs it is trialing in its test markets and scaling them nationwide.
“We like the quality and pace of the products we are shipping,” Barton said. “It feels like we are building momentum.”
One product executives are very optimistic about is Zillow Home Loans. According to Barton, in Q3 2022, there was a 15% adoption rate of Zillow Home Loans in the product’s test market of Raleigh. In Q4, this number jumped to 20%.
“Even with a relatively low level of awareness of Zillow Home Loans, millions of customers on Zillow raised their hands for financing help last year, a testament to our brand and audience scale,” Barton said.
Executives said improving the home touring experience will be one of the firm’s primary goals in 2023.
“We are excited about the early signs coming out of Atlanta, which show real-time touring enables higher connection rates and higher customer propensity to work with our Premier Agent partners, which we expect to drive benefits up and down the funnel, delivering high intent customers to our partners,” Barton said. “As a result of the early data we are seeing, we expanded this offering across Atlanta and are rolling out the product to our other three test markets.”
Despite the slower market conditions, Zillow and Barton remain optimistic about the firm’s future and it ability to achieve its end goal.
“2023 is a consequential year for us, and it is all about making progress on our initiatives through product launches and market rollouts so that we can further expand and scale into 2024,” Barton said. “After a year of significant people-related and other expense reductions in 2022, we are now investing during a very difficult housing market. While others retrench, we see real opportunity for growth.”