ZG Zillow Group Inc

Zillow Group Inc. narrowed its loss for the first quarter as the online real-estate company's revenue climbed amid a growing user base.

Following the bigger-than-expected sales increase, Zillow lifted its revenue forecast for the year. Shares in the company, up 43% over the past three months, gained 12% in after-hours trading.

The Seattle company, which operates online real-estate portals used by house hunters and real-estate agents, acquired its former rival Trulia last year. In its latest move to grow its footprint, Zillow in February closed its purchase of Naked Apartments, a New York City rental-search platform, for $13 million.

Zillow said it averaged more than 166 million unique visitors during March, up 22% from a year earlier and a level the company said marks a record high. For the full quarter, Zillow said average monthly unique users were about 156 million, helping to push its market share up to 65% of the mobile and Web real estate audience.

Real estate revenue jumped 34% during the period to $152.5 million, while mortgage revenue surged 65% to $16.5 million. Those increases offset a 34% drop in display revenue, a decrease Zillow attributed to a shift to de-emphasize display advertising. Zillow has traditionally brought in a big chunk of its money from advertising purchased by realtors. Revenue comparisons exclude sales from the Market Leader business which was divested in the third quarter of last year.

Over all, the company reported a loss of $47.6 million, or 27 cents a share, narrower than its year-earlier loss of $58.4 million, or 40 cents a share. Excluding acquisition-related costs and income taxes, among other items, Zillow posted a loss of 13 cents a share, compared with earnings of 2 cents a share a year earlier.

Revenue rose 25% to $186 million, excluding sales from Market Leader. Analysts projected an adjusted loss of 17 cents a share and revenue of $176.8 million in revenue, according to FactSet.

The company recorded a $15.7 million in legal costs during the first quarter, stemming from a lawsuit with News Corp, which owns Zillow competitor Move Inc. News Corp. also owns Dow Jones & Co., publisher of The Wall Street Journal. That expense roughly doubled from the fourth quarter. Zillow said legal costs from the suit will range between $50 million and $55 million this year.

Zillow said it now expects to log $825 million to $835 million in sales this year, up from earlier guidance of $805 million to $815 million. For the current quarter, the company anticipates $203 million to $208 million in revenue, above the $193.6 million analysts have estimated.

Write to Lisa Beilfuss at lisa.beilfuss@wsj.com

(END) Dow Jones Newswires

May 03, 2016 17:45 ET (21:45 GMT)

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