SEATTLE, Aug. 2, 2023
/PRNewswire/ -- Zillow Group, Inc. (NASDAQ: Z and ZG), which is
transforming the way people buy, sell, rent and finance homes,
today announced its consolidated financial results for the three
months ended June 30, 2023.
Complete financial results for the second quarter and outlook
for the third quarter of 2023 can be found in our shareholder
letter on the Investor Relations section of Zillow Group's website
at
https://investors.zillowgroup.com/investors/financials/quarterly-results/default.aspx.
"Zillow outperformed the broader industry for the fourth
consecutive quarter as we navigate a tough real estate market,"
says Zillow co-founder and CEO Rich
Barton. "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."
Recent highlights include:
- Zillow Group's second-quarter results exceeded the company's
outlook for revenue and Adjusted EBITDA.
- Q2 revenue was $506 million,
above the midpoint of the company's outlook range by $41 million.
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- Residential revenue decreased 3% year over year to $380 million, outperforming both the industry
total transaction dollar1 decline of 22% and the high
end of the company's expectations, as the company delivered a
better-than-expected number of connections to Premier Agent
partners, and had favorable relative housing macroeconomic
tailwinds despite a challenging housing market.
- Rentals revenue increased 28% year over year to $91 million as the company continued to see
strong traffic and growth in multifamily properties.
- Mortgages revenue of $24 million
decreased 17% year over year due to higher interest rates that
impacted demand and resulted in a decrease in revenue from our
mortgage marketplace. Q2 purchase loan origination volumes grew 30%
sequentially from Q1 2023 and 73% year over year from Q2 2022.
- On a GAAP basis, net loss was $35
million in Q2.
- Q2 Adjusted EBITDA was $111
million, $40 million above the
midpoint of the company's outlook range, driven primarily by
higher-than-expected Residential revenue.
- During Q2, Jeremy Hofmann was
promoted to Chief Financial Officer.
- The company launched a new Appointment Center by ShowingTime+℠
and Listing Showcase℠.
- Cash and investments were $3.3
billion at the end of Q2, down slightly from $3.4 billion at the end of Q1 2023, after
$150 million in share repurchases in
Q2. The company announced an additional $750
million repurchase authorization today, which brings the
company's available authorizations to $1.0
billion.
- Traffic to Zillow Group's mobile apps and websites in Q2 was
226 million average monthly unique users, down 3% year over year.
Visits during Q2 were 2.7 billion, down 8% year over year.
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1
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National Association of
REALTORS® existing homes sold during Q2 2023 multiplied by the
average selling price per home for Q2
2023, compared to the
same period in 2022.
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Second Quarter 2023 Financial Highlights
The following table sets forth Zillow Group's financial
highlights for the periods presented (in millions, except
percentages, unaudited):
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Three Months Ended
June 30,
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2022 to 2023
% Change
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Six Months Ended
June 30,
|
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2022 to 2023
% Change
|
|
|
2023
|
|
2022
|
|
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2023
|
|
2022
|
|
Revenue:
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|
|
|
|
|
|
|
|
|
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Residential
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$
380
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$
392
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(3) %
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$
741
|
|
$
810
|
|
(9) %
|
Rentals
|
|
91
|
|
71
|
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28 %
|
|
165
|
|
132
|
|
25 %
|
Mortgages
|
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24
|
|
29
|
|
(17) %
|
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50
|
|
75
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(33) %
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Other
|
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11
|
|
12
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(8) %
|
|
19
|
|
23
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(17) %
|
Total
revenue
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$
506
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$
504
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— %
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$
975
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$
1,040
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(6) %
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Other Financial Data:
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Gross profit
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$
402
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$
407
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$
779
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$
851
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Net income
(loss)
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$
(35)
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$
8
|
|
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$
(57)
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$
24
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Adjusted EBITDA
(1)
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$
111
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$
145
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$
215
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$
311
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Percentage of Revenue:
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Gross profit
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79 %
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81 %
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80 %
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82 %
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Net income
(loss)
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(7) %
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2 %
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(6) %
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2 %
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Adjusted EBITDA
(1)
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22 %
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29 %
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22 %
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30 %
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(1) Adjusted EBITDA is
a non-GAAP financial measure; it is not calculated or presented in
accordance with U.S. generally accepted accounting principles,
or GAAP. See Exhibit
99.1 to our Form 8-K filed on August 2, 2023 for more information
regarding our presentation of Adjusted EBITDA, including
a
reconciliation of
Adjusted EBITDA to the most directly comparable GAAP financial
measure, which is net income (loss) for each of the periods presented.
Adjusted EBITDA
excludes the impact of discontinued operations.
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Conference Call and Webcast Information
The company will host a live conference call to discuss these
results today at 2 p.m. Pacific Time
(5 p.m. Eastern Time). A shareholder
letter and link to both the live webcast and recorded replay of the
call may be accessed in the Quarterly Results section
of Zillow Group's Investor Relations website. Participants
must register for the live call in advance at
https://www.netroadshow.com/events/login?show=c9d97060&confId=45409
to receive emailed instructions. This pre-registration process is
designed to reduce delays due to operator congestion when accessing
the live call.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934 that involve
risks and uncertainties, including, without limitation, statements
regarding the future performance and operation of our business, our
business strategies and ability to translate such strategies into
financial performance, the current and future health and stability
of the residential housing market and economy, volatility of
mortgage interest rates, and our expectations regarding future
shifts in behavior by consumers and employees. Statements
containing words such as "may," "believe," "anticipate," "expect,"
"intend," "plan," "project," "predict," "will," "projections,"
"continue," "estimate," "outlook," "guidance," "would," "could,"
"strive," or similar expressions constitute forward-looking
statements. Forward-looking statements are made based on
assumptions as of August 2, 2023, and
although we believe the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee
these results. Differences in Zillow Group's actual results from
those described in these forward-looking statements may result from
actions taken by Zillow Group as well as from risks and
uncertainties beyond Zillow Group's control.
Factors that may contribute to such differences include, but are
not limited to: the current and future health and stability of the
economy and United States
residential real estate industry, including changes in inflationary
conditions, interest rates, housing availability and affordability,
labor shortages and supply chain issues; our ability to manage
advertising inventory and pricing and maintain relationships with
our real estate partners; our ability to establish or maintain
relationships with listing and data providers, which affects
traffic to our mobile applications and websites; our ability to
comply with current and future multiple listing service ("MLS")
rules and requirements; our ability to continue to innovate and
compete successfully to attract customers and real estate partners;
our ability to operate and grow Zillow Home Loans, our mortgage
origination business, including the ability to obtain or maintain
sufficient financing to fund its origination of mortgages, meet
customers' financing needs with its product offerings, continue to
grow the origination business and resell originated mortgages on
the secondary market; the duration and impact of natural disasters
and other catastrophic events (including public health crises) on
our ability to operate, demand for our products or services, or
general economic conditions; our ability to maintain adequate
security measures or technology systems, or those of third parties
on which we rely, to protect data integrity and the information and
privacy of our customers and other third parties; the impact of
pending or future litigation and other disputes or enforcement
actions; our ability to attract and retain a highly skilled
workforce; acquisitions, investments, strategic partnerships,
capital-raising activities, or other corporate transactions or
commitments by us or our competitors; our ability to continue
relying on third-party services to support critical functions of
our business; our ability to protect and continue using our
intellectual property and prevent others from copying, infringing
upon, or developing similar intellectual property; our ability to
comply with domestic and international laws, regulations, rules,
contractual obligations, policies and other obligations, or to
obtain or maintain required licenses to support our business and
operations; our ability to pay debt, settle conversions of our
convertible senior notes, or repurchase our convertible senior
notes upon a fundamental change; our ability to raise additional
capital or refinance on acceptable terms, or at all; actual or
anticipated fluctuations in quarterly and annual results of
operations and financial position; the assumptions, estimates and
internal or third-party data that we use to calculate business,
performance and operating metrics; and volatility of our Class A
common stock and Class C capital stock prices.
The foregoing list of risks and uncertainties is illustrative
but not exhaustive. For more information about potential factors
that could affect Zillow Group's business and financial results,
please review the "Risk Factors" described in Zillow Group's Annual
Report on Form 10-K for the fiscal year
ended December 31, 2022, and in subsequent quarterly
and annual reports. Except as may be required by law, Zillow Group
does not intend and undertakes no duty to update this information
to reflect future events or circumstances.
About Zillow Group, Inc.
Zillow Group, Inc. (NASDAQ: Z and ZG) is reimagining real estate
to make home a reality for more and more people. As the most
visited real estate website in the United
States, Zillow and its affiliates help people find and get
the home they want by connecting them with digital solutions, great
partners, and easier buying, selling, financing and renting
experiences.
Zillow Group's affiliates, subsidiaries and brands include
Zillow®; Zillow Premier Agent®; Zillow Home Loans℠; Trulia®; Out
East®; StreetEasy®; HotPads®; and ShowingTime+SM, which
includes ShowingTime®, Bridge Interactive®, and dotloop®. All marks
herein are owned by MFTB Holdco, Inc., a Zillow affiliate. Zillow
Home Loans, LLC is an Equal Housing Lender, NMLS #10287
(www.nmlsconsumeraccess.org). © 2023 MFTB Holdco, Inc., a Zillow
affiliate.
Please visit https://investors.zillowgroup.com,
www.zillowgroup.com/news, and www.twitter.com/zillowgroup, where
Zillow Group discloses information about the company, its financial
information and its business that may be deemed material.
The Zillow Group logo is available at
https://zillowgroup.mediaroom.com/logos-photos.
(ZFIN)
Use of Non-GAAP Financial Measures
To provide investors with additional information regarding our
financial results, this press release includes references to
Adjusted EBITDA, a non-GAAP financial measure. We have
provided a reconciliation below of Adjusted EBITDA to net income
(loss), the most directly comparable U.S. generally accepted
accounting principle ("GAAP") financial measure.
Adjusted EBITDA is a key metric used by our management and board
of directors to measure operating performance and trends and to
prepare and approve our annual budget. In particular, the exclusion
of certain expenses in calculating Adjusted EBITDA facilitates
operating performance comparisons on a period-to-period basis.
Our use of Adjusted EBITDA has limitations as an analytical
tool, and you should not consider this measure in isolation or as a
substitute for analysis of our results as reported under GAAP. Some
of these limitations are:
- Adjusted EBITDA does not reflect changes in, or cash
requirements for, our working capital needs;
- Adjusted EBITDA does not reflect the results of discontinued
operations;
- Adjusted EBITDA does not consider the potentially dilutive
impact of share-based compensation;
- Although depreciation and amortization are non-cash charges,
the assets being depreciated and amortized may have to be replaced
in the future, and Adjusted EBITDA does not reflect cash capital
expenditure requirements for such replacements or for new capital
expenditures or contractual commitments;
- Adjusted EBITDA does not reflect impairment and restructuring
costs;
- Adjusted EBITDA does not reflect acquisition-related costs;
- Adjusted EBITDA does not reflect interest expense or other
income;
- Adjusted EBITDA does not reflect income taxes; and
- Other companies, including companies in our own industry, may
calculate Adjusted EBITDA differently from the way we do, limiting
its usefulness as a comparative measure.
Because of these limitations, you should consider Adjusted
EBITDA alongside other financial performance measures, including
various cash-flow metrics, net income (loss) and our other GAAP
results.
Adjusted EBITDA
The following table presents a reconciliation of Adjusted EBITDA
to the most directly comparable GAAP financial measure, which is
net income (loss), for each of the periods presented (in millions,
unaudited):
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Three Months Ended
June 30,
|
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Six Months Ended
June 30,
|
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|
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2023
|
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2022
|
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2023
|
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2022
|
Reconciliation of Adjusted EBITDA to Net Income
(Loss):
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Net income
(loss)
|
|
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$
(35)
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$
8
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$
(57)
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$
24
|
Loss from discontinued
operations, net of income taxes
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—
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2
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—
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11
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Income taxes
|
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1
|
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(9)
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1
|
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(4)
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Other income
|
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(42)
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(5)
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(74)
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(7)
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Depreciation and
amortization
|
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45
|
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41
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85
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|
80
|
Share-based
compensation
|
|
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130
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|
99
|
|
233
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176
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Impairment and
restructuring costs
|
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2
|
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—
|
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8
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14
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Acquisition-related
costs
|
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1
|
|
—
|
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1
|
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—
|
Interest
expense
|
|
|
9
|
|
9
|
|
18
|
|
17
|
Adjusted
EBITDA
|
|
|
$
111
|
|
$
145
|
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$
215
|
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$
311
|
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SOURCE Zillow Group, Inc.