Mark your calendars for the ultimate real estate experiences with Inman’s upcoming events! Dive into the future at Connect Miami, immerse in luxury at Luxury Connect, and converge with industry leaders at Inman Connect Las Vegas. Discover more and join the industry’s best at inman.com/events.
Against the backdrop of an increasingly competitive real estate portal landscape, Zillow on Tuesday revealed that its revenue jumped in the fourth quarter of last year, with losses remaining nearly flat.
In total, the company earned $474 million in revenue between October and December of 2023. That’s a 9 percent increase compared to one year earlier. The jump in revenue happened due to significant gains in Zillow’s residential, rental and mortgage businesses.
Rentals saw the biggest year-over-year jump, with revenue from the vertical rising 37 percent, followed by Zillow’s mortgage business, which, despite a slow market, managed to grow 22 percent.
The rise in revenue notwithstanding, though, Zillow still lost money. In total, the company suffered a net loss of $73 million — just a hair above the $72 million Zillow lost during the fourth quarter of 2022.
Rich Barton, Zillow
In a statement, Zillow CEO Rich Barton celebrated the “great revenue numbers across the whole of our increasingly diversified and growing business.”
“This is evidence of the progress we’re making to transform the way people buy, sell, finance and rent homes by continually adding more functionality, software and services to Zillow’s housing super app,” Barton continued.
Zillow reported earnings just days after CoStar announced it will spend a fortune in 2024 promoting its Homes.com portal, which is a direct competitor to Zillow. The move is the latest in the “portal wars” that have seen CoStar, historically a commercial real estate giant, attempt to take share from incumbent residential portals — the biggest of which by far is Zillow. CoStar CEO Andy Florance has been open in his criticism of Zillow and last week told Inman he believes his company will overtake Barton’s.
In keeping with Zillow’s modus operandi in the portal wars, the company did not explicitly mention CoStar or the broader conflict in its statement Tuesday. However, Barton did notably defend his company’s position atop the portal heap.
“We have the leading real estate audience and a brand that is a household name, and we have barely scratched the surface on a real estate market with $2 trillion of total transaction value,” Barton said.
In a call with investors Tuesday afternoon, Barton added that “we are pressing the accelerator on expansion in 2024.”
Later during the call, Stephens Managing Director John Campbell asked if Zillow would have to increase its marketing budget in response to CoStar’s efforts. Barton didn’t exactly answer, but said, “We have always believed the most important part of the marketing mix is the product itself.” He went on to say that Zillow is trying to integrate the entire real estate transaction into one place, and those efforts are “what ensures that we win long term.”
Commenting directly on CoStar and Homes.com, Barton said that “we’re not currently seeing any impact from this spend nor the build up to this spend.”
Going into Tuesday’s earnings report, Zillow shares were trading for just under $54 per share. That was down for the day, but up compared to a year ago when shares were trading in the $44 range. Shares rose in after hours trading following the publication of Zillow’s earnings Tuesday.
Credit: Google
Zillow had a market cap of about $12.46 billion when markets closed Tuesday.
The company last reported earnings in November. At the time, it revealed that during the third quarter of 2023, revenue ticked up 3 percent year over year. The company suffered a net loss of $28 million in the third quarter.
In addition to quarterly numbers, Tuesday’s report also includes full-year 2023 earnings. For the entire 12-month period, Zillow brought in $1.5 billion in revenue. That’s down 5 percent compared to 2022.
The company also lost $158 million during the year, up from $101 million in 2022.
However, while speaking with investors Tuesday afternoon, Barton said the opportunity to grow is immense, with the company facing a “$30 billion revenue opportunity with high intent hand-raising consumers already in Zillow’s funnel.”
During the investor call, Barton and other executives also touted a number of potential growth opportunities, a major one of which was the company’s rental business. Among other things, Barton said Zillow has 37,000 rental properties on its platform, while Chief Operating Officer Jeremy Wacksman said rentals are a prime area of growth because “we have the most listings.”
Aside from earnings numbers, Zillow also touted its “super app” Tuesday. In a letter to shareholders, Barton and CFO Jeremy Hofmann said that the “housing super app is here today. It’s called Zillow.”
The comments echo those of Zillow President Susan Daimler, who last month at Inman Connect New York responded to a question about the app’s long gestation by saying it “is out there now.” The comments surprised some in the room, who had been under the impression that the housing super app was a yet-to-be-released new product.
Barton also weighed in during the call on the growing number of commission lawsuits, the most famous of which is known as Sitzer | Burnett. That case went to trial in October, with a jury ultimately ruling that the National Association of Realtors and major franchisors conspired to keep commissions high. The verdict has prompted speculation that the case and others like it could significantly disrupt the way real estate agents get paid.
Barton noted during his call that Zillow is not a defendant in the cases but said the company is still monitoring the situation. He said that he is confident Zillow can continue to grow, even in an “evolving climate.”
“We expect industry change to play out over many years,” Barton continued, referring to the suits’ fallout, adding moments later that “we believe all roads lead to Zillow.”
Near the end of Barton’s prepared remarks during the call, he also reiterated his point about pressing down on the “accelerator.”
“We made a great deal of progress in 2023,” he concluded. “We will make more in 2024.”
Update: This story was updated after publication with information from Zillow’s earnings report, and with commentary from the company’s investor call.
