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High rates and slow sales may be dragging on the real estate industry, but Zillow managed to buck the trend, revealing Wednesday that its third-quarter revenue shot up — with notable gains coming from the portal giant’s mortgage business.
In total, Zillow brought in $581 million in revenue between July and September of this year, according to a newly released earnings report. That represents a 17 percent year-over-year increase — with the company pointing out in the report that the figure bested the broader industry’s total transaction value growth of just 2 percent.
All of Zillow’s segments — residential, rentals, and mortgage — saw year-over-year revenue growth. But it was the mortgage segment that was the real standout, with revenue in that part of the business rising 63 percent year over year to $39 million. In the report, the company attributed that improvement to “an 80 percent year-over-year increase in purchase loan origination volume to $812 million in Q3.”
Revenue in the residential segment of the business rose 12 percent year over year, hitting $405 million. The residential segment includes Zillow’s Premier Agent program, which sells leads to real estate agents. In a shareholder letter, the company said that program “benefited from continued conversion improvements as more buyers and sellers transacted with Zillow agent partners.”
Meanwhile, revenue from rentals hit $123 million, a 24 percent improvement over the third quarter of 2023. The company attributed the gains to growing multifamily revenue.
The portal also lost $20 million in the quarter. However, that loss was down from the $28 million it burned through during the same period in 2023.
In the report, Zillow CEO Jeremy Wacksman said his company had “another strong quarter,” with investments in areas such as tech giving the portal an advantage.
“I’m proud of how we are executing our strategy to serve renters, buyers, sellers, agents and the broader residential real estate industry,” Wacksman continued. “We continue to invest in tech solutions to build the integrated transaction experience consumers demand and deserve.”
In an interview with Inman Wednesday afternoon, Wacksman added that “most of our mortgage growth is coming from getting in front of consumers who have financing questions.” And he added that the growth in the segment is proof that Zillow’s “enhanced market strategy” that involves guiding buyers through the entire purchase process “is really working.”
“We see a long growth plan ahead for mortgages because of this enhanced market strategy,” Wacksman added.
The comments allude to a specific concept, which Zillow calls “enhanced markets,” that involves providing consumers in some areas with a more seamless and thorough homebuying experience. That experience includes simplified touring options and connecting consumers to financing, among other things. Zillow began the year with nine enhanced markets, but Wacksman told Inman the company has now expanded the concept to 43 markets.
Wednesday’s report also revealed that traffic to Zillow’s sites mostly held steady in Q3, with 233 million average monthly unique users — a 1 percent year-over-year improvement. Total visits to Zillow’s sites and apps hit 2.4 billion in the quarter, an improvement of 3 percent compared to Q3 of last year.
Heading into Zillow’s earnings report Wednesday, shares in the company were trading for just under $60. That was down for the day, but up compared to both six months and one year ago.
Shares spiked in after-hours trading following the publication of Wednesday’s report.
Zillow had a market cap of about $13.4 billion as of Wednesday afternoon.
The portal last reported earnings in August. At the time, the company revealed that it brought in $572 million in revenue between April and June of this year. That number was up 13 percent compared to one year ago. The company’s mortgage segment was also a standout last quarter, with revenue growing 125 percent year over year.
Zillow’s latest earnings report comes at a time of intense pressure for the real estate industry. In addition to high rates and slow sales, a series of antitrust commission lawsuits have changed the way agents — who pay Zillow for leads — collect compensation.
Seeming to reference that situation, Wacksman said during a call with analysts Wednesday afternoon that Zillow and the agents working with the company should benefit due to the industry’s recent “very healthy evolution toward more transparency.”
Zillow Chief Financial Offer Jeremy Hoffman also briefly discussed commission lawsuits and the resulting settlement from the National Association of Realtors during the call. He said that the agents working with Zillow are top earners, so he “can’t speak to broad commission trends.” However, within that group of top earners, “we’ve seen commission rates stay in a tight band.”
Hoffman also reiterated Wacksman’s point that Zillow should be a beneficiary of changes stemming from commission litigation.
In recent months, the real estate industry has also become engulfed in a debate about the Clear Cooperation Policy. The policy is a rule from the National Association of Realtors that requires agents to put their listings into their NAR-affiliated MLS within a day that they begin marketing those listings. Zillow is among the real estate entities that have come out in favor of keeping the rule.
Asked about Clear Cooperation while speaking with Inman, Wacksman said, “For us, it’s about private networks and making sure that listings don’t grow into private networks.”
“We think private networks are bad for consumers, bad for agents, and really bad for the industry as a whole,” he said. “They create fragmentation and disparity.”
During the analyst call, Wacksman added that defending Clear Cooperation is less about business strategy for Zillow because as the largest portal, the company will always “find ways to get our share of inventory.” But he reiterated his point that he believes ending Clear Cooperation is bad for consumers, adding that putting “listings behind a velvet rope” is the wrong move.
The comments represent a kind of polar opposite to the vision Compass CEO Robert Reffkin laid out in his own company’s earnings call last week. While speaking with investors, Reffkin described Compass’ support for private networks and suggested that in the future consumers may visit many sites — rather, the implication goes, than one portal — to find listings.
Zillow, on the other hand, is pushing for a different future.
“We’ve been pretty public about the fact that we are advocating for maintaining and strengthening listings access and making sure that listings are shared with buyers and sellers freely because that is such a strong part of our marketplace,” Wacksman told Inman. “Clear Cooperation, obviously, is the current way in which that gets done. It’s enabling listing sharing with participants today, and we’d love to see it strengthened.”
Update: This report was updated after publication with additional details from Zillow’s earnings report, commentary from executives, and other context.