SEATTLE, May 3, 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 March 31, 2023.
Complete financial results for the first quarter and outlook for
the second 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.
"We're starting to see our investments pay off, with Q1
financial results that outperformed the top end of our outlook,"
said Zillow co-founder and CEO Rich
Barton. "We're capturing more customer demand and connecting
more of that demand to our strengthening partner network, and these
numerous incremental improvements have added up to make a real
impact on our business. Our powerful brand and strong balance sheet
put us on solid footing as we build the housing super app and help
get more and more people home."
Recent highlights include:
- Zillow Group's first-quarter results exceeded the company's
outlook for both revenue and Adjusted EBITDA.
- Q1 revenue was $469 million,
above the midpoint of the company's outlook range by $48 million.
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- Residential revenue decreased 14% year over year to
$361 million, driven primarily by
lower Premier Agent revenue as a result of weakness in the overall
housing market that saw total industry transaction
dollars1 decline 27% year over year. Residential revenue
outperformed the industry in total transaction dollars and the high
end of the company's outlook range, driven by the strength of the
company's brand, a better-than-expected number of connections
provided to Premier Agent partners, and favorable relative macro
tailwinds.
-
- Premier Agent revenue decreased 16% year over year,
outperforming the company's expectation of a 23% to 28% decrease in
Q1.
- Rentals revenue increased 21% year over year to $74 million as the company continued to see
strong traffic and growth in multifamily properties.
- Mortgages revenue was $26
million, a decrease of 43% due to higher interest rates that
slowed refinance activity and impacted revenue for both our
mortgage marketplace and Zillow Home Loans.
- On a GAAP basis, net loss was $22
million in Q1.
- Q1 Adjusted EBITDA was $104
million, $48 million above the
midpoint of the company's outlook range, driven primarily by
higher-than-anticipated revenue from Premier Agent.
- Cash and investments were $3.4
billion at the end of Q1, flat from the end of 2022, after
$86 million in share repurchases in
the quarter. As of the end of Q1, $414
million remained under the company's total repurchase
authorizations of $1.8 billion.
Convertible debt was $1.7 billion at
the end of Q1.
- Traffic to Zillow Group's mobile apps and websites in Q1 was
212 million average monthly unique users, flat year over year.
Visits during Q1 were 2.5 billion, down 5% year over year.
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1 National
Association of REALTORS® existing homes sold during Q1 2023
multiplied by the average selling price per home for
Q1 2023, compared to the same period in
2022.
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First Quarter 2023 Financial Highlights
The following table sets forth Zillow Group's financial
highlights for the periods presented (in millions, except
percentages, unaudited):
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Three Months
Ended
March 31,
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2022 to 2023
% Change
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2023
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2022
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Revenue:
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Residential
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$
361
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$
418
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(14) %
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Rentals
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74
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61
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21 %
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Mortgages
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26
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46
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(43) %
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Other
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8
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11
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(27) %
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Total
revenue
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$
469
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$
536
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(13) %
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Other Financial
Data:
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Gross profit
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$
377
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$
444
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Net income
(loss)
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$
(22)
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$
16
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Adjusted EBITDA
(1)
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$
104
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$
166
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Percentage of
Revenue:
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Gross profit
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80 %
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83 %
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Net income
(loss)
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(5) %
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3 %
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Adjusted EBITDA
(1)
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22 %
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31 %
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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 May 3, 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=20ec80c1&confId=45370
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, 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 May 3,
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 future 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℠; Zillow Closing
Services℠; Trulia®; Out East®; StreetEasy®; HotPads®; and
ShowingTime+℠, 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 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
March 31,
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2023
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2022
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Reconciliation of
Adjusted EBITDA to Net Income (Loss):
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Net income
(loss)
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$
(22)
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$
16
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Loss from discontinued
operations, net of income taxes
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—
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9
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Income taxes
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—
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5
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Other income
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(32)
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(2)
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Depreciation and
amortization
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40
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39
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Share-based
compensation
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103
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77
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Impairment and
restructuring costs
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6
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14
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Interest
expense
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9
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8
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Adjusted
EBITDA
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$
104
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$
166
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SOURCE Zillow Group, Inc.