Zillow beats Q2 forecasts with 18% spike in revenue 

One day after announcing the layoffs of about 500 employees, Zillow reported that its total revenue in the second quarter grew 18% year-over-year to $772 million, besting analysts' expectations.

Zillow outperformed the broader housing market, which grew by 6% in Q2, CEO Jeremy Wacksman noted, and delivered "strong results and consistent execution." For-sale revenue was up 14% year-over-year (to $549 million) while the company's rentals revenue grew 31% (to $209 million) and mortgage revenue jumped 75% (to $84 million).

Net losses were up, however, at $4 million for the quarter. Meanwhile, traffic to the company's mobile apps and websites fell 2% year-over-year — less than the decline in traffic to residential real estate sites overall amid the slow housing market, according to Comscore.

After releasing its Q2 earnings report on Aug. 5, the company's stock price fell about 7.5% in after-hours trading. Overall, Zillow stock — and that of many other publicly traded real estate companies — has not performed well over the past year, with its share price down about 47% year-over-year.

What Zillow had to say

On the challenging market: Zillow's positive performance amid a persistently flat housing market reflects "the results of our strategy play[ing] out," Wacksman told Real Estate News.

The company's recent layoffs were a result of a "structural reorganization" and were about having a "disciplined cost structure" and "making sure we can move more quickly towards the future," he added. Wacksman did not specify which departments the layoffs affected.

On 'engagement we can measure': During a Wednesday call with investors, Wacksman characterized Zillow as "AI native" and as a company that is "at the core of the transaction."

The portal recently launched Zillow AI mode, which Wacksman said has enabled consumers to share more about their needs than they could using traditional search queries. AI mode users spend nearly three times as long on Zillow than other consumers, view more than twice as many homes and run nearly three times as many searches, he added.

"This is unique, personalized context we haven't had access to before," Wacksman said. "It comes with engagement we can measure."

On the growth of its other products: While AI mode "captures" the homebuying journey, the portal's new personalized moving hub "organizes it" for consumers: "This is the first time buyers have had a single, organized place for their entire move on Zillow," Wacksman said, "which means we can identify high-intent buyers and service products that meet their needs."

Zillow Home Loans has seen significant growth in the past year and is now a top 25 purchase lender in the country, the company said. Meanwhile, Zillow Preview has amassed over 100 brokerage partnerships since launching in March, and there is continued growth with Follow Up Boss and Zillow Pro.

Zillow Showcase, the company's interactive floorplan and virtual tour product, also now appears on about 5% of all new listings on the platform, with instant floorplans — where agents can capture a 3D floorplan from their phone — expected to roll out later this year, Wacksman said.

Key numbers

Revenue: $772 million, up 18% year-over-year.

Cash and investments: $682 million, down from $788 million at the end of Q1.

Net income/loss: A loss of $4 million, compared with a gain of $2 million a year ago. Adjusted net income was $118 million.

Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization): $176 million, up from $155 million one year ago. The company noted that this does not reflect current litigation expenses associated with the FTC's ongoing lawsuit against Zillow and Redfin.

Traffic and visits: 239 million average monthly unique users across all Zillow Group websites and apps, down 2% year-over-year. Visits also dipped 2% year-over-year to 2.5 billion.

Notable moves

In conjunction with its Q2 earnings release on Wednesday, Zillow revealed several new leadership appointments and promotions, including the addition of the chief operating officer role to Chief Financial Officer Jeremy Hofmann's title. Former COO Jun Choo is stepping down to focus on his health, the company said.

Zillow has in recent months adjusted to growing calls for more pre-marketing options, launching its "Preview" program in March and teaming up with Realtor.com on pre-market listings in May. The portal has simultaneously been involved in a wide range of litigation, including its lawsuit against Midwest Real Estate Data (MRED) and Compass and the Federal Trade Commission's case over Zillow's rental syndication agreement with Redfin.

Despite the slew of litigation, Wacksman told Real Estate News that the lawsuits have had no impact on Zillow's business. A big reason why? Because Zillow positions consumers as its "north star," he said.