Financial Data and Key Metrics Changes - Zillow reported Q1 2022 Home segment revenue of $3.7 billion, exceeding the outlook range of $2.6 billion to $2.9 billion, primarily due to higher resell velocity [28] - The company ended Q1 with $3.6 billion in cash, an increase of $500 million from the previous quarter, including a $348 million share repurchase [10][33] - IMT segment revenue was $490 million, growing 10% year-over-year, slightly above the $487 million midpoint of the outlook range [30] - The company reduced its exposure to housing inventory risk to approximately $500 million and reduced related asset-backed debt by $2.6 billion in the quarter [9] Business Line Data and Key Metrics Changes - The Home segment EBITDA was $23 million, better than the outlook of a loss of $20 million [28] - Premier Agent revenue grew 9% year-over-year, outperforming industry growth of 4% in Q1 [30] - Rentals revenue was down 5% year-over-year and flat sequentially, in line with expectations due to high occupancy rates [32] - Mortgages segment revenue was $46 million, near the midpoint of the Q1 outlook range, with adjusted EBITDA showing a loss of $12 million [32] Market Data and Key Metrics Changes - The housing market is experiencing uncertainty, with existing home sales forecasts ranging from 5.5 million to 6.5 million for 2022, compared to 6.1 million in 2021 [7] - Total consumer transaction value growth trends are softening, with low levels of inventory down 23% year-over-year in March [7][8] - Average page views per listing reached a record high in Q1, indicating strong intent to move despite rising interest rates [8] Company Strategy and Development Direction - Zillow is focused on building a housing super app, targeting $5 billion in revenue and a 45% EBITDA margin by 2025 [12][20] - The company is executing on a product roadmap centered around five growth pillars: touring, financing, expanding seller services, enhancing the partner network, and integrating services [12][24] - Zillow aims to increase its share of customer transactions from 3% to 6% by 2025, leveraging technology and product innovation [22][23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current market cycle, highlighting a strong cash position and positive cash flow from core business operations [10][26] - The company acknowledged macroeconomic headwinds affecting revenue but remains committed to its long-term growth strategy [75] - Management noted that the current housing market dynamics are temporary and do not alter the growth trajectory towards 2025 targets [75] Other Important Information - Zillow has nearly completed the wind-down of its iBuying operations, with expectations to finish selling remaining inventory in Q2 [29] - The company has authorized an additional $1 billion share repurchase, reflecting confidence in its cash generation capabilities [34][76] Q&A Session Summary Question: Guidance for Premier Agent revenue growth - Management acknowledged macro headwinds affecting revenue guidance, indicating a likely muted growth for the remainder of the year [41][43] Question: IMT EBITDA margin guidance - The decrease in EBITDA margin is aligned with planned investments for building infrastructure for the super app experience [44][46] Question: ROI for agents in tough times - Management noted that while macro factors impact agents, they continue to drive higher-intent customers to high-performing agents [50] Question: Flex model in Raleigh and Denver - The decision to test the flex model in these markets is aimed at minimizing financial risk for partners while gathering insights for broader application [51][54] Question: Impact of market conditions on 2025 targets - Management indicated that the primary driver for achieving 2025 targets is increasing transaction penetration rather than market performance [66] Question: Premier Agent mix and Flex growth - Management confirmed that both monetization models are effective, with Flex expected to grow as part of the overall strategy [70]
Zillow Group(ZG) - 2022 Q1 - Earnings Call Transcript