Zillow Group(US:Z)2024-11-07 00:10Financial Data and Key Metrics Changes - Total revenue for Q3 2024 was $581 million, representing a 17% year-over-year increase, exceeding revenue outlook by $28 million [15][33] - Residential revenue grew 12% year-over-year to $405 million, outperforming the broader residential real estate industry by approximately 1,500 basis points [33][34] - EBITDA for Q3 was $127 million, resulting in a 22% EBITDA margin, with a net loss of $20 million, representing 3% of revenue [34][39] Business Line Data and Key Metrics Changes - Rentals revenue increased by 24% year-over-year to $123 million, driven by a 38% growth in multifamily rentals revenue [36][30] - Mortgages revenue accelerated to $39 million, up 63% year-over-year, with purchase loan origination volume growing 80% year-over-year to $812 million [37][39] - The number of multifamily properties on Zillow's platform reached 47,000, up from 44,000 at the end of Q2, marking a 34% year-over-year increase [36] Market Data and Key Metrics Changes - Zillow reported 233 million average monthly unique users across its ecosystem of apps and sites, with 116 million average monthly unique visitors according to Comscore [16] - Enhanced markets have expanded to 43, surpassing the goal of 40 by the end of the year, with expectations to deepen penetration and expand into more markets [18][20] Company Strategy and Development Direction - The company aims to capture a more meaningful share of the $30 billion total addressable market in residential real estate while continuing to deliver value to customers and shareholders [32][51] - Zillow is focused on integrating services and enhancing its partner network to increase customer transaction share to 6% by the end of 2025 [17][22] - The company is investing in technology solutions to create a seamless experience for movers, agents, and loan officers, positioning itself as a housing super app [14][31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strategy and ability to deliver sustainable, profitable growth despite challenges in the housing market [7][34] - The outlook for Q4 includes expected total company revenue between $525 million and $540 million, with residential revenue projected to be between $364 million and $374 million [43][44] - Management noted that while there is pent-up demand to move, affordability remains a challenge, impacting the housing market [43] Other Important Information - The company ended Q3 with $2.2 billion in cash and investments, down from $2.6 billion at the end of Q2, primarily due to the maturity and settlement of convertible debt [39][41] - Zillow has repurchased approximately $2 billion of stock since the end of 2021, with a focus on driving share price appreciation [42] Q&A Session Summary Question: Insights on real-time touring and agent transitions - Management noted that real-time touring converts to transactions at about three times the rate of other types of connections, with over 25% of connections expected to come from real-time touring by year-end [54][55] Question: Impact of regulatory changes on conversion rates - Management indicated that the buyer's agreement is seen as a helpful educational tool for buyers, with no concrete data yet on its impact on market share [60][61] Question: Drivers of residential revenue outperformance - Key drivers include continued conversion improvements, growth from Zillow Showcase, and strong performance from the new construction marketplace [64][66] Question: Stock-based compensation management - Management plans to leverage stock-based compensation as fixed costs remain stable, which will contribute to greater GAAP profitability over time [72] Question: Demand and pricing for Zillow Showcase - Early results show Zillow Showcase capturing nearly 1.5% of new listings, with a medium-term target of 5% to 10% of total active listings [76][77] Question: Market share growth in enhanced markets - Revenue per total transaction value in the oldest enhanced markets has doubled since the beginning of 2023, providing confidence for continued expansion [80]