Zillow Group(Z) - 2024 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Q1 2024 revenue reached $529 million, a 13% year-over-year increase, outperforming the residential real estate market growth of 4% [8][41] - Q1 net loss was$ 23 million, representing 4% of revenue, while EBITDA was $125 million, resulting in a 24% EBITDA margin, a year-over-year margin expansion of 200 basis points [41][42] - Mortgages revenue increased by 19% year-over-year to$ 31 million, with purchase loan origination volume growing over 130% year-over-year to $601 million [41][43] Business Line Data and Key Metrics Changes - Residential revenue was$ 393 million, growing 9% year-over-year, driven by improvements in connection rates and new construction business [41][42] - Rentals revenue grew 31% year-over-year to $97 million, primarily due to a 46% increase in Multifamily revenue [42][43] - The number of Multifamily properties increased to 40,000, up from 37,000 at the end of the previous quarter [9][41] Market Data and Key Metrics Changes - Zillow's audience includes over 217 million average monthly unique users, with 80% of traffic being organic [16] - Zillow Rentals is the most searched rentals marketplace, with a significant lead over competitors [36] - The company estimates it has over 50% of all rental listings in the U.S., with ongoing efforts to increase this share [38] Company Strategy and Development Direction - The company is focused on building a Housing Super App to integrate the moving process, enhancing customer experience across various services [13][21] - Zillow aims to grow its transaction share from 3% to 6% by the end of 2025, with a focus on expanding its enhanced markets [21][22] - The company is investing heavily in technology and partnerships to improve its offerings in both Rentals and Mortgages [19][39] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to outperform despite a challenging housing market, citing strong execution and strategic investments [7][41] - The anticipated NAR settlement is viewed as a positive evolution for the industry, with Zillow well-positioned to benefit from the changes [14][15] - The company expects continued growth in Rentals and Mortgages, with a focus on enhancing customer experiences and expanding market reach [46][47] Other Important Information - The company has repurchased$ 100 million of shares year-to-date, reflecting confidence in its financial position [44] - A national marketing campaign for Rentals is set to launch, aimed at increasing brand awareness and driving growth [46][50] Q&A Session Summary Question: Confidence in second half ramp despite residential business slowdown - Management expressed confidence in the second half ramp due to contributions from enhanced markets and continued growth in Rentals and Mortgages [52][54] Question: Managing potential friction with new buyer's agreement - Management sees the new touring agreement as an educational opportunity rather than friction, aiming to improve customer understanding and conversion rates [55][56] Question: Importance of touring in increasing transaction share - Touring is considered critical for connecting high-intent customers with agents, driving higher conversion rates and overall transaction growth [59][61] Question: Multifamily growth lifecycle and its importance - Management highlighted the strategic focus on Multifamily properties as part of a two-sided marketplace, emphasizing the importance of both demand and supply sides [66][70]