Zillow CEO Jeremy Wacksman didn’t take the bait that has been thrown his way by a leading competitor in the real estate search space.
While CoStar CEO Andy Florance has remained laser focused on Zillow in recent months, including claiming on Tuesday that Zillow was “under siege” from a barrage of lawsuits, Wacksman avoided the drama entirely.
“We really do focus on us and ourselves and what we can control. That’s worked well for us the past couple of years,” Wacksman said in an exclusive interview with Inman Thursday. “Yeah, the noise has gotten louder in recent months. The noise has gotten louder in this industry many times over the past couple of years.”
Wacksman didn’t reference or address various lawsuits and reports that have taken aim at core areas of revenue growth for the company.
Instead, Wacksman on Thursday pointed to strong revenue growth, newly released features and a growing share of agents and consumers using its products as evidence that not taking the bait works.
Zillow maintains market dominance
Zillow has tools that are involved in a majority of real estate transactions, according to the firm’s latest earnings report, released Thursday. Between Premier Agent, Follow Up Boss, ShowingTime+, Showcase and dotloop, Zillow said that 80 percent of real estate transactions in the third quarter included an agent who used at least one Zillow product.
That’s setting aside the search portal itself. And consumers continue showing up on the platform, Thursday’s report indicated.
- Zillow’s user base grew 7 percent in the third quarter, to 250 million average monthly unique users.
- The portal’s total visits grew 4 percent, to 2.5 billion total site visits during the third quarter.
- Capturing that audience allowed the company to pull in $676 million in total revenue for the quarter.
Across-the-board growth allowed Zillow to earn $10 million in profit for the quarter, a reversal from a $20 million loss from a year earlier.
The company continued rolling out new features this week, including in-app messaging among co-buyers who are shopping for homes together, virtual staging and a virtual rental assistant.
Jeremy Wacksman at ICNY | Credit: AJ Canaria Creative Services
What this means
Zillow’s business model involves providing various tools for agents to use during various stages of the transaction. It also monetizes its massive audience of users by generating and selling leads through rental listings and through its in-house mortgage division.
Lately, the focus has been on driving revenue growth through rentals and lending, and Thursday’s numbers show that focus has been working.
- Zillow’s rentals division saw revenue rise 41 percent compared to a year ago. The firm’s mortgage division revenue grew 36 percent.
- Zillow’s total revenue in the quarter — again, $676 million — which was up 16 percent year over year.
Yes, but
The third quarter was also filled with more than just noise from competitors. Zillow was named in a slew of new lawsuits that all take aim at key elements of Zillow’s business.
In June, Compass sued Zillow over the portal’s ban on listings that are marketed for more than a day before being placed within an MLS and on Zillow.
In September, Zillow was sued by a homebuyer who alleges that Zillow inflated costs to homebuyers through the Zillow Flex referral program, which imposes up to a 40 percent charge to agents who successfully close a transaction after a lead generated through the platform.
The Federal Trade Commission sued to block a $100 million rental partnership that involved Redfin stopping advertising rental listings for apartment buildings. A group of attorneys general filed its own, similar lawsuit shortly after.
CoStar itself sued Zillow, claiming “systemic” copyright infringement, in the third quarter.
Portal wars, in context
Zillow’s 250 million average monthly unique visitors is more than twice as large as CoStar’s comparable network of rental and for-sale listings on Homes.com and Apartments.com.
- $1.4 billion. That’s the amount of cash and other investments that Zillow has access to. Compare that to the $1.9 billion in cash and cash equivalents held by Homes.com parent CoStar.
- 115 million. That’s how many average monthly unique users CoStar says visited its real estate search portals in the third quarter.
- 72 million. That’s how many average monthly unique users Realtor.com reported in its most recent earnings presentation for the second quarter. Its owner, News Corp, is scheduled to release its latest earnings next week.
Rocket Companies is set to release its latest earnings later today. It purchased Redfin, a brokerage and also a search portal, earlier this year.
Wacksman told Inman Thursday Zillow didn’t have its sights set on any big acquisitions amid an industry that is consolidating at rapid speed.
“We’ve made many acquisitions in our history, so M&A is not something we’re foreign to,” Wacksman said, “but we have no plans right now.”
