Given the jury verdict and the terms of the case in Sitzer/Barnett. National Association of Realtors Several prominent industry analysts believe a nationwide settlement agreement in the Commission lawsuit has been reached. Jiro Financial performance will suffer.
Wednesday evening, during company business hours. Q1 2024 In an earnings call with investors and analysts, CEO Rich Barton offered a contrary view. Zillow is just beginning to unlock its revenue-generating potential.
“Why is Zillow able to outperform in a hostile housing market and tumultuous industry environment?” he argued. “The simple answer is that Zillow is dedicated to solving real consumer problems with software. Digitally replatforming and consolidating a huge and disparate local industry is a bold move. We are at an advantage because we are first and foremost a product and technology company.”
Zillow’s $23 million net loss in the quarter widened from its $22 million net loss in the first quarter of 2023, but didn’t necessarily reflect Burton’s confidence that the company’s annual sales growth was 13% The increase to $529 million reflected confidence. In the first quarter of 2024, Zillow reported revenue growth across all parts of its business, including rental revenue up 31% annually to $97 million and mortgage revenue up 19% year-over-year to $31 million. I recorded it.
Zillow’s housing revenue, which still accounts for the bulk of Zillow’s revenue, also recorded an increase, increasing 9% on an annual basis to $393 million.
On the conference call, Burton said Zillow’s technology has helped it gain consumer trust and puts it in an “enviable position to build a large enough audience” organically.
“Product-led organic marketing growth stories are rare, but common for great companies. These are the products and brands we most admire,” Barton said. “Those who have followed us for years know how proactive, innovative and methodically we have turned our engaged audience into revenue. Although we have built a diverse, diverse, and EBITDA profitable business, only a small portion of our large unconverted audience remains profitable. It will drive growth for years to come.”
Mr. Burton also touched on the terms of NAR’s settlement agreement. Burton said the “settlement” is “a very reasonable middle ground for the industry, where fees are communicated between buyers and sellers, and both parties are better educated.”
“This is a positive evolutionary step for the industry,” Barton added.
But Burton said he and the Zillow team do not believe the changes outlined in NAR’s settlement agreement are revolutionary.
“Clear and negotiable compensation aligns very well with our published consumer advocacy marketplace principles of free access to listings, independent representation, and negotiable compensation,” Barton said. Ta.
As such, Burton said he believes Zillow will benefit from this evolution.
“We have some of the most engaged customers in real estate, work with the most productive agents, and provide exceptional technology to make their lives more efficient,” said Barton. .
In particular, Burton highlighted Zillow’s Premier Agent program, which sells buy-side leads to agents who are part of the Premier Agent Network. Because the program relies heavily on homebuyers using real estate agents to purchase homes, some analysts have been critical of the model in light of the Commission lawsuit.
“Of the approximately 1.5 million real estate license holders, many only process one or two transactions a year. They are not our premier agent partners,” Barton said. “His 80% of real estate transactions nationwide are done by agents and teams in the top 20%, and currently nearly four out of five of his Zillow Premier Agent partners are in that top tier.”
Barton added that since 2015, Zillow has shrunk its Premier Agent partner base by about 60%, while Premier Agent revenue has increased more than 2.5 times.
Zillow executives also discussed the newly launched “tour agreement,” noting that prospective homebuyers do not need to sign a tour agreement to book a home tour with Zillow.
“Contracts like this help buyers understand what kind of service they’re paying for, which is a good thing,” said Jeremy Waxman, Zillow’s chief operating officer. It also has the added benefit of helping identify potential buyers,” he said of the buyer representation agreement. .
Looking ahead, Zillow executives said they will continue to focus on the company’s five growth pillars: tours, financing, seller solutions, and strengthening its partner network and rentals.
“It’s noisy outside, there’s a lot of confusion, there’s a lot of distraction, but I’ll tell you we’re calm,” Barton said. “We are making progress, we are making numbers and our product is getting better and better, but thanks to the incredible trading potential energy that exists within our great market, we are We have a long road ahead of us.”
