(Bloomberg) -- Zillow Group Inc. reported third-quarter earnings that beat analyst estimates, as the company’s efforts to diversify revenue helped the company weather a sluggish homebuying market.
- Zillow had adjusted earnings before interest, taxes, depreciation and amortization of $127 million, according to a statement Wednesday. That was more than the average analyst estimate of about $108 million in data compiled by Bloomberg.
Key Insights
- Zillow’s core business — selling marketing services to real estate agents — has been under pressure since higher interest rates depressed home sales in the middle of 2022. The company generated $405 million in revenue through its residential business. It added $123 million from its faster-growing rentals business, and $39 million from mortgages.
- In addition to slower home sales, the residential real estate business is grappling with fallout from a legal settlement affecting agent commissions. Industry participants now are embroiled in a new fight over rules governing how home-sale listings are distributed.
- Zillow installed a new chief executive officer in August, with longtime executive Jeremy Wacksman taking over from co-founder Rich Barton.
- Wacksman said he expects the housing recovery to proceed slowly and that Zillow aims to grow by increasing the share of transactions in which the company plays a role. “We’ve been pretty modest about what we expect the housing market to do this year and next year,” he said in an interview. “We’re not expecting rapid relief anytime soon.”
- The company projects adjusted Ebitda to range from $90 million to $105 million in the fourth quarter, according to a letter to shareholders. The midpoint is lower than the $102 million analysts expect on average.
Market Reaction
- Zillow shares rose more than 11% in late trading. They had closed at $56.08 Wednesday, down 1.1% since the beginning of the year.
(Updates with quote from CEO, share trading.)
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