Release Date: November 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Zillow Group Inc (Z, Financial) reported a 17% year-over-year revenue growth in Q3 2024, outperforming the residential real estate industry.
- The company saw a 24% year-over-year increase in rentals revenue, with multifamily rentals revenue up 38%, driven by growth in multifamily property count.
- Zillow Home Loans experienced significant growth, with purchased loan origination volume up 80% year over year, contributing to a 63% increase in mortgages revenue.
- The company successfully expanded its enhanced markets, surpassing its goal with 43 markets, which contributed to increased connection and conversion rates.
- Zillow's investments in technology, such as ShowingTime and Follow Up Boss, are driving improved connection rates and enhancing the customer experience.
Negative Points
- Despite strong revenue growth, Zillow Group Inc (Z) reported a GAAP net loss of $20 million for Q3 2024.
- The housing market remains challenging due to affordability issues, which could impact future growth.
- Zillow's fixed cost base remains high, with a $1 billion annualized run rate, which could pressure margins if revenue growth slows.
- The company faces potential risks from regulatory changes, such as those related to the National Association of Realtors settlement.
- Zillow's strategy involves significant investments in marketing and technology, which may not yield immediate returns and could affect short-term profitability.
Q & A Highlights
Q: Can you provide insights on how lead conversion for Real-Time Touring compares to other types of connections, and how many agents are transitioning to the Flex model in markets where Real-Time Touring is rolled out?
A: Jeremy Wacksman, CEO, stated that Real-Time Touring converts to transactions at about three times the rate of other touring types. Real-Time Touring is expected to be north of 25% of connections by year-end. It is available across both payment models and helps identify higher-intent customers, benefiting conversion rates.
Q: Are there any structural changes to conversion rates due to the regulatory changes and mandated buyers agreements for agents?
A: Jeremy Wacksman, CEO, noted that the buyer's agreement is a helpful friction for buyers, educating them and preparing them better for meeting agents. It's available on more than 90% of touring connections nationwide and is tailored by state, contributing positively to the process.
Q: What are the drivers behind Zillow's residential revenue outperformance compared to the broader industry?
A: Jeremy Hofmann, CFO, highlighted several factors: continued conversion improvements, strong growth in Zillow Showcase, performance of the new construction marketplace, and positive reception of software solutions like ShowingTime+ and Follow Up Boss.
Q: How is Zillow managing stock-based compensation, and what are the goals for it going forward?
A: Jeremy Hofmann, CFO, stated that Zillow plans to leverage stock-based compensation by controlling fixed costs and growing revenue, which will drive greater GAAP profitability over time. The fixed cost base is around $1 billion annually, with 90% of stock-based compensation within that bucket.
Q: Can you discuss the demand and pricing strategy for Zillow Showcase as it rolls out?
A: Jeremy Wacksman, CEO, mentioned that the pricing, which varies by home price and geography, is well-received by agents and teams. The challenge lies in helping agents operationalize the change, but the product continues to show strong engagement and benefits agents in winning more business.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
