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Zillow's (ZG) Q2 Earnings Beat Estimates, Revenues Surge Y/Y

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Zillow Group, Inc. (ZG - Free Report) reported healthy second-quarter 2024 results, wherein both the top and bottom lines surpassed the Zacks Consensus Estimate. The company witnessed a revenue expansion year over year, backed by strong momentum in all verticals.

The company has a solid brand position in the residential real estate industry. It boasts 231 million average monthly unique users across the Zillow ecosystem of apps and sites. Zillow’s advanced technology, such as Real Time Touring, Listing Showcase, Follow Up Boss CRM and ShowingTime touring software, are gaining strong popularity among real estate agents. 

Net Income

In the reported quarter, net loss on a GAAP basis was $17 million or a loss of 7 cents per share compared with a net loss of $35 million or a loss of 15 cents per share in the prior-year quarter. 

On a non-GAAP basis, the company’s net income was $99 million or a gain of 39 cents per share, identical to the year-ago quarter. Non-GAAP net income for the reported quarter beat the Zacks Consensus Estimate by 8 cents.

Zillow Group, Inc. Price, Consensus and EPS Surprise

Zillow Group, Inc. Price, Consensus and EPS Surprise

Zillow Group, Inc. price-consensus-eps-surprise-chart | Zillow Group, Inc. Quote

Revenues

Quarterly net sales improved to $572 million from $506 million reported in the year-ago quarter. Healthy growth in the residential and rental segment boosted the top line. The top line surpassed the Zacks Consensus Estimate of $540 million. 

Residential revenues were $409 million, up 8% year over year from $380 million reported in the year-ago quarter, backed by solid growth in Premier Agent Business. Growth in the New Construction business, expansion of Listing Showcase nationwide through ShowingTime+ and contributions from Follow Up Boss also supported net sales in this vertical.

Rental revenues in the June quarter improved 29% year over year to $117 million. More signups for multi-family properties and greater single-family listings, along with enhancement in Zillow’s Rentals marketplace to improve the renting experience, boosted revenues in this vertical.

The mortgages segment generated $34 million in revenues, up from $24 million in the year-ago quarter, driven by solid growth in purchase loan origination. However, the year-over-year increase in this segment was partially offset by a decrease in mortgage marketplace revenues.

Other Details

Gross profit for the second quarter was $442 million compared with $402 million in the prior-year quarter, with respective margins of 77% and 79%. Operating expenses for the quarter were $480 million compared with the year-earlier quarter’s tally of $469 million. Adjusted EBITDA was $134 million, up from $111 million in the year-ago quarter, driven primarily by higher-than-expected Residential revenues.

Cash Flow & Liquidity

Zillow generated $135 million in cash from operating activities in the first six months of 2024 compared with $193 million in the prior-year period. As of Jun 30, 2024, the company had $1,181 million in cash and cash equivalents with $89 million of lease liabilities, net of current portion.

Outlook

For the third quarter of 2024, Zillow expects total revenues in the range of $545-$560 million. Residential revenues are expected to be in the band of $375-$385 million. Adjusted EBITDA is forecasted to be in the range of $95 million-$110 million. Management expects double-digit revenue growth for 2024, with modest adjusted EBITDA margin expansion, primarily driven by the growth pillars.

Zacks Rank

Zillow Group currently has a Zacks Rank #4 (Sell). 

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Releases

Cogent Communications Holdings, Inc. (CCOI - Free Report) is scheduled to release second-quarter 2024 earnings on Aug 8. The Zacks Consensus Estimate for earnings is pegged at a loss of $1.02 per share, indicating a decline of 684.6% from the year-ago reported figure.

Akamai Technologies, Inc. (AKAM - Free Report) is slated to release second-quarter 2024 earnings on Aug 8. The Zacks Consensus Estimate for earnings is pegged at $1.54 per share, indicating growth of 3.4% from the year-ago reported figure.

Akamai has a long-term earnings growth expectation of 4.8%. AKAM delivered an average earnings surprise of 5.4% in the last four reported quarters.

CommScope Holding Company, Inc. (COMM - Free Report) is scheduled to release second-quarter 2024 earnings on Aug 8. The Zacks Consensus Estimate for earnings is pegged at $0.06 per share, suggesting a decline of 68.42% from the year-ago reported figure.

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