Zillow Forecasts Lower Ad Revenue With Agents Getting Discounts

(Bloomberg) -- Zillow Group Inc. expects second-quarter revenue in its core advertising business to decrease 30%, pulled down by discounts designed to keep real estate agents on its platform with the housing market slowed due to coronavirus.

• The company issued guidance for the second quarter on Thursday. It also reported revenue of $1.1 billion for the first three months of the year, beating the average analyst estimate.

Key Insights

• Premier Agent, Zillow’s core business of selling leads to real estate agents, benefited from a strong housing market in January and February, the company said in a letter to shareholders. Annual Revenue growth in the segment accelerated to 11%, from 6% in the previous quarter.
• Zillow said it will likely resume activity in its fast-growing home-flipping program, Zillow Offers, in the next few weeks, after halting purchases in March. Its main competitor in that business, SoftBank-backed Opendoor, resumed operations in Phoenix and plans to gradually reopen in other markets.
• The company said that while buyers and sellers of homes “retreated” in March as social-distancing shut down the economy, demand for homes is now “returning in markets across the country.”
• Zillow Chief Executive Officer Rich Barton said in March that the company would reduce expenses by 25% to guard cash during the housing slowdown.

Market Reaction

• Zillow shares surged more than 12% on Thursday to $48.19, turning positive for the year.

Get More

• Click here to read the company’s earnings statement.

©2020 Bloomberg L.P.