Zillow delivered a strong performance during the first three months of 2022, despite a mix of housing market changes that the company’s chief executive described as “choppy” in a recent earnings call.
“In these volatile times, we are especially proud of our company and brand, one that helps people find their home, a place of comfort and safety,” said Zillow co-founder and CEO Rich Barton.
According to its latest earnings report, the Seattle-based company earned $4.3 billion in Q1 of 2022—up 250% from last year. It also delivered an adjusted EBITDA of $220 million.
Zillow’s homes segment—which included Zillow Offers—contributed the lion’s share of the earnings boost, generating $3.7 billion in Q1 as the wind-down of its iBuying operation continued to progress faster than anticipated.
“We reduced our exposure to housing inventory risk on our balance sheet to approximately $500 million and reduced related asset-backed debt by $2.6 billion in the quarter,” Barton said.
Barton also noted that Zillow only has 100 homes left of its 20,000 property cache houses acquired through Zillow Offers.
“We felt confident in November, and we feel more confident today that no longer being a principal in the iBuying business with the right decision for Zillow given our desire to serve the full breadth of our audience and the attractive margin profile of our core business,” Barton said.
The company also posted a 10% increase in year-over-year revenue in its Internet, Media & Technology (IMT) segment—reeled in $490 million—which includes Zillow’s Premier Agent business.
Premier Agent revenue grew 9% year-over-year to $363 million.
Zillow’s mortgage segment saw a decline in revenue year-over-year, tallying $46 million—down 32% from the same period last year.
As Zillow nears completing its iBuying wind-down efforts, the company has also kept its eye on its future, which Barton said will primarily center around a multi-year plan to build a “housing super app.”
“As we said last quarter, our evolved strategy has an increased focus on our mid-funnel efforts as we look for opportunities to increase engagement transactions and revenue transactions from where we are today,” Barton said. “It’s important to note that our strategy and 2025 targets are grounded in the opportunity in the U.S. housing market, which we shared last quarter.”
At the start of the earnings call, Barton acknowledged a series of challenges facing the housing market that has created uncertainty for the year as inventory remains low and the widening affordability gap strains aspiring buyers.
Amid low inventory levels, Barton indicated that the intent to move is strong among aspiring buyers.
“These dynamics drove home values up an astonishing 21% year-over-year in March despite rising interest rates, which, of course, exacerbate affordability challenges,” he said. “So while we know people are still eager to move, market conditions are making it increasingly difficult.”
Zillow saw a 5% dip in traffic to its mobile apps and websites in Q1, with 211 million average monthly unique users.
Barton admitted that all the factors at play in the market are likely to soften total consumer transaction value growth. Despite potential headwinds, the tech giant and its chief executive conveyed confidence in the future.
“Zillow is more well-positioned than we are on the balls of our feet with our knees bent, playing through this uncertain macro environment,” Barton said. “We see a great deal of opportunity in front of us, which asks for investment. But we also recognize that we control the levers of our investment spend should adjustments become necessary in the future.”
