Shares slid 12 percent this week on news Zillow Group is falling short of revenue and earnings expectations in 2015. In a call to investors on April 14, CEO Spencer Rascoff stressed the transitory state of the company following its acquisition of Trulia, which was delayed by a lengthy review by the Federal Trade Commission (FTC).
“2015 is a transition year and we’re trending a couple quarters behind where we’d like to be, due to the protracted FTC approval process which only ended two months ago,” explained Rascoff. “Specifically, we’re expecting pro forma revenue around $690 million for full year 2015, of which Market Leader is about $40 million.”
These projections fall well below FactSet’s expectation of $740.4 million, according to MarketWatch reports. Though Zillow announced its acquisition of Trulia in July, the deal was not approved by the FTC until February of this year.
Despite the setback, Zillow and Trulia have combined a number of offerings since the approval, including rental listings, mortgage purchase and refinance products and display ads. Manhattan-based listings on Trulia are now powered by StreetEasy, Zillow’s online marketplace for New York City properties.
The news comes just one week after ListHub ceased syndication of listings to Zillow Group websites. Zillow has been embroiled in ongoing litigation with News Corp subsidiary Move, Inc., owner of ListHub and operator of realtor.com®, beginning in January with Zillow’s early termination of its agreement with ListHub, and culminating with a court ruling that set an end date for syndication to both Zillow and Trulia on April 7.
Zillow has worked quickly to recoup the loss, securing listings via direct syndication agreements with hundreds of MLSs. Although revenue expectations are disconcerting, the termination of the agreement will mean little to the company’s bottom line, Rascoff says.
“Brokerages, agents and home sellers explicitly want their listings on Zillow and Trulia, as well as our network-powered sites,” says Rascoff. “As a result, we have established direct feed relationships with hundreds of MLSs since January. Zillow and Trulia now have more active listings than we would have had if the News Corp contract had not ended.”
In the meantime, Move has been moving forward with strengthening its offerings, namely realtor.com®. In addition, ListHub has inked renewal deals with Century 21, Coldwell Banker, RE/MAX and Realty Executives, and has also established a new agreement with Leading Real Estate Companies of the World®.
“Move is moving full steam ahead on its mission of putting real estate at the fingertips of consumers and connecting them with the indispensable services of real estate professionals,” the company said in a previous statement to RISMedia.
Future plans for Market Leader, which was owned by Trulia prior to the acquisition, are pending. Though existing customers will continue to receive product support, the pursuit of new clients has been halted as Zillow explores its options.
“We have made great strides in successfully bringing these two companies and cultures together in eight short weeks with minimal drama and almost no lost productivity,” Rascoff said. “The teams are working well together and, quite frankly, my greatest fear going into this acquisition—that organizational thrash would set us back—has just not happened.”
The integration of both companies will position Zillow Group for an “incredibly bright 2016 and 2017,” says Rascoff.
Stay tuned to RISMedia for continuing developments.
