Stock Update (NASDAQ:Z): Zillow Group Inc Reports First Quarter 2015 Consolidated Results; Reaffirms Full-Year 2015 Outlook


ZillowZillow Group Inc (NASDAQ:Z), which houses a portfolio of the largest and most vibrant real estate and home-related brands on mobile and Web, today announced its pro forma and consolidated financial results for the quarter ended March 31, 2015. Throughout this release, financial results are presented on both a reported and pro forma basis. Reported results were prepared in accordance with generally accepted accounting principles (GAAP). Pro forma results exclude items described in the reconciliation tables below and also assume the February 2015 acquisition of Trulia occurred on January 1, 2014, the beginning of the comparable prior year reporting period. The pro forma results are presented in order to provide additional insights into the underlying trends in the business.

“The combined team at Zillow Group is executing extremely well across all of our brands and marketplaces,” said Zillow Group CEO Spencer Rascoff. “Our already massive audience of home shoppers continues to grow throughout our network of brands, and we are rapidly recognizing the benefits of scale. We have integrated the Zillow mortgage and rentals products into Trulia, giving our advertisers and partners access to an even wider consumer audience. And most importantly, we are on track to combine our agent advertising business by the end of 2015, setting us up to fully realize the potential of Zillow Group’s huge and growing audience.”

Pro Forma First Quarter 2015 Financial Highlights

  • Pro forma Revenue increased 35% to$162.5 million from$120.7 million in the first quarter of 2014. Pro forma Revenue excluding Market Leader Revenue increased 41% to$149.0 million from$105.5 million in the first quarter of 2014.
    • Pro forma Marketplace Revenue increased 42% to$136.9 million from$96.3 million in the first quarter of 2014.
      • Pro forma Real Estate Revenue grew 54% to $113.4 million from $73.5 million in the first quarter of 2014.
      • Pro forma Mortgages Revenue grew 33% to $10 million from $7.5 million in the first quarter of 2014.
      • Pro forma Market Leader Revenue decreased 11% to $13.6 million from $15.3 million in the first quarter of 2014.
    • Pro forma Display Revenue increased 5% to $25.6 million from $24.5 million in the first quarter of 2014.
  • Pro forma basic and diluted net loss per share was $0.31 in the first quarter of 2015 compared to pro forma basic and diluted net loss per share of $0.42 in the same period last year.
  • Pro forma net loss was $17.9 million in the first quarter of 2015 compared to pro forma net loss of $23.8 million in the same period last year.
  • Pro forma Adjusted EBITDA was $24.5 million in the first quarter of 2015, or 15% of pro forma Revenue, which was an increase from $12.1 million in the first quarter of 2014, or 10% of pro forma Revenue.

Reported First Quarter 2015 Consolidated Financial Highlights

Zillow Group’s first quarter 2015 consolidated financial results include the results of Trulia’s operations for the partial period from the acquisition date of February 17, 2015 to March 31, 2015.

  • Revenue of$127.3 million.
    • Marketplace Revenue of $108.9 million, including Real Estate Revenue of $93.3 million, Mortgages Revenue of $9.6 million and Trulia’s Market Leader Revenue of $6.1 million.
    • Display Revenue of $18.3 million.
  • Basic and diluted GAAP net loss per share was $1.19 in the first quarter and includes the impact of $0.25 on basic and diluted GAAP net loss per share from acquisition-related costs and $0.51 on basic and diluted GAAP net loss per share from restructuring costs due to the company’s February 2015 acquisition ofTrulia and the related restructuring plan.
  • Basic and diluted non-GAAP net income per share was $0.04 and $0.05, respectively, in the first quarter, which excludes share-based compensation expense, acquisition-related costs and restructuring costs.
  • GAAP net loss was $58.4 million in the first quarter of 2015 and includes the impact of $12.5 million of acquisition-related costs and $25.1 million of restructuring costs due to the company’s February 2015 acquisition of Trulia and the related restructuring plan.
  • Adjusted EBITDA was $16.7 million in the first quarter of 2015, or 13% of revenue.

Operating and Business Highlights

  • In March 2015, nearly 140 million unique users visited Zillow Group consumer brands Zillow, Trulia, StreetEasy and HotPads.
  • The integration of Trulia began quickly after the transaction closed on Feb. 17. Within weeks, Zillow’s and Trulia’s display media business, as well as mortgages and rentals products, were all integrated under Zillow Group, bringing the benefits of increased audience to Zillow Group’s advertisers and partners.
  • As discussed on the April 14 investor call, Zillow Group expects all aspects of the agent advertising products to be integrated between Zillow and Trulia by the end of 2015. By the beginning of 2016, agents will buy media from the combined Zillow Group family of brands.
  • Zillow and Trulia now receive 100% of listings directly, and coverage of for-sale-by-agent listings is better than it ever has been for the two brands. Zillow Groupcontinues to add MLS partners. Since the operating call four weeks ago, 47 new MLSs have started sending direct listings. By receiving listings directly, Zillow Group can provide the most accurate and timely listings to millions of consumers who visit the company’s portfolio of brands each month.
  • Zillow Group’s various brands are the clear category leaders on mobile devices across third party measurement services.1 Nearly two-thirds of our flagship brand Zillow’s usage occurs on a mobile device; on weekends it’s more than 70%. In March, more than half a billion homes were viewed on Zillow Mobile – that’s 228 homes per second.
  • At the end of the first quarter, Zillow Group had a total of 103,415 Agent Advertisers. This number includes organic additions throughout the quarter as well as the addition of Trulia’s agent advertisers, de-duplicated across Zillow and Trulia, but excluding Market Leader-only subscribers. Agent Advertisers spent a record amount with Zillow Group in the first quarter of 2015. The combination of increased impression inventory and advertiser count resulted in average monthly revenue per advertiser (ARPA) of $354 during the quarter (excluding revenue generated by Market Leader and Market Leader-only subscribers).
  • Same-agent sales remained strong in the first quarter, with over 50% of ARPA growth coming from advertisers that have been with Zillow for a year or more. In addition, more than 60% of orders for advertising packages were to existing advertisers buying more impressions.
  • The Zillow Group Rental Network is growing quickly, and over the past year has added more multifamily partners than ever before, increasing new partnerships 84% year-over-year. Today, nearly 90% of the National Multifamily Housing Council’s 50 largest apartment managers are Zillow Group Rentals customers.

Business Outlook – Full-Year 2015

For full-year 2015, Zillow Group reaffirmed its previous outlook, and expects pro forma revenue to be $690 million, which includes Market Leader’s expected revenue of $40 million. The company expects pro forma Adjusted EBITDA to be in the range of $80 million to $85 million. (Original Source)

Shares of Zillow closed today at $97.98, down $0.69 or 0.7%. Z has a 1-year high of $164.90 and a 1-year low of $81.07. The stock’s 50-day moving average is $98.04 and its 200-day moving average is $105.75.

On the ratings front, Zillow has been the subject of a number of recent research reports. In a report released yesterday, Suntrust Robinson Humphrey analyst Robert Peck upgraded Z to Buy, with a price target of $130, which implies an upside of 32.7% from current levels. Separately, on April 15, Cowen’s Thomas Champion reiterated a Hold rating on the stock and has a price target of $94.

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Robert Peck and Thomas Champion have a total average return of 12.7% and 46.7% respectively. Peck has a success rate of 56.9% and is ranked #320 out of 3599 analysts, while Champion has a success rate of 100.0% and is ranked #2108.

The street is mostly Neutral on Z stock. Out of 9 analysts who cover the stock, 5 suggest a Hold rating and 4 recommend to Buy the stock. The 12-month average price target assigned to the stock is $119.00, which represents a potential upside of 21.5% from where the stock is currently trading.

Zillow Group Incoperates the real estate and home-related information marketplaces on mobile and the Web, with a complementary portfolio of brands and products to help people find vital information about homes and connect with local professionals.