Zillow Talk

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Zillow (Nasdaq: Z  ) may be bringing up the rear in terms of alphabetical ticker symbols, but the recent IPO knows how to go to the head of the class by bringing home good grades.

The fast-growing real estate website delivered better-than-expected quarterly results last night, just as it did three months ago in its first financial report as a public company.

Zillow saw its third-quarter revenue soar 132% to $19.1 million. Adjusted earnings clocked in at $0.05 a share. Analysts were banking on a tweaked profit of just $0.03 a share on $17.1 million in revenue.

Zillow's success comes at a peculiar time. The residential real estate market is still feeling its way for a bottom. parent Move (Nasdaq: MOVE  ) doesn't report until after today's market close, but analysts see flat earnings growth on a 7% decline in revenue. Even if we head out to China where folks are still interested in real estate, China Real Estate Information (Nasdaq: CRIC  ) is growing its revenue at less than half of Zillow's pace.

So what's the secret to Zillow's success? A hook always helps. Just as (Nasdaq: PCLN  ) was able to differentiate itself from the competition with its "name your own price" gimmick to nab travel portal traffic, Zillow's secret sauce may very well be its "Zestimates" -- rough yet sticky perpetually updated home appraisals and suggested rental rates on more than 100 million properties.

Easily accessible proprietary data is a potent hook, and Zillow attracted an average of 24.2 million unique monthly visitors to its website and mobile app, more than double the audience it was reach a year earlier.

If Zillow is where the homeowners, buyers, and sellers are hanging out that's where real estate agents will be, affording the dot-com darling the opportunity to milk juicy display advertising and marketplace revenue. Zillow has been able to take a page out of the Bankrate (Nasdaq: RATE  ) playbook by rolling out a mortgage marketplace, and on Monday announced a deal to extend that marketplace's reach through AOL's (NYSE: AOL  ) Real Estate and DailyFinance websites.

This has been a year of busted IPOs, but Zillow stands tall after back-to-back blowout quarters -- well above its $20 debutante price in July.

Zillow is the pretty house in an ugly neighborhood. Deal with it.

If you want to see if the dot-com speedster can keep that new house smell going add Zillow to My Watchlist.

Motley Fool newsletter services have recommended buying shares of Zillow and Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.

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  • Report this Comment On April 05, 2013, at 4:46 PM, jalalaram333 wrote:

    Zillow is good and after the interview with the CEO I had better approciation.

    I am in the market to buy a condo in DC and just couple of weeks ago we backed out of a condo purchas. It took Zillow more than two days to re-list the condo as available and about a week to email it to me as part of the search criteria! one week is too long; it can be the difference between catching a good deal and losing out. I am not as impressed with Zillow after the experience as I was going into it.

    I found that RedFin compared well with Zillow in the timing of the re-list.

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