5 Things Zillow Inc. Wants You to Know

Zillow Inc. had an interesting conference call this summer, showing off and taking names.

Aug 26, 2014 at 9:25AM

Photo: The Motley Fool

Zillow (NASDAQ:ZG) has had an interesting summer, highlighted by July's announcement that it would be buying smaller rival Trulia (NYSE:TRLA) in a $3.5 billion deal.

As fate would have it, Zillow hosted its second-quarter earnings call earlier this month, giving it an opportunity to discuss the deal, its recent performance, and the future of real estate portals.

It was another blowout performance, giving Zillow another opportunity to boast. Let's go over a few of the interesting morsels out of Zillow's conference call in early August. 

Zillow's hitting on all cylinders

We are executing well on our three strategic priorities of growing our audience, growing our Premier Agent business, and growing our advancing marketplaces. 

It's clear that Zillow's rocking in terms of growing its audience. It attracted 81.1 million average monthly unique users during the quarter, 27 million users ahead of the prior year. After the quarter ended, Zillow drew a record 89 million visitors across its site and mobile app in July. Mobile's a big part of Zillow's reach these days accounting for two-thirds of its usage. A whopping 500 million homes were viewed on Zillow from a mobile device last month.

Premier Agent -- the real estate professionals that pay up for greater visibility and enhanced access to the portal's features -- are on the rise. Booking volume during the quarter more than doubled over the past year, up a head-turning 40% sequentially. In fact, Premier Agent revenue growth has accelerated in each of the past three quarters.

The third strategic priority is growing its advancing marketplaces. Its Zillow Mortgages marketplace took a step back, but it actually held up better than the overall mortgage market as loan applications, and particularly refis, have been sliding. The weakness in drumming up mortgage leads was more than offset by growth in Zillow Rentals, HotPads, and StreetEasy. 

Things still don't "ad" up

We have been reinvesting much of the upside into brand advertising. For the full year 2014, we now expect $75 million in advertising spend versus our initial outlook of $65 million, with about half of the $10 million increase yet to be spent in the back half of the year.

This is actually a pretty big admission. Some have argued that the combination of Trulia and Zillow will make it easier for the combined company to relax its marketing budget. It will no longer have to spend big ad dollars to set one apart from the other, often at the other's expense. 

The deal won't close until 2015, but it's still odd to see Zillow gearing up to spend more than less when it knows that it has Trulia in its back pocket. 

Things continue to get even better than Zillow's own upbeat outlook 

Due to our strong second quarter results and record bookings, we are increasing our total revenue outlook from $306 million to $322 million at the midpoint of the range for 2014 and also increasing our EBITDA outlook from $49 million to $53 million at the midpoint.

Zillow boosting its outlook after yet another blowout quarter isn't a surprise. One thing worth adding to this heartier guidance is that this has nothing to do with July's announcement of the upcoming Trulia acquisition. As pointed out earlier, Zillow doesn't expect that particular deal to close until next year. A strong quarter and a record July are clearly helping. 

Realtors are leaning more on Zillow for leads

The increase in ARPA (average revenue per agent) has been almost entirely driven by volume. We went through the numbers with a fine-tooth comb, and it was effectively all volume.

A big driver at Zillow is that real estate pros continue to spend more to get noticed on Zillow. ARPA clocked in at a record $320 for the quarter, 20% ahead of where it was a year earlier. Same agent ARPA for Premier Agents was up an even more impressive 62%.

Zillow isn't charging them more for their leads. It points out that local ad prices have held fairly steady in recent quarters. The difference here is that Zillow's volume of impressions continues to outpace agent growth. Real estate brokers and agents clearly aren't complaining about the extra leads.

Zillow plays nice with social media as a corporate communications platform 

I'll do a Twitter question and then back to the call in a moment.

Brian Bolan -- @bbolan1 -- asks, "Are you seeing any real estate areas that are becoming a little bubblicious?"

Zillow became the first publicly traded company to invite analysts and investors to ask conference call questions via Twitter a little over a year ago, and clearly it's still doing exactly that. It still leans mostly on Twitter questions asked by analysts and in this case a former research analyst, but it's great to see this continuing at Zillow. The democratization of Twitter is a neat thing, even if it would be great if more of the questions presented during its latest earnings call came from regular retail investors. 

And, just so you're not left hanging on the answer to the actual question, San Francisco and New York City were singled out as two markets that seem to show no signs of cooling down.

Take advantage of this little-known tax "loophole"
Recent tax increases have affected nearly every American taxpayer. But with the right planning, you can take steps to take control of your taxes and potentially even lower your tax bill. In our brand-new special report "The IRS Is Daring You to Make This Investment Now!," you'll learn about the simple strategy to take advantage of a little-known IRS rule. Don't miss out on advice that could help you cut taxes for decades to come. Click here to learn more.

Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Zillow. The Motley Fool owns shares of Zillow. 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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information