Zillow Group Inc. (NASDAQ:Z)(NASDAQ:ZG) announced third-quarter 2017 results on Tuesday after the market closed, with broad-based growth and more users than ever helping the online real estate platform leader to once again exceed its financial guidance. Zillow also showed no signs of slowing down, providing encouraging guidance for the fourth quarter and modestly boosting its full-year outlook.

In the meantime, let's take a virtual tour to better understand what drove Zillow's business at it kicked off the second half of the year, as well as what investors can expect in the months ahead.

Zillow app displaying maps and homes on a tablet and smartphone

IMAGE SOURCE: ZILLOW GROUP.

Zillow Group results: The raw numbers

Metric

Q3 2017

Q3 2016

Year-Over-Year Growth

Revenue

$281.8 million

$224.6 million

25.5%

GAAP net income (loss)

$9.2 million

$6.8 million

35.3%

GAAP earnings (loss) per share

$0.05

$0.04

25%

Data source: Zillow Group.  

What happened this quarter?

  • On an adjusted (non-GAAP) basis, which adds perspective by excluding items like stock-based compensation, Zillow's net income was $38 million, or $0.19 per diluted share, up from $32.9 million, or $0.17 per share in the same year-ago period.
  • Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) increased 19.3% to $80 million.
  • These results compare favorably to Zillow's latest guidance, provided in August, for revenue of $273 million to $278 million and adjusted EBITDA of $64 million to $69 million.
  • Marketplace revenue increased 25% to $281.8 million, including:
    • a 24% increase in Premier Agent revenue to $197.1 million, in line with guidance for $196 million to $198 million.
    • 45.4% growth in "other real estate" revenue to $44.8 million -- driven by businesses like agent services, Naked Apartments, StreetEasy, rentals, and dotloop -- well above guidance for $40 million to $41 million.
    • 6% growth in mortgages revenue to $20.9 million, near the high end of guidance for $20 million to $21 million.
  • Display ad revenue rose 8% to $19.1 million, above guidance for $17 million to $18 million. Recall that Zillow has consciously under-invested in its display business in order to improve its user experience and focus on the more promising marketplace opportunity.
  • Visits to Zillow Group Brands' websites and mobile apps -- including Zillow, Trulia, StreetEasy, and RealEstate.com -- rose 19% year over year to almost 1.7 billion. Premier Agent revenue per visit climbed 5% to $0.118.
  • Monthly average unique visitors increased 6% year over year to over 175 million, including an all-time high of over 187 million in July 2017.
  • Total sales to Premier Agents who spent more than $5,000 per month increased by 98% year over year, and rose 88% on a total-dollar basis. Total sales to Premier Agents who have been customers for over a year also climbed 45%.

What management had to say

Zillow Group CEO Spencer Rascoff called it an "exciting" year so far, lauding Zillow's record revenue and profitability. He also elaborated on Zillow's investments in innovation:

We created several innovative products and further cemented our leadership position in the real estate category. Consumers are demanding more than ever from their real estate experiences. We are delivering new products that will delight consumers and our industry partners, such as 3D home tours that can be captured on an iPhone, and our test of Zillow Instant Offers that allows home sellers to compare an agent's estimate of their home's potential sale price alongside investor offers. We look forward to continuing to innovate in 2018 with new products and services that we believe real estate professionals, home buyers, sellers, owners and renters will love.

Looking forward

For the current (fourth) quarter, Zillow sees consolidated revenue arriving in the range of $274 million to $279 million -- good for 21.5% year-over-over growth at the midpoint and in line with investors' expectations -- comprised of Premier Agent revenue of $199 million to $201 million, mortgages revenue of $18 million to $19 million, other real estate revenue of $42 million to $43 million, and display revenue of $15 million to $16 million.

As such, Zillow now anticipates full-year 2017 revenue of $1.068 billion to $1.073 billion (up from $1.055 billion to $1.065 billion previously), and adjusted EBITDA of $233 million to $238 million (up from $220 million to $230 million previously).

In short, this was a straightforward beat-and-raise scenario for Zillow as the company fosters its innovative roots and extends its real estate industry leadership. So, unless the market laments that Zillow's increased guidance was merely in line with expectations -- and keeping in mind Zillow's propensity for underpromising and overdelivering -- these results offer little not to like from a long-term investors' perspective.

Steve Symington has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Zillow Group (A shares) and Zillow Group (C shares). The Motley Fool has a disclosure policy.