Zillow Group (NASDAQ:Z) (NASDAQ:ZG) reported first-quarter results on May 7. The leading online real estate platform is investing heavily in new growth businesses, which is helping to drive revenue sharply higher, albeit with mounting losses.

Zillow Group results: The raw numbers

Metric

Q1 2018

Q1 2017

Year-Over-Year Change

Revenue

$299.9 million

$245.8 million

22%

Net loss

($18.6 million)

($4.6 million)

N/A

Net loss per share

($0.10)

($0.03)

N/A

Data source: Zillow Group Q1 2018 earnings press release.

What happened with Zillow Group this quarter?

Average monthly unique users of Zillow Group's mobile apps and websites rose 5% year over year to more than 175 million, including 35 million monthly unique rental users. In all, visits to Zillow Group's apps and websites -- Zillow, Trulia, StreetEasy, and RealEstate.com -- jumped 15% to nearly 1.8 billion.

A person pointing towards a screen with a search box and pictures of three different homes

More people are turning to Zillow Group for their house-hunting needs. Image source: Getty Images.

Moreover, Zillow Group is getting better at monetizing this growing traffic: Premier Agent revenue per visit increased 6% to $0.121.

"Zillow Group had a great start to 2018 and we are already executing well on our strategic priorities for the year," CEO Spencer Rascoff said in a press release. "First quarter 2018 revenue growth was driven by strength in the Premier Agent, Rentals, and New Construction marketplaces."

Premier Agent revenue leapt 22% to $213.7 million, fueled by a 58% spike in the number of Premier Agent accounts spending more than $5,000 per month on Zillow's platform. Importantly, these agents appear to be receiving a strong return on their advertising spend, as evidenced by a 38% jump in total sales to Premier Agents who have been customers of Zillow for more than one year.

Rascoff highlighted the success of Zillow's Premier Agent business in the company's first-quarter prepared remarks:

Premier Agent revenue growth for the first quarter of 2018 accelerated sequentially over the fourth quarter of 2017. Bookings in the first four months of 2018 are up 28 percent year-over-year and new advertiser account adds for the first four months are the highest we've seen since 2015. The Premier Agent business is growing fast and is still dramatically under-penetrated relative to its overall potential.

Additionally, rentals revenue soared 35% to $29.1 million, and other revenue -- which includes Zillow Group's new construction marketplaces, dotloop, and display businesses, among others -- surged 33% to $38.1 million. Mortgages revenue, however, fell 6% to $19 million, due in part to higher interest rates, which negatively impacted refinance volume. 

All told, Zillow Group delivered a GAAP net loss of $18.6 million, or $0.10 per share, compared to a loss of $4.6 million, or $0.03 per share, in the first quarter of 2017. And adjusted EBITDA -- which excludes share-based compensation and acquisition-related costs -- was $46.3 million, or 15% of revenue, down from $54.8 million, or 22% of revenue, in the year-ago period.

Looking ahead

For the second quarter, Zillow expects total revenue of $322 million to $327 million and adjusted EBITDA of $49 million to $57 million.

Zillow also provided an updated full-year financial outlook, which includes:

  • Total revenue of $1.433 billion to $1.578 billion, signifying year-over-year growth of 40% at the midpoint, and including:
    • Premier Agent revenue of $917 million to $927 million,
    • rentals revenue of $144 million to $146 million,
    • mortgages revenue of $76 million to $77 million,
    • homes segment revenue of $125 million to $255 million, and
    • other revenue of $171 million to $173 million.
  • Adjusted EBITDA of $260 million to $285 million, up 15% at the midpoint.

Additionally, Zillow said that it expects to hold 300 to 1,000 homes in inventory as part of its new house-flipping business by the end of 2018.

"This year, we are taking our business beyond lead generation by creating better experiences for consumers and further strengthening our partnerships with real estate professionals," added Rascoff. "Our opportunity is expanding with the introduction of innovative products and services, like Zillow Instant Offers, that provide end-to-end solutions for consumers and will generate more home-related transactions across our platforms. It will be an exciting year as we begin the next phase of Zillow Group's growth."

Joe Tenebruso 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.