Shares of real estate technology company Zillow (Z 0.98%) (ZG 1.72%) jumped as much as 20.5% in trading on Thursday after the company reported fourth-quarter earnings. Shares held gains midday and were up 17.9% at 11:35 p.m. EST.
Total revenue fell 16% to $789 million in the quarter on a 50% drop in Zillow Offers revenue. But the internet, media, and technology (IMT) segment saw a 33% jump in revenue. Net income was $46 million, versus a $101.2 million loss a year ago, driven by a more than quadrupling of income from the IMT segment.
As far as outlook goes, management expects first-quarter 2021 revenue to be between $1.07 billion and $1.11 billion with adjusted EBITDA of $114 million to $138 million.
The drop in revenue was due to a reduction of home inventory coming into the fourth quarter. But after buying 1,789 homes in the fourth quarter we should see Zillow Offers revenue pick up in 2021.
There's a lot to like from this earnings report, driven by a hot housing market. Zillow's digital business continues to see both increased usage and more advertising from real estate agents. And with the Offers business starting to generate solid revenue and a gross profit of $29,547 per home, this is a growth stock that has a bright future.