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Zillow Beats on Both Top and Bottom Lines

By Seth Jayson – Updated Apr 10, 2017 at 7:23AM

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Just the facts, Fool.

Zillow (Nasdaq: Z) reported earnings on May 7. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended March 31 (Q1), Zillow beat expectations on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue grew significantly. Non-GAAP earnings per share shrank significantly. GAAP earnings per share dropped to a loss.

Gross margins grew, operating margins contracted, net margins shrank.

Revenue details
Zillow reported revenue of $39.0 million. The 10 analysts polled by S&P Capital IQ anticipated a top line of $37.4 million on the same basis. GAAP reported sales were 71% higher than the prior-year quarter's $22.8 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.01. The 10 earnings estimates compiled by S&P Capital IQ forecast -$0.03 per share. Non-GAAP EPS of $0.01 for Q1 were 90% lower than the prior-year quarter's $0.10 per share. GAAP EPS were -$0.11 for Q1 compared to $0.06 per share for the prior-year quarter.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 89.4%, 410 basis points better than the prior-year quarter. Operating margin was -9.8%, much worse than the prior-year quarter. Net margin was -9.6%, much worse than the prior-year quarter. (Margins calculated in GAAP terms.)

Looking ahead
Next quarter's average estimate for revenue is $42.0 million. On the bottom line, the average EPS estimate is $0.06.

Next year's average estimate for revenue is $173.1 million. The average EPS estimate is $0.33.

Investor sentiment
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 328 members out of 503 rating the stock outperform, and 175 members rating it underperform. Among 162 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 87 give Zillow a green thumbs-up, and 75 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Zillow is outperform, with an average price target of $56.90.

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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool recommends Zillow. The Motley Fool owns shares of Zillow. 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.

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