Zillow (NASDAQ:ZG) may have just surprised the market by announcing mixed fourth-quarter results, but investors sure don't mind. Zillow stock climbed more than 5% in Friday's after-hours trading after the company announced quarterly revenue increased 58% year over year, to $92.3 million, and adjusted net income rose 26.3%, to $0.24 per share. Analysts, on average, were expecting higher earnings of $0.28 per share on sales of just $90 million.
To better understand those results, I posed three important questions for Zillow in my earnings preview yesterday. Here's what the company said:
On the Trulia deal
First, note the exact timing of this report wasn't confirmed in advance as it was last year. As a result, I wondered whether Zillow was waiting to finalize news regarding its impending acquisition of fellow online real estate specialist Trulia (NYSE: TRLA). Previously, Zillow told investors it had certified compliance with the Federal Trade Commission's second investigative request for information regarding the acquisition, and remained optimistic for it to close in the first half of this year.
Sure enough -- and this explains the stock's after-hours rise -- Zillow confirmed the Trulia deal is now expected to close as early as next Tuesday, February 17, following notification from the FTC that it has closed its investigation. Consequently, Zillow will not host its usual fourth-quarter conference call; instead, it will host a conference call to discuss the close of the Trulia acquisition on February 18.
On growth in mobile visits
Next, I wanted to know how well Zillow was sustaining growth in mobile visits. Last quarter, they climbed 70% year over year, accounted for roughly 500 million homes viewed on Zillow in September alone, and represented around two-thirds of Zillow's total visits.
Keeping in mind typical fourth-quarter seasonality, Zillow says that trend continued in Q4 with "nearly" two-thirds of Zillow's 77 million average monthly visits -- an increase of 41% year over year -- coming from mobile devices. That figure rose to "more than 70%" on the weekends. In December 2014 alone, 420 million homes were viewed on Zillow through a mobile device, equating to 157 homes per second.
On being embraced by real estate professionals
Finally, I was watching closely to see whether real estate professionals are embracing Zillow's new services, most recently including a dedicated customer support team designed to cater to their needs, as well as a new listing management and reporting platform called Zillow Data Dashboard.
It's a little early to judge, considering that Zillow just launched both efforts last month. I was hoping to hear specifics on their adoption during Zillow's regular quarterly conference call. Alas, we'll need to wait for the February 18 call to hear more on this front. The company did reiterate that it expects to directly connect with a total of 1.6 million for-sale-by-agent listings through the Dashboard by April 2015.
If Zillow's other pro-centric stats are any indication, however, they're doing just fine winning the hearts of this important group of people so far. Zillow's Marketplace segment revenue climbed 69% year over year to a company record $78.2 million, including 38% growth in Mortgages revenue, to $7.4 million, and 73% growth in Real Estate revenue, to $70.8 million. The latter most notably includes 76% growth in Premier Agent revenue, investments in which Zillow CFO Chad Cohen insisted last quarter were much more important in driving long-term growth than focusing on Zillow's slower-growing Display business. Display revenue rose "just" 17%, to $14.1 million.
Zillow also added 1,428 net new Premier Agent Advertisers in the fourth quarter to bring its total to 62,305 at year-end. Average revenue per advertiser rose to a new high at $359, up from $349 last quarter and $271 in the same year-ago period. Even more telling: A full 60% of Premier Agent bookings came from existing agents buying more impressions, and Premier Agent advertisers who have been on the platform more than two months spent 59% more in the fourth quarter than they did a year ago.
All things considered, and even if we ignore the happy news of the imminent close of the Trulia buy, Zillow appears to be firing on all cylinders, and stronger than it's ever been.