Zillow Group (NASDAQ:Z)(NASDAQ:ZG) is set to release first-quarter 2016 results Tuesday, May 3, after the market close. With Zillow stock up more than 30% over the past three months on the heels of last quarter's better-than-expected showing, shareholders are undoubtedly hoping the online real estate specialist will be able to sustain its momentum -- especially as (to borrow the words of management during last quarter's call) Zillow chooses "to forgo near-term profitability to invest in long-term growth."
But what, exactly, should investors expect to hear when Zillow's report crosses the wires?
First, Zillow's guidance calls for quarterly revenue of $174 million to $179 million, the midpoint of which represents 8% year-over-year growth on a pro forma basis. That might not sound impressive, but note that it also represents more than 18% growth, excluding revenue from Market Leader, a real estate CRM company Zillow inherited in its acquisition of Trulia last year and sold this past September.
Included within that guidance range should be primary agent revenue of $130 million to $132 million, a 22% increase over last year's first quarter. Meanwhile, display revenue should be roughly $13 million to $14 million, down from $18.3 million this time last year, but consistent with Zillow's strategy of intentionally underinvesting in the display segment in favor of focusing resources on its more promising marketplace business. And trending toward the bottom line, Zillow anticipates first-quarter adjusted EBITDA of $1 million to $6 million, including almost $12 million in legal expenses related to Zillow's defense costs in an expensive ongoing lawsuit brought by News Corp.-owned competitor Move Inc.
We should also keep an eye on Zillow's full-year guidance, which calls for 2016 EBITDA of $115 million to $125 million, including $36 million in legal expenses, and for revenue to increase 26% at the midpoint of its $805 million-to-$815 million range. Zillow management also took the unusual step last quarter of breaking out premier agent revenue of $590 million to $595 million for the year, with the aim of using this transparency to phase out reporting of specific metrics, including advertiser counts and average revenue per advertiser, in 2017.
And that makes sense; while Zillow's monthly revenue per advertiser rose 29% year over year last quarter, to $438, its number of agent advertisers has fallen for the past three quarters on a sequential basis, most recently to 92,366 as of Dec. 31, from 96,965 three months earlier. But that's not a symptom of Zillow's declining appeal to agents, but rather of its previous strategic decision to focus on quality over quantity with higher-performing agents. Last quarter, same-agent advertisers sales climbed 50% year over year. Agents who spent more than $5,000 per month rose 48% in number, while the amount of money these agents spent overall on the platform climbed 62%.
Digging deeper into the drivers behind Zillow's business, investors will also receive color regarding the company's overall average monthly unique visitors. Last quarter, average monthly unique visitors rose 61% year over year, to 124 million, across Zillow's four primary consumer brands, including Zillow, Trulia, StreetEasy, and HotPads. What's more, Zillow Group brands most recently represented around 70% market share of all mobile-exclusive visitors to the online real estate category.
Finally, I'd like some color on the effectiveness and early consumer responses to Zillow's new "Home" ad campaign, which kicked off with eight spots in mid-February, and was set to expand with several more over the spring and summer seasons. Brand-building investments such as this build on the $100 million Zillow spent advertising its brands last year alone. So far, those investments have proved effective enough to bolster Zillow's audience market share to nearly half the real estate category overall, according to comScore. Further, Zillow revealed when it launched the campaign that its unaided brand awareness had grown from 9%, before advertising, to over 31%.
Even so, the company still only commands a small fraction of the estimated $12 billion that real estate agents spend advertising their listings each year. As the network effect of Zillow's branding efforts becomes more evident and its audience grows ever larger, the size of its advertising market share should continue to follow suit.