Revenues are inching higher. 2007 is being tagged as "a year of expansion." A return to profitability is just around the corner. A lot of companies may fit the bill, but how many of those are realty firms? Compile the list alphabetically, and you may come up dry --until you hit ZipRealty (NASDAQ:ZIPR).

The cutting-edge residential real-estate brokerage is still growing. Revenue inched 16% higher to $31.3 million. The company dropped from last year's profit to a pro forma gain of $0.01 per share, but that's encouraging when compared to where Wall Street was holding its Open House. Analysts expected a $0.05-per-share adjusted deficit on a mere 1% top-line uptick.

Don't assume that ZipRealty is firing on all cylinders, though. The company's decision to break into new markets, even as many of its competitors are scaling back on their listings, is a gutsy move, but not necessarily a fiscally proven one. ZipRealty has tacked on 24% more agents over the past year, yet real estate transactions have grown at a 12% clip in the same period. Then again, most would agree that it's a relative victory. ZipRealty is a salmon flapping upstream in the cascading real estate market.

The company's aggressive stance will continue. ZipRealty plans to enter New York's Long Island and Westchester Country markets later this year. It already encompasses 2,070 real estate professionals, but plans to close out the year with as many as 2,400.

Growth rarely comes cheap. Even though ZipRealty expects to generate between $105 million and $110 million in revenue this year, it expects to post an adjusted loss of $0.25 per share to $0.40 per share. Despite the red ink, the company expects to resume its pro forma profitability in 2008.

Turning heads while keeping its head
ZipRealty has been an innovator in the industry. The company garnered plenty of press -- positive and negative -- when it allowed folks to post comments on its online listings last year. Its goal is to get property visitors to interact with aspiring sellers, though motives will always be questioned in praising or dissing a home.

The company's commission structure has been an even more disruptive tactic. Conventional brokerage firms charge roughly 6% of a home's selling price as a commission, which the listing broker then splits with the buyer's agent. ZipRealty charges as little as 4.5% to 5%, and it treats the eventual buyer to a 20% slice of that commission.

The break is a blessing to buyers, especially since lenders are being alarmingly diligent about the homes they bankroll these days.

During last night's call, ZipRealty noted that it had very little exposure to the initial subprime meltdown. However, like most agents, it's not immune to stricter lending standards in the future. Thankfully, the company has teamed up with Popular's (NASDAQ:BPOP) E-Loan to help prospective buyers line up financing for their new homes. It may not be enough to get every deal approved, but it's a friend in ZipRealty's corner, given the recent wave of subprime loan defaults.

The real estate market's weakness poses some intriguing values among its online enablers. parent Move (NASDAQ:MOVE) and lead generator HouseValues (NASDAQ:SOLD) join ZipRealty in trading in the single digits. IAC/InterActiveCorp's (NASDAQ:IACI) Lending Tree suffered an 89% decline in operating profits this past quarter, while the company's is still fumbling for an identity.

Hitting 'em where they ain't
It's too early to tell whether the market will reward ZipRealty's ambitious expansion strategy. The shares have held up better than many of its cyberspace peers, and a whole lot better than many real-world residential real estate developers, like WCI Communities (NYSE:WCI) or Toll Brothers (NYSE:TOL).

There aren't too many true ZipRealty competitors to which we can compare the company's financials. Rival Realogy was taken private a few months ago. However, impatient investors can be sure that when the residential real estate market bounces back -- and it will, though we probably haven't seen the bottom yet -- ZipRealty will be in a better position than it was when the malaise kicked in, because it zigged as its rivals zagged.

ZipRealty can afford to be patient. The company's debt-free balance sheet is flush with $3.85 per share in cash -- more than half of what the company's trading for these days. In Realtor-speak, it would be a great home in a lousy neighborhood, priced to sell.

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Longtime Fool contributor Rick Munarriz loves to check real estate listings online even though he has no plans on selling his own home. He does not own shares in any of the companies mentioned in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool's disclosure policy has an in-ground pool and a remodeled kitchen.