2. Zillow Group, Inc. (NASDAQ: Z)
Number of Hedge Fund Holders: 82
Online real estate marketplace company Zillow recently announced its second-quarter results above expectations. It reported adjusted earnings of 44 cents per share for the second quarter ended June 30. In comparison, the company had reported a loss of 17 cents per share in the year-ago quarter when it was struggling due to the negative effects of Covid-19 on its business.
Revenue for the quarter increased to $1.31 billion, well above $768 million in the comparable period of 2020. The results easily surpassed the consensus forecast of 24 cents per share for adjusted earnings and $1.28 billion for revenue.
Praising Q2 results, CEO Rich Barton said, “Zillow is making rapid and significant progress toward building a seamless, integrated real estate experience for our customers and partners. Our strong second-quarter results show how well we’re executing on the three- to five-year growth objectives we announced in 2019.”
Follow Zillow Inc (NASDAQ:Z)
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Looking forward, Zillow expects to report revenue in the range of $1.93 billion to $2.05 billion for the third quarter. The Q3 outlook is well ahead of $1.45 billion projected by analysts.
RiverPark Funds, in its Q1 2021 investor letter, mentioned Zillow Group, Inc. (NASDAQ: Z). Here is what the fund said:
“With its number one ranking in real estate brand awareness, and more than 200 million monthly unique users and 10 billion visits last year to its mobile apps and websites, Zillow is the leader in online real estate. The company has historically focused on the $20 billion real estate advertising market through its IMT segment but is now also targeting the more than $2 trillion home transaction and related services market in its Homes and Mortgages segments. Just as the internet disrupted travel bookings, job search, home movie viewing, and car purchasing, among other industries, Zillow is disrupting residential real estate by radically simplifying real estate transactions, including inspections, appraisals, title, insurance, mortgages, and buying and selling. Zillow co-founder and CEO Rich Barton has deep experience in disrupting industries, having founded Expedia and co-founding Glassdoor (Rich is also on the board of Netflix).
Zillow’s growing, high margin, high cash flow media business (its IMT segment generated $556 billion of EBITDA on $1.5 billion of revenue last year) is funding the explosive growth of its Homes and Mortgages sector, which has grown from zero in 2017 to $1.9 billion revenue last year. The two businesses work synergistically to provide Zillow with scale and data advantages, as well as low customer acquisition costs. We believe the company’s IMT segment will continue its high-margin, double-digit growth (last year IMT revenue and EBITDA grew 33% and 83%, respectively) and its Homes and Mortgages segment growth will accelerate post-COVID, with margins turning from negative to positive as the business scales.”
