Most people know Zillow Inc (NASDAQ:Z) best for its online home-value estimates, providing a gauge of how home prices have changed over time. Yet the company is working hard to go well beyond those free services to make the website a vital part of real-estate professionals’ business strategy. Let’s take an early look at what’s been happening with Zillow Inc (NASDAQ:Z) over the past quarter and what we’re likely to see in its quarterly report.
Stats on Zillow
| Analyst EPS Estimate | ($0.03) |
| Year-Ago EPS | $0.10 |
| Revenue Estimate | $37.39 million |
| Change From Year-Ago Revenue | 64% |
| Earnings Beats in Past 4 Quarters | 4 |
Source: Yahoo! Finance.
Will anything hold Zillow’s earnings back this quarter?
Somewhat surprisingly, analysts have dramatically reduced their views on Zillow’s earnings over the past several months. They’ve reversed initial calls for a modest profit in the first quarter, and they’ve slashed their full-year earnings estimates by a third. But the stock has ignored analysts’ concerns, pushing share prices up 70% since late January.
One thing that has stoked optimism for Zillow Inc (NASDAQ:Z) recently came when newly public rival Trulia Inc (NYSE:TRLA) posted extremely strong results late last month. As with many start-ups, Trulia Inc (NYSE:TRLA) lost more money than expected, but a near-doubling of revenue clearly reflects the upturn that we’ve seen in housing data over the past several months, and Trulia Inc (NYSE:TRLA)’s optimistic views of the current quarter bode well for Zillow Inc (NASDAQ:Z) as well.
But the key for Zillow to stay ahead of Trulia is to do everything it can to bolster its network effect. The company has been willing to sacrifice profits to bolster its advertising in an attempt to capture more subscriptions from real estate agents and mortgage-loan brokers as well as revenue from companies that want to advertise on Zillow Inc (NASDAQ:Z)’s website.
Zillow is also taking steps to try to stand out from its competitors. In February, the company launched its Zillow Digs home-improvement platform, allowing homeowners to sketch out remodeling projects and then get local contacts and estimates on how much the work would cost. Some early reviews of the service have been negative, however, with one magazine arguing that the figures Digs comes up with aren’t always reflective of actual costs. More recently, Zillow made its rental app accessible to Spanish-language speakers, tapping into a key demographic in many of the hottest real-estate markets.
In Zillow’s quarterly report, watch for the company to report on its continuing progress in moving its revenue mix away from advertising toward more reliable subscriber income. With many believing that Google Inc (NASDAQ:GOOG) could pose a major competitive threat to Zillow if it chose to get into real-estate information, Zillow Inc (NASDAQ:Z) needs to move as quickly as it can to keep its network of real-estate pros happy with its services
The article The Housing Rebound Should Lift Zillow’s Prospects originally appeared on Fool.com and is written by Dan Caplinger.
Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter: @DanCaplinger. The Motley Fool recommends and owns shares of Google and Zillow.
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