In an earnings report today, Seattle-based Zillow Group, the operator of listing portals Zillow, Trulia, StreetEasy and RealEstate.com, posted record revenue of $282.3 million in fourth-quarter 2017 and increased its full-year revenue by 27 percent year over year to a record $1.077 billion in 2017.

In an earnings report today, Seattle-based Zillow Group, the operator of listing portals Zillow, Trulia, StreetEasy and RealEstate.com, posted record revenue of $282.3 million in fourth-quarter 2017 and increased its full-year revenue by 27 percent year over year to a record $1.077 billion in 2017.

Zillow Group’s revenue beat its own quarterly and annual forecasts, though the company did not meet its expectations for a profit in the fourth-quarter and a $5 million to $10 million net loss for 2017. The company posted a net loss of $77.2 million in fourth-quarter 2017 and a net loss of $94.4 million for full-year 2017. The losses include recognition of a $174 million reduction in the fair value of the Trulia brand which was partially offset by a $90 million tax benefit.

The company’s revenue expectations stand between $291 million and $296 million for first-quarter 2018 and between $1.302 billion and $1.317 billion for full-year 2018. The company expects a net loss of between $13.3 million and $18.3 million in the first quarter, but a profit of between $38 million and $53 million for all of 2018.

As usual, most of the company’s revenue came from Premier Agent advertisers. That program pulled in $199.5 million in Q4, up from $164.3 million in the fourth quarter of 2016 — a 21 percent jump. Full year Premier Agent revenue rose 26 percent to $761.6 million from $604.3 million in 2016.

Zillow Group also reported that traffic to its mobile apps and websites reached more than 151 million unique users in the fourth quarter, up 8 percent year over year.

“Zillow Group had another fantastic year of record results in 2017 and exceeded $1 billion in revenue for the first time,” said Zillow Group CEO Spencer Rascoff in a statement.

“We successfully transitioned advertisers to an auction-based pricing model, launched RealEstate.com, and continued to grow our emerging marketplaces, including two strategic acquisitions.

Spencer Rascoff

“In 2018, we plan to deliver better experiences for consumers buying, selling or renting a home, and strengthen our partnerships with real estate professionals by aligning our growth with their success.”

The company estimated that Premier Agents and Brokers earned about $6.5 billion in commissions from contacts from Zillow Group in 2017, which the company estimated represents about 7.5 percent of the $87 billion total real estate agent commissions paid in the U.S. last year. That’s an increase from about 5 percent of all commissions in 2016.

In an earnings call with investors, Rascoff announced that company will integrate its transaction management platform, dotloop, with its Premier Agent app sometime in the next couple of months.

Dotloop, which Rascoff referred to as a “sleeper hit” for lead conversion, has “doubled usage and tripled revenue since we acquired it” in August 2015, he said.

With that integration showing agents the relationship between a lead from Zillow and a closed deal,“agents will be able to see ROI on an individualized basis,” potentially prompting them to spend more on advertising, Rascoff added.

Zillow Group’s 2018 priorities

During the investor call, Rascoff laid out the company’s strategic priorities for 2018:

  • Grow audience size and increase engagement across all brands — including launching new brands and into new geographies. Rascoff noted that “international expansion is a distinct possibility” but did not elaborate further.
  • Create better experiences for consumers and more efficiency for real estate industry partners. “This happens as we accompany home shoppers further down the funnel and closer to the transaction,” Rascoff said.
  • Evolve revenue models in each marketplace to better align Zillow Group’s results with transactions and industry partners’ commissions.
  • Attract and retain the best talent and leverage Zillow Group’s unique company culture focused on innovation as a competitive advantage.

“With our new priorities, we are moving into the next phase of our evolution, in which we will take our business beyond lead generation, allowing us to better serve consumers, and cementing our partnerships with real estate professionals,” Rascoff said.

An example of this priority shift is today’s launch of Out East, a hyperlocal listing site for the Hamptons, Rascoff said. Out East replaces HREO.com, which Zillow Group acquired in January 2017.

The company also sees a ” huge business” opportunity from rentals and plans to launch products “that make the rental process more seamless for both sides over the next few months,” Rascoff said.

Zillow Group predicted its rentals revenue would come in between $30 million and $31 million in Q1 2018 and between $144 million and $146 million for all of 2018.

Expenses and revenue

Zillow Group’s Q4 expenses clocked in at $443.6 million, up from $224.9 million a year earlier. Expenses for all of 2017 were $1.24 billion, up from $1.04 billion in 2016. Sales and marketing expenses in 2017 accounted for 42 percent of revenue at $448 million. Technology and development costs were 30 percent of revenue at $320 million. General and administrative costs were 20 percent of revenue at $211 million.

Besides Premier Agent, other sources of Zillow Group’s “marketplace revenue,” which totaled $1.007 billion in 2017 (up 29 percent from $778.1 million in 2016) include:

  • Other real estate revenue — $165 million in 2017, up 61 percent year over year (this includes “Zillow Group Rentals and new construction, as well as revenue from the sale of various other advertising and business software solutions ”). Starting with its first-quarter 2018 results, Zillow Group will start reporting Rental Revenue as its own separate category.
  • Mortgages revenue — $80.6 million, up 13 percent year-over-year.
  • Display revenue —$69.6 million, up 2 percent year-over-year.

Kathleen Philips

Zillow Group spent $156.5 million on advertising in 2017, up 30 percent from $120.2 million in 2016. The company plans to boost its advertising spend further in 2018, Zillow Group Chief Financial Officer Kathleen Philips told investors.

The company also plans to increase its spending on technology and development from $320 million to about $370 million in 2018, according to Philips.

“We continue to believe that it is important to invest in new products and technology today to stay ahead of changing consumer expectations that are disrupting the real estate category,” she said.

“We expect to invest approximately $50 million more than we did in 2017 in innovations like Instant Offers, Concierge, 3D Homes, Rental products, PA app enhancements, technology infrastructure and data, along with other initiatives that we believe will further position Zillow Group as both the consumer destination for home shopping and the preferred long-term technology partner to the real estate industry.”

The company ended the fourth quarter with nearly 3,200 employees.

Premier Agent growth

Premier Agent revenue made up 71 percent of both Zillow Group’s fourth-quarter revenue and its overall revenue in 2017.  Premier Agent revenue per visit rose 1 percent on an annual basis in the fourth quarter, down from 5 percent year-over-year per visit growth in the third quarter.

Of total Premier Agent bookings for the fourth quarter, 63 percent were sales to existing Premier Agents, up from 52 percent in the third quarter. Total sales to Premier Agents who have been customers for more than one year rose 41 percent year over year in Q4.

At the same time, the number of Premier Agent accounts spending more than $5,000 per month grew by 70 percent year-over-year and increased 64 percent on a total dollar basis, the company said.

Zillow Groups anticipates Premier Agent revenue will come in at between $206 million and $208 million this quarter and between $900 million and $910 million for all of 2018.

The company no longer reports its agent advertiser count, but in today’s call, Rascoff assured investors that “there’s no doubt in my mind that the number of agents [receiving leads from Zillow Group] … is at an all-time high.”

Editor’s note: This story has been updated with details from Zillow Group’s earnings call with investors and from the company’s quarterly earnings filing with the SEC.

Email Andrea V. Brambila.

Like me on Facebook! | Follow me on Twitter!

Show Comments Hide Comments
Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Success!
Thank you for subscribing to Morning Headlines.
Back to top
×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription
×