Zillow Group’s Q4 Financial Results “Outperformed Expectations,” Rich Barton Reports

Zillow Group announced its consolidated financial results for 2022 and, particularly, the final quarter, along with its optimistic outlook for the first quarter of 2023. 

Zillow CEO Rich Barton shared the highlights of the past year, including recent acquisitions and developments that contribute to the company’s vision of creating a “housing super app.” 

Byron Lazine gave his review of the Zillow shareholder letter in today’s episode of The Hot Sheet.

Here’s what you need to know. 

Q4 2022 Highlights

One of the confident assertions made in the Zillow shareholder letter was Zillow’s dominance of online portal traffic. 

According to Zillow they not only own market share of the online portal traffic, they DOMINATE it $Z pic.twitter.com/DiHhxtJAo7

— Byron Lazine (@ByronLazine) February 15, 2023

Another is the recent acquisition of VRX Media, which accelerated the launch of Listing Media Services with ShowingTime+. 

Rentals aren’t left in the cold, either. Along with the 13% gain in rental revenue, Zillow has reclaimed its number one spot among online rental property portals. 

And with recent user-friendly innovations like their automated tour scheduling, it’s hardly surprising that more renters would look to Zillow first. Until it expands to more markets, though, Apartments.com will likely maintain its foothold in the rental market. 

As for Zillow’s consolidated Q4 2022 revenue, it exceeded the expectations of company leadership by rising above the company’s outlook range—which is notable, given the challenges presented by the 2022 housing market. 

So, while last year began with a dramatic workforce reduction, after winding down its iBuying operation at the end of 2021, the company has taken confident and measured steps forward, focusing on innovations that make it easier and more enjoyable for consumers to shop for homes. 

As a result of these efforts, the company is on solid ground as we begin 2023. Our traffic and brand are extremely strong, with roughly 65% of mobile app users for real estate marketplaces using Zillow’s app. And 2022 was a year when Zillow regained its position as the No. 1 most visited rentals platform, according to Comscore. This positions us well for future growth serving customers over the lifetime of their moving needs, given that nearly every future homeowner starts out as a renter. We exited 2022 with a solid balance sheet, including $3.4 billion in cash and investments, up more than $200 million versus a year ago, even after executing $947  million of share repurchases at a weighted average price of $42.63 throughout the year.

Rich Barton

Zillow Co-founder and CEO

2022 Financial Results

While results “outperformed expectations,” Zillow did see a decline in revenue—as expected. Highlights include:

• Consolidated Q4 revenue was $435 million, and full-year 2022 revenue from continuing operations was $2.0 billion.
• IMT segment revenue was above the high end of the company’s outlook range, declining 14% year over year to $417 million.
• Premier Agent revenue saw a decline of 31%, decreasing 20% year over year to $283 million for Q4. 
• Rentals revenue increased 13% year over year to $68 million as the company continued to see strong traffic and growth in multifamily properties. 
• Mortgages segment revenue was $18 million for Q4, near the midpoint of the company’s outlook range.
• On a GAAP basis, consolidated net loss was $72 million for Q4 and $101 million for 2022. 
• Consolidated Adjusted EBITDA from continuing operations was $73 million for Q4 and $514 million for full-year 2022. 

What’s ahead in 2023: Super App and Company Investments

If you’ve been listening to Zillow, you know the company is hyper-focused on building its housing Super App. Right now, Zillow impacts 3% of all real estate transactions and is aiming to double that percentage in the coming year. 

In keeping with the company’s mission to create a housing Super App, Zillow is focusing its investments across five growth pillars:

1. Touring—with innovations like their automated tour scheduling for renters
2. Financing—by focusing on “building a better mortgage experience” for their customers, like Opendoor’s recent decision to move their mortgage fulfillment to Lower
3. Seller solutions—including its newest service, which allows homeowners to compare selling options (Opendoor cash offer vs. an estimate from a local agent), not to mention Zillow’s recent acquisition of VRX Media and its launch of Listing Media Services. 
4. Enhancing their partner network—by “meaningfully consolidating [their] partner network across all four test markets” to deliver the best customer experience and to rapidly test new products and services, all with the goal of integration
5. Integrating their services—which is the overarching goal behind Zillow’s innovations and partnerships, all in the service of creating a seamless, integrated home shopping experience.  

For more specific details and numbers pertaining to Zillow’s financial results for 2022 and the fourth quarter, see the full shareholder letter.