Chapter 1: What is the main topic discussed in this episode?
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Let's take a look at another mover to the upside, and that is Zillow, up a couple of percentage points here in the after-hours trade after the real estate marketplace reported earnings beat on several key metrics. Revenue, $676 million in the most recent quarter here.
EPS at 44 cents a share for the most recent quarter, and guidance for the fourth quarter that says that expect revenue for the current quarter in a range of $645 to $655 million, a low end of that range just above the average of street estimates. Jeremy Waxman joins us right now.
Pleased to say the CEO of Zillow Group to talk a little bit more about the performance and your core business did well, Jeremy. And I am curious as to what drove that. Was there sort of macroeconomic factors behind that marketing? What?
Yeah, thanks for having me. Q3 was a great one for Zillow. As you said, revenue up 16% year over year, and the growth was really across the board. Our for sale revenue, which is mortgages and agent revenue, up 10%, and our rentals market place our rentals revenue up 41%.
And what's driving that outperformance against a housing market that's up mid-single digits is this integrated transaction strategy, building software for buyers, sellers, and renters to use Zillow more and connect with professionals and get more transactions done with our software and our partners. That's coming to life in more places. So that's what's driving the revenue growth in for sale.
That's what's driving the revenue growth in rentals. And that's what's driving a great Q3 for us.
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Chapter 2: What were Zillow's Q3 revenue results and key metrics?
And then it's a great business because it's more efficient for them to use one platform and get multiple services. So you're right, it is very small today. It is growing nicely. It's growing double digits and has all year. We would love to see that business continue to grow over time.
As I said, the strategy there is really offer that service to our buyers inside of Zillow, offer it to our agents who are working with those customers, and just become one of their loan offerings for more of those transactions.
Jeremy, I'd love to get a little bit more detail when it comes to the breakdown of buyers versus renters, because with mortgage rates still at the levels that they are, you know, one of the narratives out there is that actually you take a look at the monthly payment. And for a lot of folks, it makes more sense to just rent versus to buy something.
And I'm wondering when you take a look at the trends on Zillow, whether that's still the case or are we starting to see that shift?
Yeah, unfortunately, it is still a real affordability crisis in the housing market. And one way to think about that is just where are things versus pre-pandemic? Home prices are up nearly 100% from pre-pandemic levels. So we talk a lot about mortgage rates and the rise in mortgage rates from those lows, but it's really home prices that are making things unaffordable.
Rent affordability, rent prices have only gone up about 30%, 40%. It's still more challenging from pre-pandemic, but it becomes more affordable to rent versus buy in many markets. You're seeing many folks who are trying to be first-time homebuyers, that's just out of reach, and they are choosing to rent again.
The good news for Zillow is by offering both of those marketplaces, we can help them with those needs. You see our rentals business growing incredibly rapidly, and that's now more than a quarter of our revenue. Those renters are tomorrow's buyers. So yes, we're helping them find a place to rent, but we're also helping them get ready to buy.
We are helping them report their rent to the credit bureaus to start building their credit score to get them ready for that home loan. We're helping them with tools where they can understand what they could afford when they go shop. Because most of those folks, as you point out, they are what we call dual tracking. They are thinking about, could I buy or should I re-rent?
And having all those options in one place is really what they need to make that decision.
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Chapter 3: How is Zillow adapting to the current residential real estate market?
Absolutely. Rentals is a fast-growing business for us, and it's a really great experience for our consumers. Our mission is to help more and more people get home. You can't do that if you're not helping renters get home because there's so many more renters than buyers and sellers every year. And what's great about our rentals business is it's really solving the fundamental problem a renter has.
There is no one database of all the rentals. You have to scour everywhere online and off to find a place on a very compressed timeframe. So we set out to try and organize as much of the inventory as possible. And we now have the most listings. We have two and a half million rental listings on Zillow.
Everything from those big buildings to the single family homes that are for rent in your neighborhood. That is what brings renters to Zillow. You want to find a place, you want to go where there are the most places to look for. That's why we have the largest audience now. Zillow Rentals has 36 million unique visitors per month coming to Zillow. It's the largest audience.
Those factors are now why the revenue is growing.
Chapter 4: What factors contributed to Zillow's revenue growth in Q3?
Right. Advertisers, big property managers who are looking to fill their vacancies, they want to tap into that audience. And so they're what's driving the revenue growth up 41% in Q3. Multifamily revenue, those advertisers are at 62% year-over-year revenue growth.
All right, Jeremy, really appreciate you taking the time after earnings. That is Jeremy Waxman. He is Zillow Group CEO.
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