Zillow Group Inc in Record Territory on Q4 Earnings Beat

Zillow stockZillow Stock Up 47% in 2021

Zillow Group Inc (NASDAQ:ZG) is a stock I’ve been bullish on for a while now. The last time I looked at ZG stock was back in October 2020, which wasn’t that long ago. But a lot has happened since then.

Last October, Zillow stock was trending steadily higher on solid second-quarter results. It was also being juiced by the strong U.S. housing market, which was being fueled by the increased demand for residential real estate during the coronavirus pandemic.

The company was doing so well, in fact, that ZG stock advanced 18% during the September sell-off.

Zillow stock continues to do well. Trading at $200.45 as of this writing, it has almost doubled since I profiled it last October. More impressively, ZG stock is up 232% year-over-year and 47% year-to-date.

Zillow Group Inc recently reported stronger-than-expected fourth-quarter revenue and earnings. The company also recently announced its acquisition of ShowingTime.com, Inc., a leading online scheduling and home touring platform.

By mid-day February 11, Zillow stock had surged almost 15% since reporting its fourth-quarter financial results after the markets closed on February 10.

Chart courtesy of StockCharts.com

ZG Stock Overview

Seattle-based Zillow is the largest online real-estate platform in the U.S., with 139 million homes in its database. During the fourth quarter of 2020, it had 201 million unique monthly users and 2.2 billion visits overall. (Source: “Overview,” Zillow Group Inc, last accessed February 12, 2021.)

In addition to its sale and rental listings, the company offers other services.

“Zillow Offers” buys and sells homes directly in dozens of markets across the U.S. “Zillow Home Loans” allows its users to get pre-approved and secure financing. “Zillow 3D Home” allows homebuyers to take virtual tours, which has been an indispensable tool during the COVID-19 pandemic. “Zillow Closing Services” helps people close their real estate transactions.

Acquisition of ShowingTime.com

On February 10, Zillow Group announced that it had entered a definitive agreement to acquire ShowingTime.com, Inc., an online scheduling platform for virtual home showings, for $500.0 million. (Source: “Zillow Group to Acquire ShowingTime, the Industry Leader in Home Touring Technology,” Zillow Group Inc, February 10, 2021.)

With a network of nearly one million agents across North America, ShowingTime.com facilitated more than 50 million showings in 2020. Agents can update their listings’ availability for showings through the network, allowing homebuyers to schedule showings with the click of a button.

Q4 Earnings and Revenue Beat

Also on February 10, Zillow Group announced that its revenue for the fourth quarter slipped 16% year-over-year to $944.0 million, far above Wall Street forecasts of $740.5 million. (Source: “Zillow Group Reports Fourth-Quarter and Full-Year 2020 Financial Results,” Zillow Group Inc, February 10, 2021.)

The company’s fourth-quarter net income came in at $46.0 million, compared to a fourth-quarter 2019 loss of $101.2 million. Its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) exceeded the high end of guidance at $170.0 million.

Traffic to Zillow Group Inc’s mobile apps and web sites hit a record 201 million average monthly unique users in the fourth quarter, up 16% year-over-year. During the quarter, Zillow welcomed 2.2 billion visitors, a 27% increase from the fourth quarter of 2019.

The company ended the fourth quarter with cash and investments of $3.9 billion.

Analyst Take

Zillow Group Inc already ran the biggest online real estate site in the U.S. before the COVID-19 pandemic supercharged the demand for its offerings. People have been flocking to Zillow in record numbers.

The company has been investing in new technologies and services to streamline the homebuying process, and it expects to capitalize on its already strong market position in 2021. This should be good for the value of Zillow stock.