Z Q1 2023 Earnings

Call Details

• Call Title: Zillow Group, Inc. Q1 2023 Earnings Call
• Date: May 3, 2023 at 9:00 PM UTC
• Management Team:
  • Rich Barton (Chief Executive Officer)
  • Allen Parker (Chief Financial Officer)
  • Jeremy Wacksman (Chief Operating Officer)
  • Brad Berning (Vice President, Strategic Affairs and Investor Relations)

Call Summary

Financial Performance

• Total revenue for Q1 was $469 million and EBITDA for Q1 was $104 million, which beat the top end of the outlook range.
• Residential revenue in Q1 was $361 million, down 14% year-over-year, which outperformed the NAR industry total transaction dollar decline of 27%.
• EBITDA expenses were $365 million in Q1, roughly flat versus $362 million in Q4, and EBITDA margin was 22% in Q1.
• GAAP net loss was $22 million in Q1 and net loss margin was 5% on a GAAP basis.
• New construction revenue grew 16% year-over-year in Q1, while rentals revenue increased 21% year-over-year.
• Rentals traffic grew 16% year-over-year to 29 million average monthly unique visitors per Comscore in Q1.
• Mortgage revenue was $26 million in Q1 and purchase loan origination volumes doubled year-over-year, increasing 9% sequentially.
• The company ended Q1 with $3.4 billion of cash and investments and $1.7 billion of convertible debt.

Guidance

• Q2 total revenue is guided to $451 million to $479 million, implying a year-over-year decline of 8% at the midpoint.
• Q2 residential revenue is guided to $341 million to $361 million, implying a 10% year-over-year decline at the midpoint versus an estimated industry decline of 18% to 28%.
• Premier Agent revenue is expected to decrease 9% to 13% year-over-year in Q2 per company commentary.
• Q2 EBITDA is guided to $61 million to $81 million, implying a 15% margin at the midpoint of the outlook range.
• Q2 EBITDA expenses are expected to increase to $390 million to $398 million driven primarily by seasonal increases in marketing and a pull-forward of planned marketing plus modest hiring.
• The company expects the Q2 expense run rate to be representative of the second half of the year based on current visibility.