Z Q2 2023 Earnings

Call Details

• Call Title: Zillow Group, Inc. Q2 2023 Earnings Call
• Date: August 2, 2023 at 9:00 PM UTC
• Management Team:
  • Brad Berning (Vice President, Investor Relations)
  • Rich Barton (Chief Executive Officer)
  • Jeremy Hofmann (Chief Financial Officer)
  • Jeremy Wacksman (Chief Operating Officer)

Call Summary

Financial Performance

• Total revenue was $506M in Q2, which exceeded the midpoint of outlook by $41M and returned to slight year-over-year growth versus $504M in Q2 last year.
• GAAP net loss was $35M in Q2, which represented 7% of revenue on a GAAP basis.
• EBITDA was $111M in Q2, equating to a 22% EBITDA margin and exceeding the top end of the outlook by $30M.
• Residential revenue was $380M in Q2, down 3% year over year and outperforming the industry transaction dollar decline by 1,900 basis points.
• Rentals revenue grew up 28% year over year, and rentals traffic increased up 15% year over year to 31M average monthly unique visitors per Comscore.
• Mortgage-related revenue was $24M in Q2 with purchase origination volume up 73% year over year and up 30% sequentially from Q1.
• Loan officer productivity increased 50% versus Q4 2022 based on locked loans, and new construction revenue grew up 18% year over year.
• Share-based compensation expense was $130M in Q2, up from $103M in Q1, and cash and investments ended the quarter at $3.3B with convertible debt at $1.7B.

Guidance

• Q3 total revenue is guided to $458M to $486M, implying down 2% year over year at the midpoint of the range.
• Q3 residential revenue is guided to $339M to $359M, implying down 6% year over year at the midpoint of the range.
• Company expects the total industry transaction dollar decline to be between 15% and 20% in Q3, with the midpoint at 17% versus a 22% industry decline in Q2.
• Premier Agent revenue is expected to decline between 4% and 9% year over year in Q3.
• Q3 EBITDA is guided to $67M to $87M, implying a 16% margin at the midpoint, and Q3 EBITDA expenses are expected to be flat versus Q2.
• Company expects to continue to outperform the industry and estimates roughly 1,100 basis points of outperformance at the midpoint of Q3 guidance.