Zillow Group, Inc.
Feb 15, 2012
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Zillow Reports Record Fourth Quarter and Full Year 2011 Results

SEATTLE, Feb. 15, 2012 (GLOBE NEWSWIRE) -- Zillow, Inc. (Nasdaq:Z), the leading real estate information marketplace, today announced financial results for the quarter and full year ended December 31, 2011.

"The fourth quarter was another excellent one for Zillow, capping off an outstanding year that further strengthens our market leadership position," said Spencer Rascoff, chief executive officer of Zillow. "Our continued product innovation, particularly on mobile and in expanding the types of services we offer real estate professionals, is fueling our growth and expanding Zillow's total addressable market. Additionally, our revenue model spans across the Web and mobile, which positions us exceptionally well for further revenue gains from mobile in 2012 and beyond."

Fourth Quarter 2011 Financial Highlights

  • Marketplace Revenue increased 169% to $13.7 million from $5.1 million in the fourth quarter of 2010.
  • Display Revenue increased 38% to $6.1 million from $4.5 million in the fourth quarter of 2010.

Full Year 2011 Financial Highlights

  • Marketplace Revenue increased 219% to $42.2 million from $13.2 million in 2010.
  • Display Revenue increased 38% to $23.9 million from $17.2 million in 2010.

Operating and Business Highlights

Business Outlook — First Quarter 2012

Zillow is providing Revenue and Adjusted EBITDA outlook for the first quarter of 2012 as follows:

Quarterly Conference Call

A conference call to discuss Zillow's fourth quarter and full year 2011 financial results will be webcast live today at 2 p.m. PST (5 p.m. EST). The live webcast of the conference call will be available on the investor relations section of Zillow's website at http://investors.zillow.com/. For those without access to the Internet, the call may be accessed toll-free via phone at 877-643-7152 with conference ID# 39952375. Callers outside the United States may dial 443-863-7921 with conference ID# 39952375. Following completion of the call, a recorded replay of the webcast will be available on the investor section of the Zillow website until March 7, 2012. To listen to the telephone replay, call toll-free 855-859-2056 with conference ID# 39952375. Callers outside the United States may dial 404-537-3406 with conference ID# 39952375.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that involve risks and uncertainties, including the statements regarding our belief about our market leadership position, our continued product innovation, our revenue model, and our business outlook. Statements containing words such as "may," "believe," "anticipate," "expect," "intend," "plan," "project," "projections," "business outlook," "estimate," or similar expressions constitute forward-looking statements. Differences in the Company's actual results from those anticipated in these forward-looking statements may result from actions taken by the Company as well as from risks and uncertainties beyond the Company's control. Factors that may contribute to such differences include, but are not limited to, the Company's ability to maintain and effectively manage an adequate rate of growth; the impact of the real estate industry on the Company's business; the Company's ability to innovate and provide products and services that are attractive to its users advertisers; the Company's ability to increase awareness of the Zillow brand; the Company's ability to maintain or establish relationships with listings and data providers; the Company's ability to attract consumers to the Company's website and mobile applications; the Company's ability to compete successfully against existing or future competitors; the reliable performance of the Company's network infrastructure and content delivery processes; and the Company's ability to protect its intellectual property. The foregoing list of risks and uncertainties is illustrative, but is not exhaustive. For more information about potential factors that could affect the Company's business and financial results, please review the "Risk Factors" described in the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2011 filed with the Securities and Exchange Commission, or SEC, and in the Company's other filings with the SEC. Except as may be required by law, the Company does not intend, and undertakes no duty, to update this information to reflect future events or circumstances.

Use of Non-GAAP Financial Measures

To provide investors with additional information regarding our financial results, this press release includes references to Adjusted EBITDA, as well as Non-GAAP basic and diluted earnings per share, both of which are non-GAAP financial measures. We have provided a reconciliation of Adjusted EBITDA to net income (loss), the most directly comparable GAAP financial measure, and a reconciliation of the calculation of Non-GAAP basic and diluted earnings per share to GAAP basic and diluted earnings per share, within this earnings release. 

Adjusted EBITDA is a key metric used by our management and board of directors to measure operating performance and trends, and to prepare and approve our annual budget. In particular, the exclusion of certain expenses in calculating Adjusted EBITDA facilitates operating performance comparisons on a period-to-period basis.

Our use of Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:

Because of these limitations, you should consider Adjusted EBITDA alongside other financial performance measures, including various cash flow metrics, net income (loss) and our other GAAP results.

Our use of Non-GAAP basic and diluted earnings per share assumes the convertible preferred stock converted into common stock on January 1, 2011. We believe the presentation of Non-GAAP basic and diluted earnings per shares facilitates comparisons on a period-to-period basis, as all of the outstanding shares of our convertible preferred stock automatically converted into shares of Class A common stock upon the effectiveness of the Company's registration statement on July 19, 2011. However, you should not consider this metric in isolation or as substitutes for analysis of our results as reported under GAAP.

About Zillow, Inc.

Zillow is the leading real estate information marketplace, providing vital information about homes, real estate listings and mortgages through its websites and mobile applications, enabling homeowners, buyers, sellers and renters to connect with real estate and mortgage professionals best suited to meet their needs. More than 30 million unique users visited Zillow's websites and mobile applications in January 2012. Zillow, Inc. operates Zillow.com®, Zillow Mortgage Marketplace, Zillow Mobile, Postlets® and Diverse Solutions™. The company is headquartered in Seattle.

Zillow.com, Zillow, Zestimate and Postlets are registered trademarks of Zillow, Inc. Diverse Solutions is a trademark of Zillow, Inc.

iPhone and iPad are registered trademarks of Apple Inc. Android is a trademark of Google Inc. BlackBerry is a registered trademark of Research in Motion Limited. Windows is a registered trademark of Microsoft Corporation. Kindle Fire is a trademark of Seesaw, LLC. Facebook is a registered trademark of Facebook, Inc.

The Zillow logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=10012

(ZFIN)

ZILLOW, INC.
UNAUDITED CONDENSED BALANCE SHEETS 
(in thousands)
     
  December 31, 
  2011 2010
Assets    
Current assets:    
Cash and cash equivalents  $ 47,926  $ 12,278
Short-term investments  28,925  1,499
Accounts receivable, net   5,638  3,984
Prepaid expenses and other current assets  3,214  410
Total current assets  85,703  18,171
Long-term investments  15,285  --
Property and equipment, net  7,227  4,929
Goodwill  3,676  --
Intangible assets, net  4,532  888
Other assets  245  25
Total assets  $ 116,668  $ 24,013
     
Liabilities and shareholders' equity    
Current liabilities:    
Accounts payable  $ 1,681  $ 750
Accrued expenses and other current liabilities  4,893  576
Accrued compensation and benefits  1,587  1,349
Deferred revenue  5,769  3,284
Deferred rent, current portion  60  271
Total current liabilities  13,990  6,230
Deferred rent, net of current portion  1,347  335
Other non-current liabilities  118  --
Shareholders' equity:    
Convertible preferred stock  --  4
Preferred stock  --  --
Class A common stock  2  --
Class B common stock  1  1
Class C nonvoting common stock  --  --
Additional paid-in capital  178,817  96,152
Accumulated other comprehensive loss  (77,607)  (78,709)
Total shareholders' equity  101,213  17,448
Total liabilities and shareholders' equity  $ 116,668  $ 24,013
 
ZILLOW, INC.
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS 
(in thousands, except per share data)
         
  Three Months Ended
December 31, 
Year Ended
December 31, 
  2011 2010 2011 2010
Revenue  $ 19,891  $ 9,573  $ 66,053  $ 30,467
Costs and expenses:        
Cost of revenue (exclusive of amortization) (1)(2)  2,961  1,326  10,575  4,973
Sales and marketing (2)  7,576  4,071  25,725  14,996
Technology and development (2)  3,994  2,711  14,143  10,651
General and administrative (2)(3)   4,463  1,958  14,613  6,684
Total costs and expenses  18,994  10,066  65,056  37,304
Income from operations  897  (493)  997  (6,837)
Other income  25  7  105  63
Net income (loss)  $ 922  $ (486)  $ 1,102  $ (6,774)
Net income (loss) attributable to common shareholders  $ 922  $ (486)  $ --  $ (6,774)
Net income (loss) per share attributable to common shareholders — basic and diluted  $ 0.03  $ (0.04)  $ --  $ (0.53)
Weighted-average shares outstanding — basic   27,748  12,972  19,815  12,770
Weighted-average shares outstanding — diluted  30,592  12,972  22,305  12,770
_________        
(1) Amortization of website development costs and
 intangible assets included in technology and
 development is as follows:
 $ 1,466  $ 1,076  $ 5,384  $ 4,184
         
(2) Includes share-based compensation expense as follows:        
Cost of revenue  $ 54  $ 42  $ 189  $ 210
Sales and marketing  129  113  388  445
Technology and development  235  86  546  389
General and administrative  236  165  822  671
Total   $ 654  $ 406  $ 1,945  $ 1,715
         
(3) General and administrative includes a facility exit charge as follows:  $ --   $ --   $ 1,737  $ -- 
         
Other Financial Data:        
Adjusted EBITDA (4)  $ 3,312  $ 1,279  $ 11,869  $ 140
         
(4) See above for more information regarding our presentation of Adjusted EBITDA.     

The following table presents a reconciliation of Adjusted EBITDA to net income (loss), the most directly comparable GAAP financial measure, for each of the periods presented (in thousands, unaudited):

  Three Months Ended
December 31,
Year Ended
December 31, 
  2011 2010 2011 2010
Reconciliation of Adjusted EBITDA to Net Income (Loss):        
Net income (loss)  $ 922  $ (486)  $ 1,102  $ (6,774)
Other income  (25)  (7)  (105)  (63)
Depreciation and amortization expense  1,761  1,366  7,190  5,262
Share-based compensation expense  654  406  1,945  1,715
Facility exit charge  --  --  1,737  --
Adjusted EBITDA  $ 3,312  $ 1,279  $ 11,869  $ 140

The following table presents the reconciliation of the numerator and denominator of Non-GAAP basic and diluted earnings per share for the year ended December 31, 2011 to GAAP basic and diluted earnings per share to give effect to the conversion of all outstanding shares of our convertible preferred stock (which are participating securities) into Class A common stock as though the conversion had occurred as of the beginning of the period on January 1, 2011 (in thousands, except per share amounts, unaudited):

Non-GAAP Basic Earnings per Share:  
Numerator:  
Net income as reported  $ -- 
Net income attributable to participating securities  1,102
Net income attributable to common shareholders for Non-GAAP basic earnings per share computation  $ 1,102
Denominator:  
Weighted-average shares used for basic earnings per share computation 19,815
Adjustment to reflect assumed conversion of convertible preferred stock to Class A common stock 5,210
Number of shares used for Non-GAAP basic earnings per share computation 25,025
Non-GAAP basic earnings per share $0.04
   
Non-GAAP Diluted Earnings per Share:  
Numerator:  
Net income as reported  $ -- 
Net income attributable to participating securities  1,102
Net income attributable to common shareholders for Non-GAAP diluted earnings per share computation  $ 1,102
Denominator:  
Weighted-average shares used for diluted earnings per share computation 22,305
Adjustment to reflect assumed conversion of convertible preferred stock to Class A common stock 5,210
Number of shares used for Non-GAAP diluted earnings per share computation 27,515
Non-GAAP diluted earnings per share $0.04

All of the outstanding shares of our convertible preferred stock automatically converted into shares of Class A common stock upon the effectiveness of our registration statement on July 19, 2011.

Revenue by Type

The following tables present our revenue by type and as a percentage of total revenue for each of the periods presented (in thousands, unaudited):

  Three Months Ended
December 31, 
Year Ended
December 31, 
  2011 2010 2011 2010
Revenue:        
Marketplace revenue  $13,746  $ 5,114  $42,190  $ 13,228
Display revenue  6,145  4,459  23,863  17,239
Total  $19,891  $ 9,573  $66,053  $ 30,467
         
  Three Months Ended
December 31, 
Year Ended
December 31, 
  2011 2010 2011 2010
Percentage of Revenue:        
Marketplace revenue 69% 53% 64% 43%
Display revenue 31% 47% 36% 57%
Total 100% 100% 100% 100%

Key Growth Drivers

The following tables set forth our key growth drivers for each of the periods presented:

  Average Monthly Unique Users
for the Three Months
Ended December 31,
2011 to 2010
  2011 2010 % Change
  (in thousands)  
Unique Users 23,507 12,666 86%

Unique users source: Beginning in October 2011, we measure unique users with Google Analytics. Prior to October 2011, we measured monthly unique user metrics with Omniture analytical tools. We believe Google Analytics and Omniture result in materially consistent measurements of our monthly unique users.

  At December 31, 2011 to 2010 
  2011 2010 % Change
Premier Agent Subscribers 15,799 8,102 95%
CONTACT: Raymond Jones

         Investor Relations

         206-470-7137

         ir@zillow.com



         Cynthia Nowak

         Public Relations

         206-757-2701

         press@zillow.com

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Source: Zillow

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