Zillow Group, Inc.
Nov 5, 2012

Zillow Reports Record Third Quarter 2012 Results

SEATTLE, Nov. 5, 2012 (GLOBE NEWSWIRE) -- Zillow, Inc. (Nasdaq:Z), the leading real estate information marketplace, today announced financial results for the quarter ended September 30, 2012.

"Zillow had another great quarter with record usage across mobile and Web. In fact, we reached a major milestone recently, topping 1 billion home views on Zillow Mobile through the first three quarters of 2012," said Spencer Rascoff, chief executive officer of Zillow. "During the quarter we also expanded our suite of technology tools and services for professionals. Last week we announced the acquisition of Buyfolio, a collaborative shopping tool that can increase the conversion rates for agents, and further add value to our successful Premier Agent program. We've made another important leap today with the announcement of our planned acquisition of Mortech, which will further extend the services we provide to the mortgage industry."

Third Quarter 2012 Financial Highlights

  • Marketplace Revenue increased 99% to $23.6 million from $11.8 million in the third quarter of 2011.
  • Display Revenue increased 15% to $8.3 million from $7.2 million in the third quarter of 2011.

Operating and Business Highlights

Business Outlook — Fourth Quarter 2012 and Full Year 2012

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

Quarterly Conference Call

A conference call to discuss Zillow's third quarter of 2012 financial results and business outlook 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# 45276210. Callers outside the United States may dial 443-863-7921 with conference ID# 45276210. Following completion of the call, a recorded replay of the webcast will be available on the investor section of the Zillow website until November 19, 2012. To listen to the telephone replay, call toll-free 855-859-2056 with conference ID# 45276210. Callers outside the United States may dial 404-537-3406 with conference ID# 45276210.

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, without limitation, the statements regarding our belief about our traction gained in providing meaningful tools and services for professionals while developing products that delight our customers and enhance our real estate, mortgages and rentals marketplaces, the expected benefits of our acquisition of Buyfolio, our ability to extend the services we provide to the mortgage industry with our planned acquisition of Mortech and the acquisition's impact on our total addressable market, the integration of our RentJuice acquisition, and our business outlook. Statements containing words such as "may," "believe," "anticipate," "expect," "intend," "plan," "project," "will," "projections," "business outlook," "estimate," or similar expressions constitute forward-looking statements. Differences in Zillow's actual results from those anticipated in these forward-looking statements may result from actions taken by Zillow as well as from risks and uncertainties beyond Zillow's control. Factors that may contribute to such differences include, but are not limited to, Zillow's ability to maintain and effectively manage an adequate rate of growth; the impact of the real estate industry on Zillow's business; Zillow's ability to innovate and provide products and services that are attractive to its users and advertisers; Zillow's ability to increase awareness of the Zillow brand; Zillow's ability to maintain or establish relationships with listings and data providers; Zillow's ability to attract consumers to Zillow's mobile applications and websites; Zillow's ability to successfully close, integrate and realize the benefits of our past or future strategic acquisitions, including the planned acquisition of Mortech, or investments; Zillow's ability to compete successfully against existing or future competitors; the reliable performance of Zillow's network infrastructure and content delivery processes; and Zillow'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 Zillow's business and financial results, please review the "Risk Factors" described in Zillow's Quarterly Report on Form 10-Q for the three months ended June 30, 2012 and Zillow's Annual Report on Form 10-K for the year ended December 31, 2011 filed with the Securities and Exchange Commission, or SEC, and in Zillow's other filings with the SEC. Except as may be required by law, Zillow 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, which is a non-GAAP financial measure. We have provided a reconciliation of Adjusted EBITDA to net income (loss), the most directly comparable GAAP financial measure, 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.

About Zillow, Inc.

Zillow is the leading real estate information marketplace, providing vital information about homes, real estate listings, rental listings and mortgages through its mobile applications and websites, enabling homeowners, buyers, sellers and renters to connect with real estate, rental and mortgage professionals best suited to meet their needs. Nearly 35 million unique users visited Zillow's mobile applications and websites in September 2012. Zillow, Inc. operates Zillow.com®, Zillow Mortgage Marketplace, Zillow Mobile, Zillow Rentals, Postlets® and Diverse Solutions™. Zillow is headquartered in Seattle.

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

iPhone and iPad are registered trademarks of Apple Inc. Android is a trademark of Google Inc.

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


(in thousands)
  September 30, 2012 December 31, 2011
Current assets:    
Cash and cash equivalents  $ 188,858  $ 47,926
Short-term investments  40,024  28,925
Accounts receivable, net   8,639  5,638
Prepaid expenses and other current assets  3,223  3,214
Total current assets  240,744  85,703
Long-term investments  --  15,285
Property and equipment, net  12,878  7,227
Goodwill  35,375  3,676
Intangible assets, net  9,069  4,532
Other assets  286  245
Total assets  $ 298,352  $ 116,668
Liabilities and shareholders' equity    
Current liabilities:    
Accounts payable  $ 2,660  $ 1,681
Accrued expenses and other current liabilities  5,387  4,893
Accrued compensation and benefits  2,393  1,587
Deferred revenue  8,720  5,769
Deferred rent, current portion  92  60
Total current liabilities  19,252  13,990
Deferred rent, net of current portion  2,950  1,347
Other non-current liabilities  --  118
Shareholders' equity:    
Preferred stock  --  --
Class A common stock  3  2
Class B common stock  1  1
Additional paid-in capital  348,363  178,817
Accumulated deficit  (72,217)  (77,607)
Total shareholders' equity  276,150  101,213
Total liabilities and shareholders' equity  $ 298,352  $ 116,668
(in thousands, except per share data)
  Three Months Ended Nine Months Ended
  September 30, September 30,
  2012 2011 2012 2011
Revenue  $ 31,915  $ 19,057  $ 82,513  $ 46,162
Costs and expenses:        
Cost of revenue (exclusive of amortization) (1)(2)  3,623  3,084  10,237  7,614
Sales and marketing (2)  14,118  7,035  34,586  18,150
Technology and development (2)  6,687  3,849  17,535  10,148
General and administrative (2)(3)  5,192  5,695  14,869  10,151
Total costs and expenses  29,620  19,663  77,227  46,063
Income (loss)from operations  2,295  (606)  5,286  99
Other income  39  36  104  79
Net income (loss)  $ 2,334  $ (570)  $ 5,390  $ 178
Net income (loss) attributable to common shareholders  $ 2,334  $ (570)  $ 5,390  $ -- 
Net income(loss) per share attributable to common shareholders — basic   $ 0.08  $ (0.02)  $ 0.19  $ -- 
Net income (loss) per share attributable to common shareholders — diluted  $ 0.07  $ (0.02)  $ 0.17  $ -- 
Weighted-average shares outstanding — basic   30,040  24,020  29,115  17,141
Weighted-average shares outstanding — diluted  32,230  24,020  31,493  20,220
(1) Amortization of website development costs and intangible assets included in technology and development is as follows:  $ 3,198  $ 1,461  $ 7,576  $ 3,918
(2) Includes share-based compensation expense as follows:        
 Cost of revenue  $ 94  $ 48  $ 271  $ 134
 Sales and marketing  870  85  1,349  259
 Technology and development  374  135  1,182  311
 General and administrative  374  220  1,553  587
Total   $ 1,712  $ 488  $ 4,355  $ 1,291
(3) General and administrative includes a facility exit charge as follows:  $ --  $ 1,737  $ --  $ 1,737
Other Financial Data:        
Adjusted EBITDA (4)  $ 7,624  $ 3,654  $ 18,343  $ 8,556
(4) See above for more information regarding our presentation of Adjusted EBITDA.       

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 Nine Months Ended
  September 30, September 30,
  2012 2011 2012 2011
Reconciliation of Adjusted EBITDA to Net Income (Loss):        
Net income (loss)  $ 2,334  $ (570)  $ 5,390  $ 178
Other income  (39)  (36)  (104)  (79)
Depreciation and amortization expense  3,617  2,035  8,702  5,429
Share-based compensation expense  1,712  488  4,355  1,291
Facility exit charge  --  1,737  --   1,737
Adjusted EBITDA  $ 7,624  $ 3,654  $ 18,343  $ 8,556

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 Nine Months Ended
  September 30, September 30,
  2012 2011 2012 2011
Marketplace revenue  $23,616  $11,840  $59,832  $28,443
Display revenue  8,299  7,217  22,681  17,719
Total  $31,915  $19,057  $82,513  $46,162
  Three Months Ended Nine Months Ended
  September 30, September 30,
  2012 2011 2012 2011
Percentage of Revenue:        
Marketplace revenue 74% 62% 73% 62%
Display revenue 26% 38% 27% 38%
Total 100% 100% 100% 100%

Average Monthly Revenue per Subscriber

The following table presents our average monthly revenue per subscriber for each of the periods presented (unaudited):

  Three Months Ended
  September 30,
June 30,
March 31,
December 31,
September 30,
June 30,
March 31,
Average Monthly Revenue per Subscriber  $ 270  $ 263  $ 263  $ 258  $ 242  $ 233  $ 206

We calculate our average monthly revenue per subscriber by dividing the revenue generated by our Premier Agent subscription products in the period by the average number of Premier Agent subscribers in the period, divided again by the number of months in the period. The average number of Premier Agent subscribers is derived by calculating the average of the beginning and ending number of Premier Agent subscribers for the period.

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
September 30,
2011 to 2012
  2012 2011 % Change
  (in thousands)  
Unique Users 36,096 24,238 49%

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 September 30, 2011 to 2012 
  2012 2011 % Change
Premier Agent Subscribers 26,703 14,876 80%
CONTACT: Raymond Jones

         Investor Relations



         Katie Curnutte

         Public Relations



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Source: Zillow

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