Zillow Group’s financial earnings continue to improve as the company locked in record revenue of $208.4 million in the second quarter, beating capital consensus and moving past its contentious legal battle with Move/New Corp.
Revenue for the quarter increased 31% year-over-year, excluding revenue from Market Leader, which was divested in the third quarter of 2015.
Zillow Group, which includes brands like Zillow, Trulia, SreetEasy, HotPads and Naked apartments, had lots of positive and record growth in its second-quarter earnings.
“Record revenue and traffic growth were highlights of Zillow Group’s tremendous second quarter,” said Zillow Group CEO Spencer Rascoff. “We continue to command significant category leadership on mobile and web, reaching an all-time high of unique users in May and achieving our largest market share of the real estate category.”
“It is clear that our monetization on mobile is benefiting from our significant market leadership, which now captures 78% of the mobile-only category. We are executing well against our long-term strategic priorities to increase our audience size, grow our Premier Agent and emerging marketplaces, and attract and retain the best talent in the industry,” he continued.
Zillow Group presents its earnings on a pro forma basis, allowing a look at the company’s business assuming the acquisition of Trulia happened in 2014, instead of in 2015, which allows an apples-to-apples comparison of the company’s business from year to year.
Using this methodology, Zillow Group posted that second-quarter revenue increased 31% to $208.4 million, up from $158.7 million in the second quarter of 2015.
Broken up, marketplace revenue increased 44% to $191.6 million from $133.0 million in the second quarter of 2015, excluding revenue from Market Leader, and display revenue decreased 35% to $16.8 million from $25.8 million in the second quarter of 2015. The company attributed the decrease to its strategy of deemphasizing display advertising and improving the user experience.
Of its marketplace revenue, premier agent revenue increased 28% to $147.1 million from $115.2 million in the second quarter of 2015, as other real estate revenue increased 254% to $26.1 million from $7.4 million in the second quarter of 2015. Also, mortgages revenue increased 77% to $18.4 million from $10.4 million in the second quarter of 2015.
As far as website traffic, the company once again witnessed record growth, reporting more than 168 million average monthly unique users for the second quarter of 2016.
Zillow Group also posted an all-time high of more than 171 million unique users in May to Zillow Group consumer brands Zillow, Trulia, StreetEasy, HotPads and Naked Apartments, an increase of 20% year-over-year.
This is compared to last quarter, which set a record at the time of more than 166 million unique users in March to Zillow Group sites.
In June this year, Zillow Group finally settled one of the most contentious battles in the history of online real estate when it announced that it reached a settlement with Move over allegations of trade secret theft levied against two high-level executives at Zillow who once plied their craft at Move.
The final price tag: $130 million.
According to a Securities and Exchange Commission filing, Zillow will pay Move, which operates Realtor.com for the National Association of Realtors and is owned by News Corp, a total of $130 million to settle allegations that Errol Samuelson, who was once Move’s chief strategy officer, stole trade secrets and proprietary information from Move before joining Zillow in 2013.
The settlement amount is far less than Move initially wanted, as Move originally claimed that Zillow owed the company $2 billion in damages.
In light of the settlement, Zillow stated in its results that its GAAP net loss was $156.1 million in the second quarter of 2016, which includes the impact of a $130 million litigation settlement and $12.5 million in related legal costs, compared to GAAP net loss of $38.7 million in the same period last year.
Adjusted EBITDA was $(101.3) million in the second quarter of 2016, which was a decrease from $21.0 million, or 12% of revenue, in the second quarter of 2015. These numbers include the impact of the $130 million litigation settlement and $12.5 million in related legal costs.
Zillow added that excluding the impact of the $130 million litigation settlement, Adjusted EBITDA in the second quarter of 2016 would have been $28.7 million, or 14% of revenue.
Looking ahead, Zillow Group is positive about the rest of 2016. For full year 2016, Zillow Group is increasing its outlook for revenue to a range of $830 million to $840 million, up from a range of $825 million to $835 million.