Seattle-based Zillow Group is patting itself on the back after its share price rose by 10 percent ($6.70), after it declared quarterly revenues exceeding expectations.
It seems the company's acquisition of arch-rival Trulia is finally starting to bear fruit, for Zillow reported Q2 revenues of $171.3 million, up from the $168.7 million that analysts had predicted. Nevertheless, overall losses for the quarter reached $26.7 million – or $0.46 a share - due to $8.4 million in restructuring-related costs associated with the acquisition. That compares with a pro forma loss of $0.52 per share in Q2 of 2014.
Speaking to investors, Zillow CE Spencer Rascoff said the company had been through “a tough few months”, with the Trulia acquisition only concluding in February of this year, and a host of employees being made redundant.
However, Rascoff said that Zillow will “power through this time of transition” and said it should be business as usual by this time next year. Zillow is hoping to fully conclude its integration of Trulia by the end of the third quarter.
Shareholders seem to be just as confident – Zillow's share price shot up by more than 10 percent in after hours trading.
“We believe the strategic rationale for the combination remains extremely strong, as we are already realizing the benefits of our combined audience scale,” Rascoff insisted.
The CEO pointed to the fact that Zillow's sites are seeing greater traffic than ever before. He said the company holds a greater than 50 percent market share in online real estate, while its share on mobile is a whopping 72 percent. He also noted that advertisers are spending more money, while the service is seeing multiple listing services sign up at “an unprecedented rate”.
This is due to Zillow commanding “the largest audience of home shoppers on mobile and the Web,” Rascoff concluded.
Zillow's only real problem area is Market Leader, a provider of cloud-based real estate management software that Trulia acquired for $355 million in 2013. That company, which Zillow inherited, saw its revenues fall by 21 percent year-over-year to just $12.5 million. Zillow has reportedly been looking to sell Market Leader for some time, and in its earnings call it admitted it's conducting a “strategic review” of the business.