Zillow Group(Z) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q4 2024, Zillow reported total revenue of $554 million, a 17% increase year-over-year, exceeding the outlook range [12][41] - For the full year 2024, revenue grew 15% year-over-year to$ 2.2 billion, outperforming the housing market growth of 6% [13][51] - The company achieved an EBITDA margin expansion of 200 basis points, reaching 22% for the full year 2024 [52][61] Business Line Data and Key Metrics Changes - For Sale revenue in Q4 increased by 15% year-over-year to $428 million, with residential revenue growing 11% to$ 387 million and mortgages revenue surging 86% to $41 million [43][45] - Rentals revenue grew 25% year-over-year in Q4 to$ 116 million, driven primarily by a 41% increase in multifamily revenue [46][47] - The number of multifamily properties listed on Zillow increased to 50,000, up from 37,000 at the end of 2023 [37][46] Market Data and Key Metrics Changes - The broader residential real estate industry grew 13% year-over-year in Q4, while Zillow's revenue growth outperformed the market by approximately 1,000 basis points [41][110] - Zillow's active rental listings reached 1.9 million, a 15% increase year-over-year, solidifying its position as the leading consumer rentals audience [34][47] Company Strategy and Development Direction - Zillow is focused on executing its housing super app strategy, aiming for sustainable, profitable growth and a target of $5 billion in revenue with a 45% EBITDA margin in a normalized housing market [14][67] - The company plans to expand its Enhanced Market experience from 21% of connections to over 35% by the end of 2025, with a long-term goal of 75% [30][59] - Zillow aims to increase its share of customer transactions in the For Sale category, currently at a single-digit percentage, by enhancing user experience and integrating services [18][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving positive GAAP net income for the full year 2025, driven by revenue growth and disciplined cost management [94][64] - The company anticipates a subdued housing market in 2025, expecting industry growth in the low to mid-single digits [59][60] - Management highlighted the importance of AI in enhancing operational efficiency and improving customer service [99][100] Other Important Information - Zillow's cash and investments at the end of Q4 were$ 1.9 billion, down from $2.2 billion, primarily due to the settlement of convertible debt [49] - The company has repurchased nearly$ 2 billion of shares since 2021, indicating a strong capital management strategy [68] Q&A Session Summary Question: Enhanced Markets and Strategic Rationale with Redfin - Management discussed the path to achieving 75% of connections in Enhanced Markets, emphasizing the importance of scaling partnerships and integration with loan officers [76][77] - The partnership with Redfin involves a $100 million upfront payment and aims to enhance the rental marketplace by providing greater access to multifamily listings [81][84] Question: 2025 Outlook for GAAP Net Income - Management confirmed the target for GAAP profitability in 2025, focusing on outperforming the housing market and maintaining a flat fixed cost base [93][94] Question: Cost Structure and Headcount Levels - Management expressed confidence in keeping headcount growth modest while leveraging fixed costs to expand margins [120][121] Question: Agent Behavior and Adoption of New Solutions - Management reported strong support from agent partners for new solutions, indicating a positive environment for accelerating the rollout of Enhanced Markets [126]