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Newly Public Zillow Shines In Otherwise Damp Sector

Posted on Wednesday, Aug 31st 2011

According to market reports, the total market for local real estate listing is expected to be worth $6 billion annually. Online real estate listing services provider Zillow is hoping to tap into this market. The company recently went public, and unlike other Internet companies, which are having a tough time keeping up their valuations in the current market conditions, Zillow seems to be finding the task relatively easy.

Zillow’s Financials
Zillow (Nasdaq:Z) saw revenues grow 41% over the quarter and 116% over the year to $15.8 million. Growth was driven by 180% growth in the number of Premier Agent subscribers. The company ended the quarter with 13,385 Premier Agent subscribers. By segment, marketplace revenues grew 269% over the year to $9.7 million. During the quarter, the number of unique users increased 93% over the year to a record 20.8 million, helping to drive growth in display revenues by 30%.

This was not only the company’s first quarter since they went public, but also the first quarter for them to report profits. They generated $1.6 million in net earnings during the year. Since inception, Zillow has added nearly $64 million in net losses from operations.

For the current quarter, Zillow estimates revenues of $16 million-$17 million and expects to end the year with revenues of $59 million-$61 million.

Zillow’s Mobile Application
During the quarter, Zillow continued to expand their mobile dominance. Recently, they launched Zillow Mortgage App Marketplace, a mobile app that enables users to send in loan requests and connect with verified lenders. Their mobile app is available for free download across iOS, Android, and BlackBerry devices. Further, Zillow recently launched a real estate app for Windows Phone 7. Zillow was used on a mobile device 11.9 million times in July 2011, with 28 homes viewed each second.

Zillow’s Improving Zestimates
Zillow also improved the algorithm behind their Zestimates to increase accuracy of price estimates of houses listed on Zillow by 33% to an 8.5% median margin of error. During the quarter, they added almost 25 million homes listed on their site and now have a database of more than 100 million homes.

Zillow gains its market strength from the continuous expansion to their Premier Agent program. In depressed market conditions, such as the current market, most Realtors need to expand their exposure to continue to stay in business. Zillow offers such an opportunity to the agents through their Premier Agent program. According to market estimates, at present there are about 300,000 real estate agents in the country, of which Zillow’s Premier Agent Program has registered a comparatively small 13,385 agents. Surely there is enough market potential for the company’s growth.

The stock is trading at $33.04 with a market capitalization stands at $460.54 million. The company had priced the stock at $20 for the IPO and saw it soar to $60.00 on the day of listing.

MOVE’s Financials
Among other real estate players, MOVE’s (Nasdaq:MOVE) quarterly revenues fell from previous year’s $49.7 million to $48.9 million. Earnings of $0.01 per share were better than the previous year’s loss of $0.01 per share and managed to exceed the market’s expectations of a break even quarter.

During the month of June, MOVE reported more than 23 million consumers who viewed over 650 million pages and spent more than 300 million minutes on the Realtor.com real estate network.

For the current quarter, Move expects revenues of $46.5 million-$47.0 million with EBITDA margin of 12%. They expect to end the year with revenues of $192 million-$195 million with EBITDA margin forecasted at 13%.

Move’s Social Media Expansion
Move expanded their presence in the social networking space by the acquisition of SocialBios. Denver-based SocialBios is known for a “social layering” technology that helps to convert the “contact us” link of small businesses to a social networking hub. MOVE plans to integrate the technology with Realtor.com so that visitors to Realtor.com will be able to see common connections on social networks including Facebook, Twitter, Foursquare, Google, and LinkedIn.

The stock is trading at $1.67 with a market capitalization of $267 million. It touched a 52-week high of $2.89 in December of last year.

ZipRealty’s Financials
For Q1, ZipRealty’s (NASDAQ:ZIPR) revenues fell 37% over the year to $23.6 million. During the quarter, the company shut down offices and removed 1,200 agents from its listing in an attempt to keep costs under check. However, loss for the quarter came in at $0.05 per share compared with a loss of $0.01 per share suffered a year ago.

ZipRealty’s Mobile Focus
ZipRealty increased their focus on the mobile segment and recently added new features to their Android app. As part of the new app, Android device users will be able to view all available MLS listings of homes for sale and more complete MLS data on each home. The app is enabled with an action bar that will help users to request a visit, seek further information, or contact their ZipRealty agent about the home. Further, they integrated social networking features into the app to let users log in using Facebook Connect and share home details with their connections either through Facebook or through email.

ZipRealty has seen significant traction within the mobile device segment. Since their launch, the iOS and Android mobile applications have been downloaded more than one million times and are consistently ranked among the top ten real estate apps in both the Apple App Store and Google Android Market.

Their stock is trading at $2.18 with a market capitalization of $44.8 million. It reached a 52-week high of $3.47 in October of last year.

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