On February 13, 2024, Zillow Group Inc (ZG, Financial) released its consolidated financial results for the fourth quarter and full year of 2023, detailing a mix of growth and challenges in a fluctuating real estate market. The company's 8-K filing reveals a 9% year-over-year increase in Q4 revenue, reaching $474 million, and a slight 1% dip in full-year revenue, totaling $1.9 billion. Despite the revenue growth in Q4, the company reported a net loss of $73 million, mirroring the loss from the same quarter in the previous year.
Zillow Group Inc, a leading Internet-based real estate company, operates through its Internet, Media & Technology (IMT) segment, Mortgages segment, and Homes segment. The company's mission is to streamline the process of buying, selling, renting, and financing homes with transparency and ease, leveraging technology and comprehensive services.
The company's performance is particularly noteworthy given the broader residential real estate industry's challenges, including a total transaction value decline of 4%. Zillow Group's residential revenue outperformed industry trends with a 3% increase in Q4 to $349 million. Rentals revenue was a standout, surging 37% year over year to $93 million, driven by a 52% growth in multifamily revenue. The Mortgages segment also saw a 22% increase in revenue, thanks to a substantial rise in purchase loan origination volume.
Adjusted EBITDA for Q4 was $69 million, representing 15% of total revenue and exceeding the company's outlook by $19 million. This figure would have been $83 million, or 18% of total revenue, if not for a one-time partial lease termination expense. For the full year, Adjusted EBITDA amounted to $391 million. Zillow Group's cash and investments at the end of Q4 totaled $2.8 billion, a decrease from the $3.3 billion reported at the end of Q3.
User engagement on Zillow Group's platforms showed mixed signals, with a 2% year-over-year decrease in average monthly unique users to 194 million, while visits increased by 1% to 2.2 billion in Q4.
Financial Table Summary
| Financial Metrics | Q4 2023 | Q4 2022 | % Change |
|---|---|---|---|
| Residential Revenue | $349 million | $340 million | 3% |
| Rentals Revenue | $93 million | $68 million | 37% |
| Mortgages Revenue | $22 million | $18 million | 22% |
| Total Revenue | $474 million | $435 million | 9% |
| Net Loss | $(73) million | $(72) million | N/A |
| Adjusted EBITDA | $69 million | $73 million | N/A |
Zillow Group's CEO Rich Barton expressed confidence in the company's trajectory, stating, "Our progress in crafting an integrated customer experience in our early markets has given us the confidence to press on the accelerator and expand this experience to more markets in 2024." The company's strategic focus on enhancing its housing super app with additional functionality, software, and services is a testament to its commitment to transforming the real estate market.
Value investors may find Zillow Group's financial achievements and strategic initiatives indicative of the company's potential for growth and market leadership. With a strong brand presence and a vision to tap into a $2 trillion real estate market, Zillow Group is positioning itself to capitalize on future opportunities.
For a detailed analysis of Zillow Group Inc's financial results and future outlook, investors and interested parties can access the full shareholder letter and investor presentation on the company's Investor Relations website.
Explore the complete 8-K earnings release (here) from Zillow Group Inc for further details.
