Online real-estate firm Zillow has released its forecast for the third quarter (Q3), and has blown away all earning expectations for Q2, while also forecasting its first $2 billion quarter in terms of sales. At the same time, the cost that would go into these earnings could hurt profits and shares simultaneously.
Actual Figures Higher Than Expected In Most Sectors
The company issued its earning statement and forecast on Thursday, reporting a revenue of $1.31 billion during the quarter ended in June, up from the $768 million year-on-year. Share stood at 44 cents apiece, with earnings being valued at $9.6 million. These figures are higher than the expected values of 24 cents a share ($1.28 billion in sales) that experts had forecasted. However, immediately after the release of the scores, shares fell 5 percent in after-hour trading. They quickly came back up as well, closing the extended session at some 2.4 percent. The regular session, meanwhile, closed at $110.30, seeing a decrease of 0.1 percent.
Zillow is gaining popularity as a platform for providing information to customers about real estate, and has even set up a paying programme for realtors, under its Internet, Media & Technology (IMT) sector. This particular segment saw a revenue of $476.1 million, up more than $196.1 from last year. Moreover, the company’s core Premier Agent product also raked in a sum of $348.8 million, much higher than last year’s $192 million. The expected values for these two segments had stood at $467 million and $345 million, respectively.
Analysts at Canaccord Genuity believe that the strong earnings by the real estate business, especially through its Premier Agent programme, in Q2 reflect the low interest rates, limited housing supply, and increased flexibility in terms of remote work.
The company is also home to subsidiaries that deal in buying and selling of houses, such as Zillow Offers, and has also come up with service mortgages. The former is part of the Homes segment, which reported an income of $777.1 million, up more than $300 million from last year’s $454.3 million. Mortgages, on the other hand, went up from $33.8 million last year, to $56.7 million this year. The expected revenues for the Home segment been $751 million, but it may be noted that Mortgages is among one sector that fell short of the expectations, which had stood at $62 million.
A Strong Forecast
Finally, Zillow has also released its first $2 billion forecast for Q3 revenues ranging between $1.93 billion to $2.05 billion in Q3, completely blowing away the expectations of an average of $1.45 billion (with Homes bringing in between $1.4 billion to $1.5 billion, IMT ranging between $472 million to $485 million, and Mortgages standing at $55 million to $62 million).