[ad_1]
Zillow Group beat earnings expectations for the third quarter amid a slowdown in the overall housing market and rising inflation-driven interest rates.
Revenues from the company’s Premier Agent and Mortgage businesses declined year-on-year but were outside guidance. The Seattle real estate giant beat his $456 million estimate, reporting third-quarter total earnings for him of $483 million. Its total revenue fell by 12%.
Property firms are feeling the effects of a slowing housing market and mortgage rates above 7% for the first time in 20 years.
The overall housing market continues to show signs of slowing down. Single-family home starts fell nearly 19% in September, marking a breakthrough in new housing infrastructure. Meanwhile, the amount of building permits allocated decreased by 17%.
In a third-quarter letter to shareholders, Zillow CEO Rich Burton said, “The persistently low inventory, coupled with the lackluster flow of continued new listings, will push the housing market forward in 2023. The preparations for starting the
Zillow’s Premier Agents, surveyed by RBC Capital Markets, said they expect real estate transaction volumes to “remain a challenge” heading into the fourth quarter.
Zillow has made various cost-cutting moves, including abandoning iBuying, the company’s ambitious Homeflip business, to prepare for the ongoing economic downturn. Zillow cut about 25% of its workforce last year after deciding to close Zillow Offers.
“Given how this year unfolded, we continue to feel that we made the right decision with our existing iBuying 12 months ago, with no inventory remaining on our balance sheet as of September 30,” said Barton. wrote in a letter.
Opendoor, the iBuying giant that recently partnered with Zillow, announced today that it has laid off about 550 employees, or 18% of its workforce.
Zillow confirmed last week that it laid off 300 people.
The company is also tightening discretionary spending and cutting back on marketing. Barton, who co-founded travel giant Expedia before helping launch Zillow in 2006, said:
“From what led Expedia to 9/11, Zillow to the 2008 financial crisis and early 2020 to COVID, we have the experience of staying relatively steady even when others hit the brakes. “Wednesday. “We are well aware of the dangers on the road, but our vehicles are well charged and handling well and we see an opportunity down the road.”
Shares rose more than 6% in after-hours trading. Zillow is down more than 51% of its size in 2022, with a market cap hovering at around $7 billion.
The breakdown of the company’s financial position for the third quarter is as follows.
- Zillow reported better-than-expected earnings per share of $0.41.
- Internet, Media, and Technology (IMT) segment revenue decreased 5% year-over-year from $480 million to $476 million.
- Premier Agent revenues of $312 million decreased from $359 million, or 13%, in the year-ago quarter. The company expects this segment to fall by more than 20% in the third quarter.
- Total operating expenses for the third quarter were $445 million, up from $413 million a year ago. The increase was primarily due to equity initiatives to reduce employee turnover.
- Mortgage segment revenues of $26 million were down nearly 63% from $70 million a year ago.
- Rental revenue was $74 million, up 10% from the prior year period. Traffic to this segment increased by 30% year-over-year as a result of a drop in utilization from historically high levels.
[ad_2]
Source link
