Zillow shares fell 10.6% after earnings, as investors likely focused on weakness in For Sale: revenue was flat year over year, with residential revenue down 4%, amid a sharply worsening housing backdrop. Rentals growth and expanding EBITDA margin offered support, but did not offset the concern around the core home-sales business.
- Q3 revenue rose 7% year over year to $724 million; EBITDA was $182 million, within management’s expectations, and margin expanded 70 basis points to 25%.
- For Sale revenue was flat: residential revenue declined 4%, while mortgages revenue grew 32%. Management said underlying For Sale revenue outperformed the purchase mortgage industry by 600 basis points, adjusting for the expected impact of the Preferred transition.
- Rentals revenue increased 26% to $220 million, driven by multifamily revenue.
- Management described a difficult housing market: mortgage rates rose nearly 100 basis points from the end of June to early October, while purchase mortgage origination volume for the industry declined 4%.
- Zillow said AI mode drew more than 2.5 million users from March to September; users who engaged with it spent nearly three times as long on Zillow as those who did not.
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