SEATTLE - Zillow Group (NASDAQ:ZG) Inc. (NASDAQ: Z) reported a stronger-than-expected performance for the first quarter of 2024, with earnings and revenue surpassing analyst estimates. However, shares fell sharply by 10% as the company's guidance for the second quarter fell below Wall Street expectations.
The real estate giant posted a first-quarter adjusted EPS of $0.35, which was $0.05 higher than the analyst consensus of $0.30. Revenue for the quarter was also robust at $529 million, a 13% increase YoY and notably higher than the consensus estimate of $507.12 million.
This growth was attributed to a 9% rise in residential revenue to $393 million, outpacing the industry's growth, and a significant 31% surge in rentals revenue to $97 million. Mortgages revenue also saw a healthy 19% increase YoY.
Despite the positive first-quarter results, investors reacted negatively to Zillow's second-quarter revenue forecast, which is anticipated to be between $525 million and $540 million. This projection is below the analyst consensus of $559 million, marking a potential decline in the company's revenue trajectory.
Zillow's CEO Rich Barton highlighted the company's efforts in expanding its market coverage and integrating the end-to-end moving transaction for consumers and professionals. He credited the strong brand and engaged audience for the company's ability to outperform the residential real estate industry.
The company's net loss on a GAAP basis was $23 million, or 4% of total revenue, a slight increase from the $22 million, or 5% of total revenue, reported in the first quarter of the previous year. Adjusted EBITDA for the quarter was $125 million, or 24% of total revenue, which was $25 million above the company's own expectations, primarily driven by higher residential revenue.
Zillow ended the first quarter with $2.9 billion in cash and investments, up from $2.8 billion at the end of the fourth quarter of 2023. However, the company's average monthly unique users on its mobile apps and sites remained flat YoY at 217 million, with a modest 3% increase in visits.
Looking forward, Zillow's guidance suggests a cautious outlook for the second quarter, which has prompted a significant market response. The company's stock movement reflects investor sentiment on the future revenue prospects and the challenges that may lie ahead for Zillow in a competitive real estate market.
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