SEATTLE, Aug. 5, 2014 (GLOBE NEWSWIRE) -- Zillow, Inc. (Nasdaq:Z), the leading real estate and home-related marketplace, today announced record financial results for the quarter ended June 30, 2014.
"We had our strongest quarter yet with record consumer traffic and record revenue and bookings by Premier Agent advertisers," said Spencer Rascoff, Zillow CEO. "Our deliberate focus on high-performing agents and their teams drove the significant increase in orders, and has prompted us to increase our full-year outlook. Advertisers are clearly following audience, and we're continuing to reinvest in the business to get the flywheel to spin even faster.
"Additionally, last week we announced our entry into an agreement to acquire Trulia, a move that we believe will allow us to combine our resources and achieve even more impressive innovation for consumers and advertisers."
Second Quarter 2014 Financial Highlights
Operating and Business Highlights
Business Outlook - Third Quarter and Full Year 2014
In the third quarter of 2014, Zillow expects revenue to be in the range of $87.0 million to $88.0 million, which represents a 64% increase over third quarter of 2013 revenue at the midpoint of the range.
Zillow expects Adjusted EBITDA to be in the range of $14.0 million to $15.0 million, which represents a $10.4 million increase over third quarter of 2013 Adjusted EBITDA at the midpoint of the range. This outlook excludes anticipated transaction-related costs resulting from our planned acquisition of Trulia, which are estimated to be $7.0 million to $10.0 million in the period. Estimated reconciling adjustment ranges for Adjusted EBITDA are $9.0 million to $10.0 million for depreciation and amortization and $7.0 million to $8.0 million for share-based compensation expense.
For full year 2014, Zillow is increasing its outlook for revenue to a range of $321.0 million to $323.0 million, up from a range of $304.0 million to $308.0 million, which represents a year-over-year increase of $124.5 million, or 63%, at the midpoint of the range.
Zillow is raising its outlook for Adjusted EBITDA to a range of $52.0 million to $54.0 million, up from the previous range of $48.0 million to $50.0 million for the full year. This represents a year-over-year increase of 78% at the midpoint of the range. Estimated reconciling adjustment ranges for Adjusted EBITDA are $35.0 million to $38.0 million for depreciation and amortization and $32.0 million to $34.0 million for share-based compensation expense.
Quarterly Conference Call
A quarterly conference call to discuss Zillow, Inc.'s second quarter 2014 financial results will occur today at 2 p.m. Pacific Time (5 p.m. Eastern Time) that will also be webcast live. The live webcast of the conference call will be available on the investor relations section of Zillow, Inc.'s website at http://investors.zillow.com/. For those without access to the Internet, the call may be accessed toll-free via phone at 877-643-7152 with conference ID# 79067051. Callers outside the United States may dial 443-863-7921 with conference ID# 79067051. Questions submitted via Zillow's Twitter account (www.twitter.com/zillow) using the hashtag #ZEarnings, and questions posted on the Zillow Facebook page (www.facebook.com/zillow), will be considered during the Q&A portion of the call, in addition to questions submitted by those dialed in. Following completion of the call, a recorded replay of the webcast will be available on the investor relations section of Zillow, Inc.'s website at http://investors.zillow.com/.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that involve risks and uncertainties, including, without limitation, statements regarding our beliefs about our reinvestments in the business, our business outlook, and the expected benefits related to our proposed acquisition of Trulia. Statements containing words such as "may," "believe," "anticipate," "expect," "intend," "plan," "project," "will," "projections," "continue," "business outlook," "estimate," "outlook," or similar expressions constitute forward-looking statements. Differences in Zillow's actual results from those described in these forward-looking statements may result from actions taken by Zillow as well as from risks and uncertainties beyond Zillow's control. Factors that may contribute to such differences include, but are not limited to, Zillow's ability to successfully integrate and realize the benefits of our past or future strategic acquisitions or investments, including our proposed acquisition of Trulia, Inc.; Zillow's ability to maintain and effectively manage an adequate rate of growth; the impact of the real estate industry on Zillow's business; Zillow's ability to innovate and provide products and services that are attractive to its users and advertisers; Zillow's ability to increase awareness of the Zillow brand; Zillow's ability to maintain or establish relationships with listings and data providers; Zillow's ability to attract consumers to Zillow's mobile applications and websites; Zillow's ability to compete successfully against existing or future competitors; the reliable performance of Zillow's network infrastructure and content delivery processes; and Zillow's ability to protect its intellectual property. The foregoing list of risks and uncertainties is illustrative, but is not exhaustive. For more information about potential factors that could affect Zillow's business and financial results, please review the "Risk Factors" described in Zillow's Annual Report on Form 10-K for the fiscal year ended December 31, 2013 filed with the Securities and Exchange Commission, or SEC, and in Zillow's other filings with the SEC. Except as may be required by law, Zillow does not intend, and undertakes no duty, to update this information to reflect future events or circumstances.
Additional Information and Where to Find It
In connection with the proposed acquisition of Trulia, Zillow and Trulia will file a joint proxy statement/prospectus with the Securities and Exchange Commission, and a new holding company will file a Registration Statement on Form S-4 with the Securities and Exchange Commission. INVESTORS AND SECURITYHOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT AND JOINT PROXY STATEMENT/PROSPECTUS (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) REGARDING THE PROPOSED TRANSACTION WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Investors and security holders will be able to obtain free copies of the registration statement and joint proxy statement/prospectus (when they become available) and other documents filed by Zillow and Trulia at the Securities and Exchange Commission's web site at www.sec.gov. Copies of the registration statement and joint proxy statement/prospectus (when they become available) and the filings that will be incorporated by reference therein may also be obtained, without charge, from Zillow's website, www.zillow.com, under the heading "Investors" in the "About" tab or by contacting Zillow Investor Relations at (206) 470-7137. These documents may also be obtained, without charge, from Trulia's website, www.trulia.com, under the tab "Investor Relations" or by contacting Trulia Investor Relations at (415) 400-7238.
Participants in Solicitation
The respective directors and executive officers of Zillow and Trulia and other persons may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction. Information regarding Zillow's directors and executive officers is available in its proxy statement filed with the SEC by Zillow on April 17, 2014, and information regarding Trulia's directors and executive officers is available in its proxy statement filed with the SEC by Trulia on April 22, 2014. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the joint proxy statement/prospectus and other relevant materials to be filed with the SEC (when they become available). These documents can be obtained free of charge from the sources indicated above.
Use of Non-GAAP Financial Measures
To provide investors with additional information regarding our financial results, this press release includes references to Adjusted EBITDA as well as non-GAAP net income (loss) per share, both of which are non-GAAP financial measures. We have provided a reconciliation of Adjusted EBITDA to net loss, the most directly comparable GAAP financial measure, and a reconciliation of net income (loss), adjusted, to net loss, as reported on a GAAP basis, and the calculation of non-GAAP net income (loss) per share - basic and diluted, within this earnings release.
Adjusted EBITDA is a key metric used by our management and board of directors to measure operating performance and trends, and to prepare and approve our annual budget. In particular, the exclusion of certain expenses in calculating Adjusted EBITDA facilitates operating performance comparisons on a period-to-period basis.
Our use of Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:
Because of these limitations, you should consider Adjusted EBITDA alongside other financial performance measures, including various cash flow metrics, net loss and our other GAAP results.
Our presentation of non-GAAP net income (loss) per share excludes the impact of share-based compensation expense. This measure is not a key metric used by our management and board of directors to measure operating performance or otherwise manage the business. However, we provide non-GAAP net income (loss) per share as supplemental information to investors, as we believe the exclusion of share-based compensation expense facilitates investors' operating performance comparisons on a period-to-period basis. You should not consider these metrics in isolation or as substitutes for analysis of our results as reported under GAAP.
1Source: Zillow's custom-defined ranking based on comScore data, Rental Networks by Unique Visitors, June 2014, US Data; Zillow Rental Network is the unduplicated reach of Zillow.com Rentals and HotPads.com, Media Metrix Audience Duplication report, June 2014, US Data.
About Zillow, Inc.
Zillow, Inc. (Nasdaq:Z) operates the leading real estate and home-related marketplaces on mobile and the Web, with a complementary portfolio of brands and products that help people find vital information about homes, and connect with the best local professionals. Zillow's brands serve the full lifecycle of owning and living in a home: buying, selling, renting, financing, remodeling and more. In addition, Zillow offers a suite of tools and services to help local real estate, mortgage, rental and home improvement professionals manage and market their businesses. Welcoming nearly 89 million monthly unique users in July 2014, the Zillow, Inc. portfolio includes Zillow.com®, Zillow Mobile, Zillow Mortgage Marketplace, Zillow Rentals, Zillow Digs®, StreetEasy®, Postlets®, Diverse Solutions®, Agentfolio®, Mortech®, HotPads™ and Retsly ™. Zillow is headquartered in Seattle.
Please visit http://investors.zillow.com/, www.zillowblog.com, www.twitter.com/zillow, and www.facebook.com/zillow, where Zillow discloses information about the company, its financial information, and its business which may be deemed material.
The Zillow logo is available at http://zillow.mediaroom.com/logos.
Zillow.com, Zillow, Digs, StreetEasy, Postlets, Mortech, Agentfolio and Diverse Solutions are registered trademarks of Zillow, Inc.
HotPads and Retsly are trademarks of Zillow, Inc.
(ZFIN)
ZILLOW, INC. | ||
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | ||
(in thousands) | ||
June 30, 2014 | December 31, 2013 | |
Assets | ||
Current assets: | ||
Cash and cash equivalents | $ 138,289 | $ 201,760 |
Short-term investments | 219,777 | 93,531 |
Accounts receivable, net | 19,885 | 15,234 |
Prepaid expenses and other current assets | 6,464 | 4,987 |
Total current assets | 384,415 | 315,512 |
Long-term investments | 99,806 | 142,435 |
Property and equipment, net | 34,011 | 27,408 |
Goodwill | 96,352 | 93,213 |
Intangible assets, net | 26,455 | 29,149 |
Other assets | 434 | 346 |
Total assets | $ 641,473 | $ 608,063 |
Liabilities and shareholders' equity | ||
Current liabilities: | ||
Accounts payable | $ 14,279 | $ 4,724 |
Accrued expenses and other current liabilities | 12,116 | 10,601 |
Accrued compensation and benefits | 6,363 | 4,440 |
Deferred revenue | 14,037 | 12,298 |
Deferred rent, current portion | 735 | 546 |
Total current liabilities | 47,530 | 32,609 |
Deferred rent, net of current portion | 10,248 | 7,658 |
Shareholders' equity: | ||
Preferred stock | -- | -- |
Class A common stock | 3 | 3 |
Class B common stock | 1 | 1 |
Additional paid-in capital | 684,548 | 651,913 |
Accumulated deficit | (100,857) | (84,121) |
Total shareholders' equity | 583,695 | 567,796 |
Total liabilities and shareholders' equity | $ 641,473 | $ 608,063 |
ZILLOW, INC. | ||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
(in thousands, except per share data) | ||||||||
Three Months Ended | Six Months Ended | |||||||
June 30, | June 30, | |||||||
2014 | 2013 | 2014 | 2013 | |||||
Revenue | $ 78,675 | $ 46,920 | $ 144,918 | $ 85,886 | ||||
Costs and expenses: | ||||||||
Cost of revenue (exclusive of amortization) (1)(2) | 6,793 | 4,294 | 12,957 | 8,424 | ||||
Sales and marketing (2) | 48,075 | 32,924 | 82,973 | 52,718 | ||||
Technology and development (2) | 19,862 | 11,071 | 36,832 | 21,682 | ||||
General and administrative (2) | 14,706 | 8,978 | 29,395 | 17,211 | ||||
Total costs and expenses | 89,436 | 57,267 | 162,157 | 100,035 | ||||
Loss from operations | (10,761) | (10,347) | (17,239) | (14,149) | ||||
Other income | 284 | 115 | 503 | 170 | ||||
Net loss | $ (10,477) | $ (10,232) | $ (16,736) | $ (13,979) | ||||
Net loss per share — basic and diluted | $ (0.26) | $ (0.30) | $ (0.42) | $ (0.41) | ||||
Weighted-average shares outstanding — basic and diluted | 39,800 | 34,553 | 40,314 | 34,164 | ||||
_________ | ||||||||
(1) Amortization of website development costs and intangible assets included in technology and development | $ 6,857 | $ 4,492 | $ 13,641 | $ 8,700 | ||||
(2) Includes share-based compensation expense as follows: | ||||||||
Cost of revenue | $ 418 | $ 176 | $ 791 | $ 339 | ||||
Sales and marketing | 1,698 | 7,777 | 3,001 | 9,004 | ||||
Technology and development | 3,056 | 1,034 | 5,081 | 2,068 | ||||
General and administrative | 3,238 | 1,480 | 6,669 | 3,202 | ||||
Total | $ 8,410 | $ 10,467 | $ 15,542 | $ 14,613 | ||||
Other Financial Data: | ||||||||
Adjusted EBITDA (3) | $ 6,245 | $ 5,275 | $ 14,973 | $ 10,398 | ||||
(3) See above for more information regarding our presentation of Adjusted EBITDA. | ||||||||
ZILLOW, INC. | |||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||
(in thousands) | |||
Six Months Ended June 30, | |||
2014 | 2013 | ||
Operating activities | |||
Net loss | $ (16,736) | $ (13,979) | |
Adjustments to reconcile net loss to net cash provided by operating activities: | |||
Depreciation and amortization | 16,670 | 9,934 | |
Share-based compensation expense | 15,542 | 14,613 | |
Loss on disposal of property and equipment | 353 | 668 | |
Bad debt expense | 1,225 | 765 | |
Deferred rent | 2,779 | (122) | |
Amortization of bond premium | 1,751 | 210 | |
Changes in operating assets and liabilities: | |||
Accounts receivable | (5,876) | (5,193) | |
Prepaid expenses and other assets | (1,565) | (462) | |
Accounts payable | 9,555 | 2,659 | |
Accrued expenses | 3,438 | (1,506) | |
Deferred revenue | 1,739 | 959 | |
Net cash provided by operating activities | 28,875 | 8,546 | |
Investing activities | |||
Proceeds from maturities of investments | 73,885 | 33,000 | |
Purchases of investments | (159,253) | (56,272) | |
Purchases of property and equipment | (15,373) | (10,996) | |
Purchases of intangible assets | (2,132) | (1,707) | |
Cash paid for acquisition | (3,500) | -- | |
Net cash used in investing activities | (106,373) | (35,975) | |
Financing activities | |||
Proceeds from exercise of Class A common stock options | 14,027 | 8,941 | |
Net cash provided by financing activities | 14,027 | 8,941 | |
Net decrease in cash and cash equivalents during period | (63,471) | (18,488) | |
Cash and cash equivalents at beginning of period | 201,760 | 150,040 | |
Cash and cash equivalents at end of period | $ 138,289 | $ 131,552 | |
Supplemental disclosures of cash flow information | |||
Noncash transactions: | |||
Capitalized share-based compensation | $ 3,086 | $ 1,732 | |
Write-off of fully depreciated property and equipment | $ 3,017 | $ 792 |
Adjusted EBITDA
The following table presents a reconciliation of Adjusted EBITDA to net loss, the most directly comparable GAAP financial measure, for each of the periods presented (in thousands, unaudited):
Three Months Ended | Six Months Ended | |||
June 30, | June 30, | |||
2014 | 2013 | 2014 | 2013 | |
Reconciliation of Adjusted EBITDA to Net Loss: | ||||
Net loss | $ (10,477) | $(10,232) | $ (16,736) | $ (13,979) |
Other income | (284) | (115) | (503) | (170) |
Depreciation and amortization expense | 8,596 | 5,155 | 16,670 | 9,934 |
Share-based compensation expense | 8,410 | 10,467 | 15,542 | 14,613 |
Adjusted EBITDA | $ 6,245 | $ 5,275 | $ 14,973 | $ 10,398 |
Non-GAAP Net Income (Loss) per Share
The following table presents a reconciliation of net income (loss), adjusted, to net loss, as reported on a GAAP basis, and the calculation of non-GAAP net income (loss) per share - basic and diluted, for each of the periods presented (in thousands, except per share data, unaudited):
Three Months Ended | Six Months Ended | |||
June 30, | June 30, | |||
2014 | 2013 | 2014 | 2013 | |
Net loss, as reported | $ (10,477) | $(10,232) | $(16,736) | $ (13,979) |
Share-based compensation expense | 8,410 | 10,467 | 15,542 | 14,613 |
Net income (loss), adjusted | $ (2,067) | $ 235 | $ (1,194) | $ 634 |
Weighted-average shares outstanding - basic | 39,800 | 34,553 | 40,314 | 34,164 |
Weighted-average shares outstanding - diluted | 39,800 | 37,633 | 40,314 | 37,243 |
Non-GAAP net income (loss) per share - basic and diluted | $ (0.05) | $ 0.01 | $ (0.03) | $ 0.02 |
Revenue by Type
The following tables present our revenue by type and as a percentage of total revenue for each of the periods presented (in thousands, unaudited):
Three Months Ended | Six Months Ended | |||
June 30, | June 30, | |||
2014 | 2013 | 2014 | 2013 | |
Revenue: | ||||
Marketplace revenue: | ||||
Real estate | $ 56,051 | $ 30,637 | $ 102,646 | $ 56,746 |
Mortgages | 6,565 | 5,814 | 13,694 | 10,723 |
Total Marketplace revenue | 62,616 | 36,451 | 116,340 | 67,469 |
Display revenue | 16,059 | 10,469 | 28,578 | 18,417 |
Total revenue | $ 78,675 | $ 46,920 | $ 144,918 | $ 85,886 |
Three Months Ended | Six Months Ended | |||
June 30, | June 30, | |||
2014 | 2013 | 2014 | 2013 | |
Percentage of Total Revenue: | ||||
Marketplace revenue: | ||||
Real estate | 71% | 65% | 71% | 66% |
Mortgages | 8% | 12% | 9% | 12% |
Total Marketplace revenue | 80% | 78% | 80% | 79% |
Display revenue | 20% | 22% | 20% | 21% |
Total revenue | 100% | 100% | 100% | 100% |
Key Growth Drivers
The following tables set forth our key growth drivers for each of the periods presented:
Average Monthly Unique Users for the | |||
Three Months Ended June 30, | 2013 to 2014 | ||
2014 | 2013 | % Change | |
(in thousands) | |||
Unique Users | 81,108 | 54,317 | 49% |
Unique users source: We measure unique users with Google Analytics. Beginning in September 2013, the reported monthly unique users reflect the effect of Zillow's August 26, 2013 acquisition of StreetEasy, Inc.
At June 30, | 2013 to 2014 | ||
2014 | 2013 | % Change | |
Premier Agent Advertisers | 56,818 | 38,807 | 46% |