SEATTLE, May 12, 2015 (GLOBE NEWSWIRE) -- Zillow Group (Nasdaq:Z), which houses a portfolio of the largest and most vibrant real estate and home-related brands on mobile and Web, today announced its pro forma and consolidated financial results for the quarter ended March 31, 2015. Throughout this release, financial results are presented on both a reported and pro forma basis. Reported results were prepared in accordance with generally accepted accounting principles (GAAP). Pro forma results exclude items described in the reconciliation tables below and also assume the February 2015 acquisition of Trulia occurred on January 1, 2014, the beginning of the comparable prior year reporting period. The pro forma results are presented in order to provide additional insights into the underlying trends in the business.
"The combined team at Zillow Group is executing extremely well across all of our brands and marketplaces," said Zillow Group CEO Spencer Rascoff. "Our already massive audience of home shoppers continues to grow throughout our network of brands, and we are rapidly recognizing the benefits of scale. We have integrated the Zillow mortgage and rentals products into Trulia, giving our advertisers and partners access to an even wider consumer audience. And most importantly, we are on track to combine our agent advertising business by the end of 2015, setting us up to fully realize the potential of Zillow Group's huge and growing audience."
Pro Forma First Quarter 2015 Financial Highlights
Reported First Quarter 2015 Consolidated Financial Highlights
Zillow Group's first quarter 2015 consolidated financial results include the results of Trulia's operations for the partial period from the acquisition date of February 17, 2015 to March 31, 2015.
Operating and Business Highlights
Business Outlook - Full-Year 2015
For full-year 2015, Zillow Group reaffirmed its previous outlook, and expects pro forma revenue to be $690 million, which includes Market Leader's expected revenue of $40 million. The company expects pro forma Adjusted EBITDA to be in the range of $80 million to $85 million.
Quarterly Conference Call
A quarterly conference call to discuss Zillow Group, Inc.'s first quarter 2015 financial results and business outlook will occur today at 2 p.m. Pacific Time (5 p.m. Eastern Time) and will be webcast live. The live webcast of the conference call will be available on the investor relations section of Zillow Group, Inc.'s website at http://investors.zillowgroup.com. For those without access to the Internet, the call may be accessed toll-free via phone at 877-643-7152 with conference ID# 18765839. Callers outside the United States may dial 443-863-7921 with conference ID# 18765839. Questions submitted via Zillow Group, Inc.'s Twitter account (www.twitter.com/zillowgroup) using the hashtag #ZEarnings 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 Group, Inc.'s website at http://investors.zillowgroup.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 expectations related to our execution against our strategic priorities, our positioning for 2016, and our business outlook. 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 Group's actual results from those described in these forward-looking statements may result from actions taken by Zillow Group as well as from risks and uncertainties beyond Zillow Group's control. Factors that may contribute to such differences include, but are not limited to, Zillow Group's ability to successfully integrate and realize the benefits of our past or future strategic acquisitions or investments, including our February 2015 acquisition of Trulia, Inc.; Zillow Group's ability to maintain and effectively manage an adequate rate of growth; Zillow Group's ability to maintain or establish relationships with listings and data providers; the impact of the real estate industry on Zillow Group's business; Zillow Group's ability to innovate and provide products and services that are attractive to its users and advertisers; Zillow Group's ability to increase awareness of the Zillow Group brands; Zillow Group's ability to attract consumers to Zillow Group's mobile applications and websites; Zillow Group's ability to compete successfully against existing or future competitors; the reliable performance of Zillow Group's network infrastructure and content delivery processes; and Zillow Group'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 Group's business and financial results, please review the "Risk Factors" described in Zillow Group, Inc.'s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2015 filed with the Securities and Exchange Commission, or SEC, and in Zillow Group's other filings with the SEC. Except as may be required by law, Zillow Group does not intend, and undertakes no duty, to update this information to reflect future events or circumstances.
Use of Non-GAAP Financial Measures
To provide investors with additional information regarding our financial results, this press release includes references to certain pro forma financial results, Adjusted EBITDA and non-GAAP net income per share, all of which are non-GAAP financial measures. We have provided a reconciliation of pro forma Adjusted EBITDA to pro forma net loss, Adjusted EBITDA to net loss, the most directly comparable GAAP financial measure, and a reconciliation of net income, adjusted, to net loss, as reported on a GAAP basis, and the calculation of non-GAAP net income per share - basic and diluted, within this earnings release.
The pro forma financial results included in this press release, although helpful in illustrating the financial characteristics of Zillow Group under one set of assumptions, are not true historical financial results. They are provided for informational purposes and do not attempt to represent Zillow Group's actual financial condition if the acquisition had been completed on the applicable dates of the financial statements presented herein or predict or suggest future results.
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 per share excludes the impact of share-based compensation expense, acquisition-related costs and restructuring costs. 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 per share as supplemental information to investors, as we believe the exclusion of share-based compensation expense, acquisition-related costs and restructuring costs 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.
About Zillow Group
Zillow Group (Nasdaq:Z) houses a portfolio of the largest real estate and home-related brands on mobile and Web. The company's brands focus on all stages of the home lifecycle: renting, buying, selling, financing and home improvement. Zillow Group is committed to empowering consumers with unparalleled data, inspiration and knowledge around homes, and connecting them with the right local professionals to help. The Zillow Group portfolio of consumer brands includes real estate and rental marketplaces Zillow®, Trulia®, StreetEasy® and HotPads®. In addition, Zillow Group works with tens of thousands of real estate agents, lenders and rental professionals, helping maximize business opportunities and connect to millions of consumers. The company operates a number of business brands for real estate, rental and mortgage professionals, including Postlets®, Mortech®, Diverse Solutions®, Market Leader® and Retsly™. The company is headquartered in Seattle.
Please visit http://investors.zillowgroup.com, www.zillowgroup.com/ir-blog, and www.twitter.com/zillowgroup, where Zillow Group discloses information about the company, its financial information, and its business which may be deemed material.
The Zillow Group logo is available at http://zillowgroup.mediaroom.com/logos-photos.
Zillow, Postlets, Mortech, Diverse Solutions, StreetEasy, and HotPads are registered trademarks of Zillow, Inc. Retsly is a trademark of Zillow, Inc. Trulia is a registered trademark of Trulia, Inc. Market Leader is a registered trademark of Market Leader, Inc.
(ZFIN)
Pro Forma Financial Information
The following pro forma financial information gives effect to the February 2015 acquisition of Trulia as if it were consummated on January 1, 2014, the beginning of the comparable prior reporting period (in thousands, unaudited):
Three Months Ended | ||
March 31, | ||
2015 (1) | 2014 (2) | |
Pro forma revenue | $ 162,531 | $ 120,732 |
Pro forma net loss | $ (17,854) | $ (23,806) |
Pro forma net loss per share — basic and diluted | $ (0.31) | $ (0.42) |
Pro forma weighted-average shares outstanding — basic and diluted | 58,143 | 56,581 |
_________ | ||
Other Financial Data: | ||
Pro forma Adjusted EBITDA (3) | $ 24,501 | $ 12,117 |
(1) The three months ended March 31, 2015 includes pro forma adjustments for $46.2 million to eliminate direct and incremental acquisition-related costs reflected in the historical financial statements, $33.7 million to eliminate one-time share-based compensation expense attributable to substituted equity awards and to record additional share-based compensation expense attributable to substituted equity awards, $25.3 million to eliminate restructuring costs associated with the acquisition of Trulia reflected in the historical financial statements, $2.4 million to record additional amortization expense for acquired intangible assets and $1.1 million to eliminate Trulia's historical amortization of capitalized website development costs. | ||
(2) The three months ended March 31, 2014 includes pro forma adjustments for $4.7 million to record additional amortization expense for acquired intangible assets, $1.3 million to eliminate share-based compensation expense attributable to substituted equity awards and $0.9 million to eliminate Trulia's historical amortization of capitalized website development costs. | ||
(3) See below for a reconciliation of pro forma Adjusted EBITDA to pro forma net loss. |
The following table presents a reconciliation of pro forma Adjusted EBITDA to pro forma net loss for each of the periods presented (in thousands, unaudited):
Three Months Ended | ||
March 31, | ||
2015 | 2014 | |
Reconciliation of Pro Forma Adjusted EBITDA to Pro Forma Net Loss: | ||
Pro forma net loss | $ (17,854) | $(23,806) |
Pro forma other income | (302) | (364) |
Pro forma depreciation and amortization expense | 19,862 | 19,013 |
Pro forma share-based compensation expense | 21,236 | 15,701 |
Pro forma interest expense | 1,559 | 1,573 |
Pro forma Adjusted EBITDA | $ 24,501 | $ 12,117 |
The following table presents our pro forma revenue by type for each of the periods presented (in thousands, unaudited):
Three Months Ended | ||
March 31, | ||
2015 | 2014 | |
Pro Forma Revenue: | ||
Pro forma Marketplace revenue: | ||
Real estate | $ 113,396 | $ 73,520 |
Mortgages | 9,950 | 7,497 |
Market Leader | 13,581 | 15,252 |
Total pro forma Marketplace revenue | 136,927 | 96,269 |
Pro forma Display revenue | 25,604 | 24,464 |
Total pro forma revenue | $ 162,531 | $ 120,732 |
Reported Consolidated Results
ZILLOW GROUP, INC. | ||
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | ||
(in thousands) | ||
March 31, 2015 | December 31, 2014 | |
Assets | ||
Current assets: | ||
Cash and cash equivalents | $ 307,852 | $ 125,765 |
Short-term investments | 320,581 | 246,829 |
Accounts receivable, net | 31,267 | 18,684 |
Prepaid expenses and other current assets | 25,035 | 10,059 |
Total current assets | 684,735 | 401,337 |
Restricted cash | 6,800 | -- |
Long-term investments | -- | 83,326 |
Property and equipment, net | 72,936 | 41,600 |
Goodwill | 1,833,427 | 96,352 |
Intangible assets, net | 569,125 | 26,757 |
Other assets | 1,171 | 358 |
Total assets | $ 3,168,194 | $ 649,730 |
Liabilities and shareholders' equity | ||
Current liabilities: | ||
Accounts payable | $ 13,661 | $ 9,358 |
Accrued expenses and other current liabilities | 52,468 | 16,883 |
Accrued compensation and benefits | 16,786 | 6,735 |
Accrued restructuring costs | 7,369 | -- |
Deferred revenue | 23,768 | 15,356 |
Deferred rent, current portion | 968 | 864 |
Total current liabilities | 115,020 | 49,196 |
Deferred rent, net of current portion | 11,774 | 11,755 |
Long-term debt | 230,000 | -- |
Deferred tax liabilities and other long-term liabilities | 143,430 | -- |
Shareholders' equity: | ||
Class A common stock | 5 | 3 |
Class B common stock | 1 | 1 |
Additional paid-in capital | 2,853,941 | 716,506 |
Accumulated other comprehensive income | 138 | -- |
Accumulated deficit | (186,115) | (127,731) |
Total shareholders' equity | 2,667,970 | 588,779 |
Total liabilities and shareholders' equity | $ 3,168,194 | $ 649,730 |
ZILLOW GROUP, INC. | ||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||
(in thousands, except per share data) | ||
Three Months Ended | ||
March 31, | ||
2015 | 2014 | |
Revenue | $ 127,273 | $ 66,243 |
Costs and expenses: | ||
Cost of revenue (exclusive of amortization) (1)(2) | 13,019 | 6,164 |
Sales and marketing (2) | 59,286 | 35,133 |
Technology and development (2) | 37,325 | 16,735 |
General and administrative (2) | 38,024 | 14,689 |
Acquisition-related costs | 12,477 | -- |
Restructuring costs (2) | 25,065 | -- |
Total costs and expenses | 185,196 | 72,721 |
Loss from operations | (57,923) | (6,478) |
Other income | 269 | 219 |
Interest expense | (730) | -- |
Net loss | $ (58,384) | $ (6,259) |
Net loss per share — basic and diluted | $ (1.19) | $ (0.16) |
Weighted-average shares outstanding — basic and diluted | 49,130 | 39,322 |
_________ | ||
(1) Amortization of website development costs and intangible assets included in technology and development | $ 11,782 | $ 6,784 |
(2) Includes share-based compensation expense as follows: | ||
Cost of revenue | $ 952 | $ 373 |
Sales and marketing | 4,209 | 1,303 |
Technology and development | 5,766 | 2,025 |
General and administrative | 12,080 | 3,431 |
Restructuring costs | 10,420 | -- |
Total | $ 33,427 | $ 7,132 |
Other Financial Data: | ||
Adjusted EBITDA (3) | $ 16,654 | $ 8,728 |
(3) See above for more information regarding our presentation of Adjusted EBITDA. |
ZILLOW GROUP, INC. | ||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
(in thousands) | ||
Three Months Ended | ||
March 31, | ||
2015 | 2014 | |
Operating activities | ||
Net loss | $ (58,384) | $ (6,259) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation and amortization | 14,028 | 8,074 |
Share-based compensation expense | 23,007 | 7,132 |
Restructuring costs | 21,702 | -- |
Loss on disposal of property and equipment | 87 | 235 |
Bad debt expense | 805 | 635 |
Deferred rent | 381 | 697 |
Amortization of bond premium | 849 | 812 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (296) | (260) |
Prepaid expenses and other assets | 5,477 | (1,920) |
Accounts payable | (763) | 1,679 |
Accrued expenses and other current liabilities | (7,652) | 2,468 |
Accrued compensation and benefits | 1,727 | 1,070 |
Deferred revenue | 112 | (158) |
Other long-term liabilities | 375 | -- |
Net cash provided by operating activities | 1,455 | 14,205 |
Investing activities | ||
Proceeds from maturities of investments | 63,780 | 44,539 |
Purchases of investments | (59,896) | (103,094) |
Proceeds from sales of investments | 4,979 | -- |
Increase in restricted cash | 147 | -- |
Purchases of property and equipment | (10,321) | (7,872) |
Purchases of intangible assets | (284) | (1,147) |
Cash acquired in acquisition, net | 173,406 | -- |
Net cash provided by (used in) investing activities | 171,811 | (67,574) |
Financing activities | ||
Proceeds from exercise of Class A common stock options | 9,124 | 5,263 |
Value of equity awards withheld for tax liability | (303) | -- |
Net cash provided by financing activities | 8,821 | 5,263 |
Net increase (decrease) in cash and cash equivalents during period | 182,087 | (48,106) |
Cash and cash equivalents at beginning of period | 125,765 | 201,760 |
Cash and cash equivalents at end of period | $ 307,852 | $ 153,654 |
Supplemental disclosures of cash flow information | ||
Noncash transactions: | ||
Value of Class A common stock issued in connection with an acquisition | $ 1,883,728 | $ -- |
Capitalized share-based compensation | $ 2,424 | $ 1,586 |
Write-off of fully depreciated property and equipment | $ 11,759 | $ 1,498 |
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 | ||
March 31, | ||
2015 | 2014 | |
Reconciliation of Adjusted EBITDA to Net Loss: | ||
Net loss | $ (58,384) | $(6,259) |
Other income | (269) | (219) |
Depreciation and amortization expense | 14,028 | 8,074 |
Share-based compensation expense | 23,007 | 7,132 |
Acquisition-related costs | 12,477 | -- |
Restructuring costs | 25,065 | -- |
Interest expense | 730 | -- |
Adjusted EBITDA | $ 16,654 | $ 8,728 |
Non-GAAP Net Income per Share
The following table presents a reconciliation of net income, adjusted, to net loss, as reported on a GAAP basis, and the calculation of non-GAAP net income per share - basic and diluted, for each of the periods presented (in thousands, except per share data, unaudited):
Three Months Ended | ||
March 31, | ||
2015 | 2014 | |
Net loss, as reported | $ (58,384) | $(6,259) |
Share-based compensation expense | 23,007 | 7,132 |
Acquisition-related costs | 12,477 | -- |
Restructuring costs | 25,065 | -- |
Net income, adjusted | $ 2,165 | $ 873 |
Weighted-average shares outstanding - basic | 49,130 | 39,322 |
Weighted-average shares outstanding - diluted | 55,102 | 42,378 |
Non-GAAP net income per share - basic | $ 0.04 | $ 0.02 |
Non-GAAP net income per share - diluted | $ 0.05 | $ 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 | ||
March 31, | ||
2015 | 2014 | |
Revenue: | ||
Marketplace revenue: | ||
Real estate | $ 93,312 | $ 46,595 |
Mortgages | 9,558 | 7,129 |
Market Leader | 6,057 | -- |
Total Marketplace revenue | 108,927 | 53,724 |
Display revenue | 18,346 | 12,519 |
Total revenue | $ 127,273 | $ 66,243 |
Three Months Ended | ||
March 31, | ||
2015 | 2014 | |
Percentage of Total Revenue: | ||
Marketplace revenue: | ||
Real estate | 73% | 70% |
Mortgages | 8% | 11% |
Market Leader | 5% | 0% |
Total Marketplace revenue | 86% | 81% |
Display revenue | 14% | 19% |
Total revenue | 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 March 31, | 2014 to 2015 | ||
2015 | 2014 | % Change | |
(in thousands) | |||
Unique Users | 109,912 | 70,668 | 56% |
Unique users source: Zillow measures unique users with Google Analytics and Trulia measures unique users with Omniture analytical tools. Beginning on February 17, 2015, the reported monthly unique users reflect the effect of Zillow Group's February 17, 2015 acquisition of Trulia.
At March 31, | 2014 to 2015 | ||
2015 | 2014 | % Change | |
Agent Advertisers | 103,415 | 52,968 | 95% |
__________
1 For example, flagship brand Zillow operates the most popular suite of mobile real estate apps across all major platforms, according to internal tracking in April 2015.