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Zillow +5.1% AH on Q1 beat, guidance; Trulia +1.3%

  • Zillow (Z) guides on its CC for Q2 revenue of $75.5M-$76.5M, above a $71.8M consensus. Full-year revenue guidance has been hiked to $304M-$308M from $288M-$294M (consensus is at $294.8M). Full-year EBITDA guidance is now at $48M-$50M (up $10M at the midpoint).
  • Q1 results beat estimates on the back of a 72% Y/Y increase in Marketplace revenue to $53.4M (real estate +77%, mortgages +45%), and a 62% increase in Display (ad) revenue to $12.9M.
  • As expected, Zillow spent aggressively: Sales/marketing spend rose to $34.9M from $19.8M a year ago, R&D spend to $17M from $10.6M, and G&A to $14.7M from $8.2M.
  • 4,654 Premier Agent subs were added, raising the total to 52,968. ARPU +6% Q/Q and +10% Y/Y to $286. Average monthly unique users +51% to 70.7M.
  • Trulia (TRLA) is following Zillow higher.
  • Q1 results, PR, datasheet, prepared remarks
Comments (12)
  • mlauritz
    , contributor
    Comments (352) | Send Message
     
    The Fact Zillow is going back over $100 Per Share AH is Pure Madness...

     

    Once this Revenue-Beat High subsides & the reality that this business model cannot make actual Profits; I am seeing Deep Red again for Z tomorrow...
    7 May, 05:58 PM Reply Like
  • Weighing Machine
    , contributor
    Comments (603) | Send Message
     
    Operating loss increases ... Again... This company is a joke
    7 May, 06:24 PM Reply Like
  • Blizz_The_Wiz
    , contributor
    Comments (46) | Send Message
     
    Weighing Machine, I agree with your thesis 100% that the business isn't scalable, the sales/marketing costs grow proportionally with their agent and visitor ads, but how come Mr. Market isn't catching on?

     

    Do you think its because of the high short interest?
    7 May, 06:33 PM Reply Like
  • Weighing Machine
    , contributor
    Comments (603) | Send Message
     
    im not sure why it has held up so well - as they've been clobbered, i have been covering some of my other momo shorts and have massively increased my z short. i think fv is ~$20 or so at best.
    7 May, 07:04 PM Reply Like
  • Wilson Wang
    , contributor
    Comments (818) | Send Message
     
    Wow. This is absolute craziness.

     

    This company does not have a profitable business model.
    7 May, 07:06 PM Reply Like
  • gap123
    , contributor
    Comments (173) | Send Message
     
    I wish I could short it... Can't find any? Lol. Agreed, don't understand how Z is not at 40
    7 May, 06:29 PM Reply Like
  • ericmcarter
    , contributor
    Comments (179) | Send Message
     
    A few observations to restore some sanity... First, from a pure growth perspective (fundamentals be damned), the report and guidance were quite good. But, Z now trades at 17x trailing sales and 10x 2014 guided sales, all while generating little-to-no actual GAAP profit. If the stock goes up tomorrow, which it likely will, than that means we live in a market where this type of risk is acceptable. I choose not to play in that sandbox. Also, remember this stock has 40% of its float shorted. I find it odd that even after what I would call a great earnings report, the stock is marginally up. If this were a true short squeeze, it would be up substantially more.
    7 May, 06:35 PM Reply Like
  • Blizz_The_Wiz
    , contributor
    Comments (46) | Send Message
     
    Eric, you make some great points. I was also thinking something similar.
    In the context that:
    a) It fell 9% today alone
    b) They beat on EPS estimates (well, less of a loss than expected - sustainable profit seems unattainable for this company)
    c) They beat on REV estimates
    d) They raised next Q and FY guidance
    It is surprising to up only 4% give or take AH....

     

    The true tell will be at 9:45am tomorrow... I suspect an intial huge spike at the open from panic short covering, probably up 10% back to where it opened today, but if the gains don't hold and the stock ends down, that will be a tell that the market doesn't care about revenue (only) growth, no matter how good it is.

     

    That has been the continual theme: the market is taking a rather healthy transition back to profit growth as a primary determination of value.
    7 May, 06:48 PM Reply Like
  • ericmcarter
    , contributor
    Comments (179) | Send Message
     
    Blizz... I think your forecast nailed it thus far. Quick pop followed by a slow fade back down. Perhaps Tiger Global's new 10% position is helping support it? I'm not sure. But again, that was a very good earnings report, and with the amount of short interest here I'm very surprised by the lack momentum today.
    8 May, 03:11 PM Reply Like
  • kevinconway
    , contributor
    Comments (1744) | Send Message
     
    Love Zillow as a site. As an investment, not so much. Way too expensive.
    7 May, 08:58 PM Reply Like
  • Stone Fox Capital
    , contributor
    Comments (5790) | Send Message
     
    Agree that the stock could sell off tomorrow as the crazies come out of the woods suddenly demanding profits.Regardless though, the company is building for the future and shouldn't focus on profits. The leader in this sector will be worth tens of billions.

     

    The other comments are mostly absurd!
    7 May, 10:40 PM Reply Like
  • Hayden Cole
    , contributor
    Comments (73) | Send Message
     
    Your argument might hold water if spending was on technology, rather than TV adds and call center jockeys.

     

    Trying to out-spend your undifferentiated competitors to sign up reluctant realtors and get eyeballs to your site is not 'building for the future'.
    7 May, 11:32 PM Reply Like
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