A month has gone by since the last earnings report for Zillow Group (ZG Quick QuoteZG - Free Report) . Shares have lost about 20.5% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Zillow due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Zillow Group Q3 Earnings & Revenues Lag Estimates

Zillow Group reported third-quarter 2021 loss of of 95 cents per share, which missed the Zacks Consensus Estimate for earnings of 16 cents. The company had reported earnings of 37 cents per share in the year-ago quarter.

Total revenues of $1.74 billion lagged the Zacks Consensus Estimate by 13.7% but surged 164% year over year.

Top-Line Details

Homes segment revenues were $1.19 billion, up 534% year over year. Zillow Offers revenues were $1.17 billion, up 531% year over year. Other segment revenues amounted to $13.5 million compared with $1.2 million in the year-ago quarter.

Internet, Media & Technology (“IMT”) segment revenues increased 16% year over year to $480.2 million in the reported quarter. Premier Agent revenues totaled $358.9 million, up 20% year over year. Other revenues climbed 4% on a year-over-year basis to $121.3 million.

Mortgages segment revenues increased 30% year over year to $70.3 million.

Key Metrics

Traffic on mobile apps and websites decreased 4% year over year to 227 million average monthly unique users for the three months ended Sep 30, 2021. Visits were 2.7 billion, down 4% year over year.

Operating Details

In third-quarter 2021, Zillow’s gross profit declined 41.7% year over year to $240.6 million.

Total operating expenses increased 55.2% year over year to $522.2 million.

Adjusted EBITDA loss was $168.7 million in the third quarter against adjusted EBITDA of $152.1 million reported in the year-ago quarter.

Homes’ adjusted EBITDA loss was $380.8 million, wider than the year-ago quarter’s loss of $59.2 million.

However, IMT reported adjusted EBITDA of $206.9 million, up 5.8% year over year. Mortgages’ adjusted EBITDA was $5.2 million down 67.3% year over year.

Balance Sheet

As of Sep 30, 2021, cash & cash equivalents and short-term investments were $3.2 billion compared with $4.6 billion as of Jun 30, 2021.

Guidance

For fourth-quarter 2021, Zillow expects total revenues between $2.221 billion and $2.639 billion.

IMT segment revenues are expected in the range of $474-$487 million, with Premier Agent revenues between $354 million and $362 million.

Homes revenues are expected between $1.70 billion and $2.10 billion. Mortgages revenues are anticipated in the $47-$52 million range.

Adjusted EBITDA loss is expected between $136 million and $186 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -264.95% due to these changes.

VGM Scores

At this time, Zillow has a poor Growth Score of F, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Zillow has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.