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Zillow (ZG) Down 13.2% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Zillow Group (ZG - Free Report) . Shares have lost about 13.2% 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 Beats Earnings and Revenue Estimates in Q4
Zillow Group reported relatively modest fourth-quarter 2022 results, beating the bottom-line and top-line estimates. Despite recording lower revenues year over year owing to a challenging macroeconomic environment, a favorable mix of first-time home buyers combined with solid engagements in its rental platforms remained tailwinds.
Net Income
GAAP net loss in the quarter was $72 million or a loss of 31 cents per share compared with a net loss of $261 million or a loss of $1 per share in the prior-year quarter. The narrower loss was primarily due to loss from discontinued operations in fourth-quarter 2021.
On a non-GAAP basis, the company’s net income declined to $52 million or 21 cents per share from $88 million or 34 cents per share in the year-ago quarter. Non-GAAP net income for the reported quarter beat the Zacks Consensus Estimate by 11 cents.
For 2022, Zillow witnessed a net loss of $101 million or a loss of 42 cents per share compared with a net loss of $528 million or a loss of $2.02 per share in 2021. On a non-GAAP basis, the company reported a net income of $372 million or $1.43 per share, down from $413 million or $1.58 per share in 2021.
Revenues
Revenues declined to $435 million from $535 million as both segments witnessed a top-line contraction. The top line, however, beat the Zacks Consensus Estimate of $414 million.
The IMT segment witnessed a 14% decline and generated $417 million in revenues compared with $484 million in the prior-year quarter. Despite reporting a 20% decline from the prior-year quarter’s levels, Premier Agent revenues outperformed management’s expectations and Rental revenues increased by 13% year over year. Macro housing factors, including interest rates, higher home price and tight housing inventory levels, dented top-line performance. However, the company witnessed strong traffic and growth in multifamily properties. Improvement in mix of first time home buyers cushioned the top line in this segment.
The mortgages segment generated $18 million in revenues compared with $51 million in the year-earlier quarter. Seasonality and unfavorable macroeconomic conditions hampered revenue from this segment.
In 2022, total revenues declined by 8% year over year to $1,958 million.
Other Details
During the quarter, Zillow recorded a gross profit of $346 million compared with $440 million in the prior-year quarter. The decline is primarily due to lower revenues. The operating expenses during the quarter were $429 million, up from $408 million in the prior-year quarter. Adjusted EBITDA was $73 million compared with $154 million in the prior-year quarter, primarily driven by a significant fall in adjusted EBITDA in the IMT segment.
Cash Flow & Liquidity
For the full year 2022, Zillow generated $4,504 million cash from operating activities against $3,177 million cash utilization in the prior-year period. As of Dec 31, 2022, the company had $1,466 million in cash and cash equivalents with $139 million of lease liabilities, net of the current portion compared with respective tallies of $2,315 million and $148 million in the prior-year period.
Outlook
For the first quarter of 2023, Zillow estimates total revenue to be in the range of $404-$437 million, indicating a 22% year-over-year decline. Total adjusted EBITDA is expected to be in the range of $48 million to $63 million. Within the IMT segment, the company anticipates Premier Agent revenue to decline in the range of 23% to 28% year over year. Management expects a modest increase in operating expenditures and cost of revenues owing to investments in VRX media and the company’s new ShowingTime+ products.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.
VGM Scores
Currently, Zillow has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Zillow has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Zillow is part of the Zacks Internet - Services industry. Over the past month, Alphabet (GOOGL - Free Report) , a stock from the same industry, has gained 5%. The company reported its results for the quarter ended December 2022 more than a month ago.
Alphabet reported revenues of $63.12 billion in the last reported quarter, representing a year-over-year change of +2%. EPS of $1.05 for the same period compares with $1.53 a year ago.
Alphabet is expected to post earnings of $1.09 per share for the current quarter, representing a year-over-year change of -11.4%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.6%.
Alphabet has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.
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Zillow (ZG) Down 13.2% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Zillow Group (ZG - Free Report) . Shares have lost about 13.2% 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 Beats Earnings and Revenue Estimates in Q4
Zillow Group reported relatively modest fourth-quarter 2022 results, beating the bottom-line and top-line estimates. Despite recording lower revenues year over year owing to a challenging macroeconomic environment, a favorable mix of first-time home buyers combined with solid engagements in its rental platforms remained tailwinds.
Net Income
GAAP net loss in the quarter was $72 million or a loss of 31 cents per share compared with a net loss of $261 million or a loss of $1 per share in the prior-year quarter. The narrower loss was primarily due to loss from discontinued operations in fourth-quarter 2021.
On a non-GAAP basis, the company’s net income declined to $52 million or 21 cents per share from $88 million or 34 cents per share in the year-ago quarter. Non-GAAP net income for the reported quarter beat the Zacks Consensus Estimate by 11 cents.
For 2022, Zillow witnessed a net loss of $101 million or a loss of 42 cents per share compared with a net loss of $528 million or a loss of $2.02 per share in 2021. On a non-GAAP basis, the company reported a net income of $372 million or $1.43 per share, down from $413 million or $1.58 per share in 2021.
Revenues
Revenues declined to $435 million from $535 million as both segments witnessed a top-line contraction. The top line, however, beat the Zacks Consensus Estimate of $414 million.
The IMT segment witnessed a 14% decline and generated $417 million in revenues compared with $484 million in the prior-year quarter. Despite reporting a 20% decline from the prior-year quarter’s levels, Premier Agent revenues outperformed management’s expectations and Rental revenues increased by 13% year over year. Macro housing factors, including interest rates, higher home price and tight housing inventory levels, dented top-line performance. However, the company witnessed strong traffic and growth in multifamily properties. Improvement in mix of first time home buyers cushioned the top line in this segment.
The mortgages segment generated $18 million in revenues compared with $51 million in the year-earlier quarter. Seasonality and unfavorable macroeconomic conditions hampered revenue from this segment.
In 2022, total revenues declined by 8% year over year to $1,958 million.
Other Details
During the quarter, Zillow recorded a gross profit of $346 million compared with $440 million in the prior-year quarter. The decline is primarily due to lower revenues. The operating expenses during the quarter were $429 million, up from $408 million in the prior-year quarter. Adjusted EBITDA was $73 million compared with $154 million in the prior-year quarter, primarily driven by a significant fall in adjusted EBITDA in the IMT segment.
Cash Flow & Liquidity
For the full year 2022, Zillow generated $4,504 million cash from operating activities against $3,177 million cash utilization in the prior-year period. As of Dec 31, 2022, the company had $1,466 million in cash and cash equivalents with $139 million of lease liabilities, net of the current portion compared with respective tallies of $2,315 million and $148 million in the prior-year period.
Outlook
For the first quarter of 2023, Zillow estimates total revenue to be in the range of $404-$437 million, indicating a 22% year-over-year decline. Total adjusted EBITDA is expected to be in the range of $48 million to $63 million. Within the IMT segment, the company anticipates Premier Agent revenue to decline in the range of 23% to 28% year over year. Management expects a modest increase in operating expenditures and cost of revenues owing to investments in VRX media and the company’s new ShowingTime+ products.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.
VGM Scores
Currently, Zillow has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Zillow has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Zillow is part of the Zacks Internet - Services industry. Over the past month, Alphabet (GOOGL - Free Report) , a stock from the same industry, has gained 5%. The company reported its results for the quarter ended December 2022 more than a month ago.
Alphabet reported revenues of $63.12 billion in the last reported quarter, representing a year-over-year change of +2%. EPS of $1.05 for the same period compares with $1.53 a year ago.
Alphabet is expected to post earnings of $1.09 per share for the current quarter, representing a year-over-year change of -11.4%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.6%.
Alphabet has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.