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Zillow Group (ZG) Q2 Earnings Beat Despite Flat Revenues Y/Y
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Zillow Group, Inc. (ZG - Free Report) reported relatively healthy second-quarter 2023 results, wherein the bottom-line and top-line beat the respective Zacks Consensus Estimate.
Despite solid momentum in rental revenues, declining trends in residential revenues, owing to increasing interest rate volatility, and home price fluctuations impeded the company’s revenue growth during the quarter.
Net Income
In the reported quarter, net loss on a GAAP basis was $35 million or a loss of 15 cents per share against a net income of $8 million or 3 cents per share in the prior-year quarter. The decline was primarily due to higher operating expenses during the quarter.
On a non-GAAP basis, the company’s net income stood at $99 million or 39 cents per share compared with $100 million or 38 cents per share in the year-ago quarter. Non-GAAP net income for the reported quarter beat the Zacks Consensus Estimate by 21 cents.
Zillow Group, Inc. Price, Consensus and EPS Surprise
Quarterly net sales aggregated $506 million compared with $504 million reported in the year-ago quarter. Lower residential and mortgage revenues hindered the top line. The top line surpassed the Zacks Consensus Estimate of $476 million.
Residential revenues were $380 million, down 3% year over year from $392 million reported in the year-ago quarter. Net sales from this vertical surpassed the Zacks Consensus Estimate of $352.8 million. Volatility in mortgage interest rates, home price fluctuations, and fewer new for-sale listings impacted the revenues from this segment.
However, residential net sales were at the high end of management’s expectations and outperformed the industry trends. Although the overall housing market situation remains challenging, favorable tailwinds compared to the industry and a greater number of customer connections to premier agent partners partially cushioned the net sales in this vertical.
Rental revenues in the quarter improved 28% year over year to $91 million. Segment top line beat the Zacks Consensus Estimate of $79.52 million. More signups for multi-family properties and greater single-family listings, combined with enhancement in Zillow Group’s Rentals marketplace to improve the renting experience, boosted the revenues in this vertical.
The mortgages segment generated $24 million in revenues, down from $29 million in the year-earlier quarter. Net sales fell short of the Zacks Consensus Estimate of $25.4 million. Higher interest rates affected demand and impeded the top line in this vertical.
Other Details
Gross profit during the quarter stood at $402 million compared with $407 million in the prior-year quarter. The decline was primarily due to lower revenues. Operating expenses during the quarter were $469 million, up 17% year over year from $402 million in the year-ago quarter. Adjusted EBITDA was $111 million, down from $145 million in the prior-year quarter. Despite the year-over-year decline, the adjusted EBITDA figure was above the midpoint of the company's guidance.
Cash Flow & Liquidity
Zillow Group generated $193 million in cash from operating activities in the first six months of 2023 compared with $4,255 million in the prior-year period. As of Jun 30, 2023, the company had $1,566 million in cash and cash equivalents with $126 million of lease liabilities, net of current portion.
Outlook
For the third quarter of 2023, Zillow Group expects total revenues to be in the range of $458-$486 million. Residential revenues are expected in the band of $339 to $359 million. Adjusted EBITDA is estimated to be in the range of $67 million to $87 million.
Zacks Rank & Stocks to Consider
Zillow Group currently carries a Zacks Rank #3 (Hold).
Akamai is a global provider of content delivery networks and cloud infrastructure services. The company’s solutions accelerate and improve content delivery over the Internet, enabling faster response to requests for web pages, streaming of video & audio, business applications, etc. Akamai’s offerings are intended to reduce the impact of traffic congestion, bandwidth constraints and capacity limitations on customers.
Workday Inc. (WDAY - Free Report) , sporting a Zacks Rank #1 at present, delivered an earnings surprise of 13.05%, on average, in the trailing four quarters.
Workday is a provider of enterprise-level software solutions for financial management and human resource domains. The company’s cloud-based platform combines finance and HR in a single system, which makes it easier for organizations to provide analytical insights and decision support.
Motorola Solutions, Inc. (MSI - Free Report) , currently carrying a Zacks Rank #2, delivered an earnings surprise of 5.62%, on average, in the trailing four quarters.
The leading communications equipment manufacturer has strong market positions in bar code scanning, wireless infrastructure gear, and government communications. Motorola Solutions generally provides services and solutions to government segments and public safety programs, along with large enterprises and wireless infrastructure service providers.
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Zillow Group (ZG) Q2 Earnings Beat Despite Flat Revenues Y/Y
Zillow Group, Inc. (ZG - Free Report) reported relatively healthy second-quarter 2023 results, wherein the bottom-line and top-line beat the respective Zacks Consensus Estimate.
Despite solid momentum in rental revenues, declining trends in residential revenues, owing to increasing interest rate volatility, and home price fluctuations impeded the company’s revenue growth during the quarter.
Net Income
In the reported quarter, net loss on a GAAP basis was $35 million or a loss of 15 cents per share against a net income of $8 million or 3 cents per share in the prior-year quarter. The decline was primarily due to higher operating expenses during the quarter.
On a non-GAAP basis, the company’s net income stood at $99 million or 39 cents per share compared with $100 million or 38 cents per share in the year-ago quarter. Non-GAAP net income for the reported quarter beat the Zacks Consensus Estimate by 21 cents.
Zillow Group, Inc. Price, Consensus and EPS Surprise
Zillow Group, Inc. price-consensus-eps-surprise-chart | Zillow Group, Inc. Quote
Revenues
Quarterly net sales aggregated $506 million compared with $504 million reported in the year-ago quarter. Lower residential and mortgage revenues hindered the top line. The top line surpassed the Zacks Consensus Estimate of $476 million.
Residential revenues were $380 million, down 3% year over year from $392 million reported in the year-ago quarter. Net sales from this vertical surpassed the Zacks Consensus Estimate of $352.8 million. Volatility in mortgage interest rates, home price fluctuations, and fewer new for-sale listings impacted the revenues from this segment.
However, residential net sales were at the high end of management’s expectations and outperformed the industry trends. Although the overall housing market situation remains challenging, favorable tailwinds compared to the industry and a greater number of customer connections to premier agent partners partially cushioned the net sales in this vertical.
Rental revenues in the quarter improved 28% year over year to $91 million. Segment top line beat the Zacks Consensus Estimate of $79.52 million. More signups for multi-family properties and greater single-family listings, combined with enhancement in Zillow Group’s Rentals marketplace to improve the renting experience, boosted the revenues in this vertical.
The mortgages segment generated $24 million in revenues, down from $29 million in the year-earlier quarter. Net sales fell short of the Zacks Consensus Estimate of $25.4 million. Higher interest rates affected demand and impeded the top line in this vertical.
Other Details
Gross profit during the quarter stood at $402 million compared with $407 million in the prior-year quarter. The decline was primarily due to lower revenues. Operating expenses during the quarter were $469 million, up 17% year over year from $402 million in the year-ago quarter. Adjusted EBITDA was $111 million, down from $145 million in the prior-year quarter. Despite the year-over-year decline, the adjusted EBITDA figure was above the midpoint of the company's guidance.
Cash Flow & Liquidity
Zillow Group generated $193 million in cash from operating activities in the first six months of 2023 compared with $4,255 million in the prior-year period. As of Jun 30, 2023, the company had $1,566 million in cash and cash equivalents with $126 million of lease liabilities, net of current portion.
Outlook
For the third quarter of 2023, Zillow Group expects total revenues to be in the range of $458-$486 million. Residential revenues are expected in the band of $339 to $359 million. Adjusted EBITDA is estimated to be in the range of $67 million to $87 million.
Zacks Rank & Stocks to Consider
Zillow Group currently carries a Zacks Rank #3 (Hold).
Akamai Technologies, Inc. (AKAM - Free Report) , currently carrying a Zacks Rank #2 (Buy), delivered an earnings surprise of 4.9%, on average, in the trailing four quarters. It delivered an earnings surprise of 6.06% in the last reported quarter. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Akamai is a global provider of content delivery networks and cloud infrastructure services. The company’s solutions accelerate and improve content delivery over the Internet, enabling faster response to requests for web pages, streaming of video & audio, business applications, etc. Akamai’s offerings are intended to reduce the impact of traffic congestion, bandwidth constraints and capacity limitations on customers.
Workday Inc. (WDAY - Free Report) , sporting a Zacks Rank #1 at present, delivered an earnings surprise of 13.05%, on average, in the trailing four quarters.
Workday is a provider of enterprise-level software solutions for financial management and human resource domains. The company’s cloud-based platform combines finance and HR in a single system, which makes it easier for organizations to provide analytical insights and decision support.
Motorola Solutions, Inc. (MSI - Free Report) , currently carrying a Zacks Rank #2, delivered an earnings surprise of 5.62%, on average, in the trailing four quarters.
The leading communications equipment manufacturer has strong market positions in bar code scanning, wireless infrastructure gear, and government communications. Motorola Solutions generally provides services and solutions to government segments and public safety programs, along with large enterprises and wireless infrastructure service providers.