Zillow Group Inc. has cemented its role in the pandemic-era zeitgeist, with “Saturday Night Live”poking fun at homebound millennials who lust after online home listings.
The growing popularity of the company’s websites and apps has also earned the company record profits during the fourth quarter, with adjusted earnings before interest, taxes, depreciation and amortization of $170 million, according to a statement on Wednesday.
That beat the average analyst estimate of $125 million and represented a wide swing from a $3.2 million loss a year earlier period. The results sent shares surging as much as 13% to $193.39. The company’s stock had already jumped more than 600% since bottoming out in March.
The rally comes amid a housing boom in the U.S. that has been fueled by low mortgage rates. With Americans confined to their homes, Zillow scrolling has become a national pastime.
“Because of all the people who are stuck at home, dreaming about a new home, and because of all the millennials having babies and shopping for homes, the Zillow brand has broken through to a new level of awareness and cultural significance,” Zillow Chief Executive Officer Rich Barton said in an interview. “There’s lots more shopping, lots more dreaming, and lots more fantasizing.”
Zillow’s websites and apps received 2.2 billion visits during the fourth quarter. That drove revenue growth in the company’s core marketing business, which brought in $314 million, up 35% from the prior year.
Zillow’s booming marketing operation has shifted the spotlight away from its nascent home-flipping initiative. The company acquired 1,789 homes in the quarter, compared to 1,787 a year earlier, as it returned to pre-Covid purchasing levels after slowing acquisitions earlier in the year.
Zillow also announced it has agreed to pay $500 million to acquire ShowingTime.com Inc., which makes tools for house-hunters to arrange home tours with agents. The purchase fits a key theme in the U.S. housing market in recent months, as socially-distancing efforts and the coming-of-age of millennial homebuyers drives more house-hunting functions online.
That theme has also been good for other companies at the intersection of technology and the U.S. housing market. Shares in brokerage Redfin Corp. have soared, and next-generation home-flipper Opendoor Technologies Inc. went public through a merger with a blank-check company.
Barton said that Zillow, along with consumers, will benefit from the increasing digitization of the homebuying process.
“The seller and the buyer are going to win from more innovation, happening faster,” he said. “It’s long overdue.”