On November 1, 2023, Zillow Group Inc (ZG, Financial) released its consolidated financial results for the third quarter of 2023. Despite a 14% downturn in the residential real estate industry, Zillow reported a 3% growth in total revenue, a 34% increase in rentals revenue, and an 88% increase in its purchase mortgage origination business.
Financial Performance
Zillow Group Inc (ZG, Financial)'s Q3 revenue was $496 million, up 3% year over year and above the midpoint of the company’s outlook range by $24 million. The residential revenue of $362 million outperformed both the industry total transaction dollar decline of 14% and the high end of the company’s expectations, decreasing only 3% year over year. The outperformance was primarily driven by connections growth to Premier Agent partners, which grew faster than the overall industry.
Rentals revenue of $99 million increased 34% year over year, driven primarily by the company’s multifamily revenue, which grew 42% year over year in Q3 2023. Mortgages revenue of $24 million decreased 8% year over year, due primarily to higher interest rates that impacted demand for Zillow's mortgage marketplace. Q3 purchase loan origination volume grew 88% year over year from Q3 2022.
Financial Highlights
On a GAAP basis, Zillow's net loss was $28 million in Q3. Q3 Adjusted EBITDA was $107 million, $30 million above the midpoint of the company’s outlook range, driven primarily by strong Rentals revenue, higher-than-expected Residential revenue, and lower-than-expected operating expenses.
Cash and investments of $3.3 billion at the end of Q3 were flat compared to the end of Q2, after $100 million in share repurchases in Q3. The company's available repurchase authorization was $914 million at the end of Q3.
Future Outlook
Zillow Group Inc (ZG, Financial) continues to focus on building a better, more integrated real estate transaction experience for both movers and partners. The company's recent agreement to acquire Follow Up Boss for $400 million in cash upon closing and up to $100 million in cash earnouts over a three-year period is a testament to this commitment.
Despite the challenges in the residential real estate industry, Zillow Group Inc (ZG, Financial) has demonstrated resilience and adaptability, leveraging its diverse revenue streams to maintain positive growth. The company's performance in Q3 2023 underscores its strategic focus and operational efficiency.
Explore the complete 8-K earnings release (here) from Zillow Group Inc for further details.
