Zillow Group is responding to the ongoing public health crisis caused by coronavirus by cutting the cost of its Premier Agent program in half.
The company’s CEO Rich Barton emailed agents who use Premier Agent Tuesday morning and released a letter to shareholders later in the day. The 50 percent discount will go into effect on March 23 and apply to all new bookings through “at least” April 22.
“We’re still seeing home shopping activity—albeit bumpy—through our apps and websites,” Barton wrote to agents. “While we can’t predict what’s ahead, we want to work with you to help homebuyers and sellers in creative ways as we expect people will continue to shop in this new (virtual) reality.”
Barton and chief financial officer Allen Parker advised shareholders that annual revenue impact was expected to be between $40 million to $50 million, but said the company is trying to reduce expenses.
Citing Zillow economists’ analysis of past pandemics and recessions including the 2003 SARS outbreak, Barton and Parker told shareholders that in these previous periods “prices remained relatively stable and activity came back quickly when related health concerns subsided.”
Premier Agent is a key revenue source for Zillow, though it’s not as central as it once was. In 2018, the program represented 67 percent of the company’s quarterly revenue. But since its pivot to iBuying, Premier Agent accounted for just 25 percent of revenue in the fourth quarter of 2019.
In February, when Zillow reported its final quarter earnings for 2019, Premier Agent’s revenue was $233.5 million, a year-over-year uptick of about 6 percent, while the company saw a 57 percent surge from its iBuying program Zillow Homes with $603.2 million in revenue.
Zillow’s discount follows the actions that other companies, such as Grubhub, have taken to give clients a break and try to support their businesses as the coronavirus pandemic affects larger swaths of people and slows economic activity. Business is at a standstill in some cities, such as San Francisco where a shelter-in-place order shuttered all non-essential businesses. As of Wednesday, New York City is considering a similar measure.
In his message, Barton promised agents the discount would be automatically applied and said Zillow would be reaching out in coming days and weeks with new resources in light of the coronavirus pandemic.
Write to Erin Hudson at e[email protected]