Zillow Group suspended its full-year revenue guidance and said it would slash expenses by 25 percent to ride out the coronavirus pandemic.
The Seattle-based company announced the suspension of its capital-intensive iBuying program Monday morning. During an earnings call after the market closed, it also announced plans to freeze hiring, suspend marketing expenditures and cut discretionary spending to offset an anticipated drop in revenue.
With buyers in major U.S. cities sheltering in place, Zillow said traffic to its site dropped 20 percent year-over-year in the last few days. In New York City, traffic is down 36 percent, and it’s off 19 percent in Seattle. “We can’t know what lies ahead,” co-founder and CEO Rich Barton said during the call.
“Things are pretty foggy and uncertain right now,” he added. “We hope this will be enough … We’re clear-eyed. If we have to control expenses more than we have, we will do that.”
Despite Zillow pausing its home-buying, Barton said he remains bullish on the business, which he previously said would be an “existential threat” to ignore. “We will unpause Zillow Offers as soon as the health situation stabilizes and we feel the housing market is functional,” he said.
“Interest in it is really high,” he said. “We are keeping the apparatus in place and the people in place while we pause and get ready to accelerate out of this.”
Zillow was one of the last iBuyers to suspend home-buying, following Redfin, Opendor, Realogy and Offerpad.
According to an investor presentation Monday, Zillow had $2.5 billion in cash on its balance sheet as of Feb. 29 after selling $1.1 billion of convertible senior notes in September. Its decision to suspend the iBuying program came after several weeks of intentional reductions in its owned-homes inventory. It owned $645 million worth of homes, down from $837 million at the end of 2019.
“It’s good to have this cash,” Barton said.
He said it also helps that Zillow has multiple business lines, including Premier Agent, that feed into each other to keep. “We can pause this business … and still run our other business and keep progressing forward.”