Zillow Group’s bet on instant homebuying boosted its second-quarter revenues 84 percent to $599.6 million, the company said Wednesday.
Revenue for Zillow Offers — which debuted last year — totaled $248.9 million for the quarter. Meanwhile, Zillow Mortgages revenue rose 40 percent to $26.9 million.
In a statement, co-founder and CEO Rich Barton described demand for Zillow Offers as “incredibly impressive” and said the program is on track to hit an annualized run rate of $1 billion in revenue. Zillow said more than 69,000 homeowners requested an offer from Zillow to purchase their home during the second quarter, up 94 percent from the prior quarter.
“We’re in the early stages of a bold expansion of our company that opens up exciting opportunities for our customers, partners, shareholders and employees,” Barton said.
Despite the iBuying program’s impressive run, Zillow Offers comes at a price.
Zillow said its second-quarter losses widened to roughly $72 million, compared to just $3 million last year. The Homes segment accounted for most of those losses — some $71.1 million, up from $10.1 million a year ago.
Zillow said it made $1,578 on each home it sold during the quarter. “Over time, our unit economics should benefit more from other adjacent services, like mortgage origination, title and escrow,” Barton said in a letter to shareholders.
Until now, the Seattle-based listings giant has made the bulk of its money by selling ads to agents via Premier Agent. Last year, as revenue growth from Premier Agent started to drop, the company bet heavily iBuying and mortgages — though investors haven’t been completely swayed by the pivot. Zillow’s stock closed at $49.56 a share, compared to $65.57 a share in June 2018.
Steve Eisman — who bet against the subprime mortgage market before the downturn — has a short position in Zillow, which he told The Real Deal in July he believes is running out of ideas to grow its home-listing business.
On Wednesday, Zillow said Premier Agent has normalized. But revenue for the program was relatively flat at $231.9 million, compared to last year’s $230.8 million.
Barton has described Zillow’s plan to buy homes and offer mortgages as a moonshot opportunity.
“We are dreaming of our own moon landing,” he said during an earnings call Wednesday. “In Q2, we stepped on the gas, launching seven markets — a rate we [intend] to match in Q3.”
Since the start of the year, Zillow has expanded Zillow Offers to seven more cities; on Wednesday, it said it would add four more by mid-2020 for a total of 26, including Cincinnati, Tucson, Oklahoma City, and Jacksonville.