Zillow Nabs $10M Profit In Q3 Amid Resi Platform Wars

Zillow may be fending off an onslaught of litigation, but its third quarter earnings results don’t show signs of a struggle.

The company reported $10 million in net income last quarter, a significant improvement from a year ago, when it lost $20 million, according to a filing with the Securities and Exchange Commission.

Executives with the firm wasted little breath addressing the pending litigation against the firm in their prepared remarks — a stark contrast to CoStar Group’s earnings call earlier this week, during which CEO Andy Florance delivered a lengthy recap of the lawsuits against Zillow.

Instead, Zillow CEO Jeremy Wacksman acknowledged the lawsuits only vaguely, saying the company was “aware of external noise that has gotten louder” but that it was confident in its ability to move forward.

The firm’s revenue also rose 16 percent annually to $676 million. Revenue generated by its residential segment increased 7 percent to $435 million, driven in part by growth in its mortgage and rental divisions, up 36 percent and 41 percent respectively.

Its adjusted EBITDA — earnings before interest, taxes, depreciation and amortization — was $165 million, up from $127 million in the same period last year.

Zillow is still significantly ahead of its competitors in the war over traffic. Last quarter, the platform reported a 7 percent increase in traffic to its website and mobile applications, which logged 250 million unique monthly visitors. That number is more than double the metric reported by CoStar Group’s Homes.com, which routinely claims to be the No. 2 residential listing platform.

On the technology front, earlier this month, Zillow announced a partnership with ChatGPT, which allows users to connect to Zillow through the OpenAI chatbot and search for listings surfaced through their prompt. It also removed Matterport 3D tours from its listings, a move Zillow attributed to CoStar ending its API agreement with the platform. CoStar, however, denied terminating the license.

News of Zillow’s earnings comes as the platform is at the center of a fight over private listings, which it started cracking down on in April, when it announced new policies prohibiting agents from listing properties on the platform if they were previously marketed outside of multiple listings services for more than a day.

The rollout followed Compass’ campaign against a similar rule from the National Association of Realtors, called Clear Cooperation, and the company’s adoption of the three-phased marketing plan — a strategy that begins with advertising homes solely on its private listing network.

Two months later, Compass sued the aggregator over the new rules, which the firm dubbed the “Zillow ban,” alleging they unfairly constrained competition. Though Compass alleges it was singled out by the policies, spokespeople for Zillow have denied that the guidelines were targeted at a single brokerage.

At the time of the lawsuit’s filing, a spokesperson for Zillow called the claims “unfounded” and said the rules were enacted to promote transparency and accessibility.

In response to a question about whether Compass’ proposed merger with Anywhere Real Estate would affect Zillow’s bottom line, Wacksman said he had “no concerns.” However, he added that there was “more noise” surrounding the debate over private listings, which he described as a harm to consumers.

“We continue to see the vast majority of the industry align with [Zillow’s listing] standards,” Wacksman said. He added that most sellers want their homes marketed broadly and that he “expects that behavior to continue.”

In July, CoStar Group, the parent company of Homes.com, filed a lawsuit against the platform over copyright infringement, claiming Zillow used 46,000 of its proprietary images without authorization. The lawsuit added to the dozens of complaints over copyright infringement that CoStar has filed over the years.

During CoStar’s earnings call earlier this week, its CEO, Andy Florance, criticized Zillow’s recent moves to thwart private listings, calling it a “ruthless scheme to strangle competition [and] trap home sellers inside of Zillow’s walled garden.”

Just last month, the Federal Trade Commission sued Zillow over the company’s deal to become the sole provider of multifamily listings to Redfin, also named in the lawsuit as a defendant. Zillow paid Redfin $100 million to lock down the agreement, a move the FTC characterized as “paying off” the competition and violating antitrust laws.

The day after the FTC suit, five states — including Virginia, Arizona, Connecticut, Washington and New York — filed their own antitrust lawsuits against Zillow with similar claims as the federal action.

On the call, Wacksman contradicted the FTC’s claims, instead heralding its partnership with Redfin as a benefit to tenants, property managers and landlords.

He billed the agreement as a step forward in the company’s goal to “make renting simpler, fairer, more transparent and more affordable,” adding that since the deal, renters searching on Redfin have access to three times the amount of listings than were previously featured on the site.