Earnings recap: Traditional brokerages chase profits while digital rivals see revenue soar

Realogy’s revenue was up 2% compared to Zillow’s 22%

While the future of brokerage remains uncertain, after the most recent quarter Wall Street is bullish on the tech upstarts. Though digital firms like Zillow and Redfin posted big losses, revenue soared in the first quarter.

William Blair analyst Stephen Sheldon, who projected that Redfin’s revenue would grow 30 percent this year, said the business model “can challenge traditional residential brokerages for market share without having to take much to perform well in the coming years.”

Meanwhile, their traditional brokerage foes posted single-digit revenue growth during the first quarter.

Here’s a recap of how some of the biggest firms did in the quarter that ended March 31.


$1.23 billion revenue, up 2 percent from $1.2 billion

$67 million loss, up 139.3 percent from $28 million loss

Slow new development sales and commission payouts eat into Realogy’s profits; the New Jersey-based conglomerate spent $40 million on commission during the quarter, leading CEO Ryan Schneider to hint at a new “data-driven” commission model.

Analysts said they are impressed with Schneider’s vision. “The hope is that enhanced value propositions for agents in time can translate into better economics and commission splits favorable to Realogy,” Jason Deleeuw, an analyst at Piper Jaffray, wrote in a May 3 research note.

Douglas Elliman (Vector)

$159.4 million revenue, up 2.5 percent from $155.5 million

$8.1 million loss, up 8000% from $100,000 profit

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New York is usually Elliman’s most lucrative market, but slow sales hurt the firm’s profits during the quarter, and it continued to shell out money for last year’s acquisition of Teles in Los Angeles. Elliman chairman Howard Lorber said things are looking up in New York, as sellers come to terms with prices that are down around 15 percent. “They’re finally starting to realize that they have to drop their pricing,” he said.


$79.9 million revenue, up 33 percent from $59.9 million

$36 million net loss, up 28 percent from $28.1 million

Redfin’s still chasing profitability, and spent $11 million on advertising and new agent hires as it worked on ramping up market share during the first quarter. In the first quarter, it closed 9,522 deals, up 23 percent year over year. And the company said its sell-side business is growing faster than the buy-side.


$299 million in revenue, up 22 percent from $245.8 million

$18.6 million net loss, up 304 percent from $4.6 million

Zillow’s revenue is still rising thanks thanks to its popular-but-controversial Premier Agent program. But the stock dropped after Zillow announced in April that it would get into the home-flipping game. Mark Mahaney, an analyst at RBC, downgraded the stock even though (or maybe because) CEO Spencer Rascoff called Zillow’s home-buying program one of its “biggest swings yet.”

News Corp.’s Digital Real Estate

$279 million revenue, up 27 percent from $219 million

$88 million EBITDA*, up 17 percent from $75 million (*Net income/loss not broken out)

For media giant News Corp., digital real estate business drove its $2.1 billion quarterly revenue, which was up 6 percent year-over-year. Traffic to Realtor.com, which is making a big push in New York, grew 10 percent and CEO Robert Thomson called Realtor a “core and increasingly” important part of the company. “Folks in the digital world were rather skeptical about it,” he said in March, of News Corp.’s acquisition. “The team has proved the naysayers wrong.”