Zillow Group is replacing CEO Spencer Rascoff with co-founder and former CEO Rich Barton, the company said in a Securities and Exchange Commission filing Thursday.
Rascoff, also a co-founder, led Zillow as CEO from 2010 through its IPO — and will remain with the company until March 22. He’ll stay on the board of directors after Barton takes over.
Barton has been executive chairman since stepping down as CEO in 2010. Barton also founded Expedia in 1994 and co-founded Glassdoor in 2007.
The move comes as Zillow has faced challenges amid slowing home sales and rising interest rates. The company’s stock is down more than 25 percent in the last 12 months.
The announcement coincides with Zillow’s fourth-quarter earnings report. Revenue totaled $365.3 million, a 29 percent increase from a year earlier, driven primarily by slower-than-expected growth in Premier Agent revenue. Net loss for the quarter was $97.7 million, or 27 percent of revenue — compared with a loss of $77 million a year earlier.
Here’s the note I shared with @zillowgroup employees today. pic.twitter.com/mrE4NGMz7o
— Spencer Rascoff (@spencerrascoff) February 21, 2019
Premier Agent’s revenue grew 11 percent year-over-year to $221 million. Because of changes to program last year, Zillow “experienced increased advertiser account cancellations, or churn, that began in the third quarter,” the company said in a statement. “Based on feedback from advertisers about the lead validation and distribution process, Zillow Group implemented changes to attempt to remedy the situation.”
When Zillow introduced its Premier Agent program to the New York market through StreetEasy in 2017, REBNY asserted that it caused “a maelstrom of consumer confusion.” StreetEasy responded by adding a representative to screen potential buyer leads by phone before passing along live leads to buy-side agents. That created a new concern: Premier Agents worried they’d receive fewer leads.
Zillow said it expects recovery from that advertiser churn in the first and second quarters this year. The mid-year changes led to significant price hikes for agents participating in the auction-based program, the company said.