- Record Quarterly Revenue of $34.3 million, up 73% over fourth quarter 2011.
- Record Quarterly Marketplace Revenue of $26.8 million, up 95% over fourth quarter 2011.
- Quarterly Net Income of $0.5 million, resulting in basic and diluted EPS of $0.02.
- Quarterly Adjusted EBITDA of $6.8 million, representing 20% of revenue.
- Quarterly traffic grew 47% year-over-year to 34.5 million average monthly unique users with more than 50% of visits coming from mobile devices in December.
SEATTLE, Feb. 13, 2013 (GLOBE NEWSWIRE) -- Zillow, Inc. (Nasdaq:Z), the leading real estate and home-related information marketplace, today announced financial results for the quarter and full year ended December 31, 2012.
"The fourth quarter was another terrific one as incredible execution by the Zillow team re-accelerated year-over-year growth, and delivered revenue and profit that exceeded our expectations," said Spencer Rascoff, chief executive officer of Zillow, Inc. "The quarter capped off a pivotal year of tremendous growth and we're looking forward to 2013 as we focus on three core priorities: attracting more users with great products and services; growing our Premier Agent business with unmatched value and tools; and accelerating our emerging mortgage, rental and home improvement marketplaces."
Fourth Quarter 2012 Financial Highlights
- Revenue increased 73% to $34.3 million from $19.9 million in the fourth quarter of 2011. Total revenue showed re-accelerating year-over-year growth when compared to year-over-year growth of 67% in the third quarter.
- Marketplace Revenue increased 95% to $26.8 million from $13.7 million in the fourth quarter of 2011. Zillow achieved record Marketplace Revenue while executing a pricing model transition in the Premier Agent business.
- Display Revenue increased 22% to $7.5 million from $6.1 million in the fourth quarter of 2011.
- Net income was $0.5 million, compared to net income of $0.9 million in the fourth quarter of 2011. The fourth quarter of 2012 results include a year-over-year increase in depreciation and amortization expense, and share-based compensation expense, primarily related to acquisitions.
- Basic and diluted earnings per share were $0.02, compared to basic and diluted earnings per share of $0.03 in the same period last year.
- Adjusted EBITDA was $6.8 million, or 20% of revenue, which was an increase from $3.3 million in the fourth quarter of 2011, or 17% of revenue.
Full Year 2012 Financial Highlights
- Revenue increased 77% to $116.9 million from $66.1 million in 2011.
- Marketplace Revenue increased 105% to $86.7 million from $42.2 million in 2011.
- Display Revenue increased 26% to $30.2 million from $23.9 million in 2011.
- Net income was $5.9 million, compared to net income of $1.1 million in 2011. Included in the full year financial results for 2012 is approximately $1.1 million of acquisition-related transaction costs, compared to 2011 transaction costs of $0.4 million.
- Basic and diluted earnings per share were $0.20 and $0.18, respectively, compared to basic and diluted earnings per share of zero for the same period last year.
- Adjusted EBITDA was $25.2 million, or 22% of revenue, which was an increase from $11.9 million in 2011, or 18% of revenue.
Operating and Business Highlights
- Average monthly unique users grew 47% to 34.5 million in the fourth quarter of 2012 compared to 23.5 million average monthly unique users for the same period in 2011. In addition, January 2013 was a record traffic month with 45.9 million unique users, representing 45% year-over-year growth. In December, the company crossed another mobile milestone as more than half of the visits occurred on mobile devices. On weekends, 60% of Zillow's traffic comes from a mobile device.
- Premier Agent subscribers increased by 2,770 in the fourth quarter of 2012, and totaled 29,473 on December 31, 2012, up 87% year over year. Average monthly revenue per subscriber in the fourth quarter of 2012 increased 3% to $267, compared to $258 in the same period last year. Premier Agent revenue is reported as part of Marketplace Revenue.
- Zillow entered the home improvement market earlier this month with the launch of Zillow Digs™, on the Web at www.zillow.com/digs and on iPad®, as an important complement to the company's existing real estate, mortgage and rental marketplaces. Expanding into home improvement makes Zillow more relevant to consumers throughout the entire lifecycle of homeownership and expands its total addressable market, as the home improvement industry was expected to spend approximately $6 billion on advertising in 20121. Zillow Digs includes patent-pending Digs Estimates, the estimated costs of recreating actual kitchens and bathrooms.
- In the fourth quarter, Zillow completed three acquisitions that accelerate its mortgage, rental and real estate marketplaces: Mortech, Inc., a Lincoln, Neb.-based software and services company that provides a CRM and pricing engine to the mortgage industry; HotPads™, a San Francisco-based consumer rentals shopping site and suite of mobile apps; and Buyfolio, a New York City-based online and mobile collaborative shopping tool.
- Earlier this month, Zillow announced that HGTV's FrontDoor is joining the Zillow® Real Estate Network, the leading real estate network. Zillow now will be the exclusive provider of all real estate listings for HGTV's FrontDoor, giving agents and brokerages that list on Zillow substantial additional marketing for their listings. Scheduled to launch in the second quarter, Zillow Premier Agents also will receive exposure through FrontDoor.
| 1 According to Borrell Associates in their 2012 report forecasting the home improvement market. |
Quarterly Conference Call to Include Business Outlook
Zillow management will discuss Zillow, Inc.'s fourth quarter and full year 2012 financial results, as well as the first quarter and full year 2013 business outlook in a conference call today at 2 p.m. PST (5 p.m. EST) that will also be webcast live. The live webcast of the conference call will be available on the investor relations section of Zillow, Inc.'s website at http://investors.zillow.com/. For those without access to the Internet, the call may be accessed toll-free via phone at 877-643-7152 with conference ID# 91697215. Callers outside the United States may dial 443-863-7921 with conference ID# 91697215. Following completion of the call, a recorded replay of the webcast and a copy of the prepared remarks will be available on the investor relations section of Zillow, Inc.'s website. The recorded replay will be available until February 27, 2013. To listen to the telephone replay, call toll-free 855-859-2056 with conference ID# 91697215. Callers outside the United States may dial 404-537-3406 with conference ID# 91697215.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that involve risks and uncertainties, including, without limitation, the statements regarding our belief about our re-acceleration of year-over-year growth, our belief about 2013 and our three core priorities, and our business outlook. Statements containing words such as "may," "believe," "anticipate," "expect," "intend," "plan," "project," "will," "projections," "business outlook," "estimate," or similar expressions constitute forward-looking statements. Differences in Zillow's actual results from those anticipated in these forward-looking statements may result from actions taken by Zillow as well as from risks and uncertainties beyond Zillow's control. Factors that may contribute to such differences include, but are not limited to, Zillow's ability to maintain and effectively manage an adequate rate of growth; the impact of the real estate industry on Zillow's business; Zillow's ability to innovate and provide products and services that are attractive to its users and advertisers; Zillow's ability to increase awareness of the Zillow brand; Zillow's ability to maintain or establish relationships with listings and data providers; Zillow's ability to attract consumers to Zillow's mobile applications and websites; Zillow's ability to successfully integrate and realize the benefits of our past or future strategic acquisitions or investments; Zillow's ability to compete successfully against existing or future competitors; the reliable performance of Zillow's network infrastructure and content delivery processes; and Zillow's ability to protect its intellectual property. The foregoing list of risks and uncertainties is illustrative, but is not exhaustive. For more information about potential factors that could affect Zillow's business and financial results, please review the "Risk Factors" described in Zillow's Quarterly Report on Form 10-Q for the three months ended June 30, 2012 and Zillow's Annual Report on Form 10-K for the year ended December 31, 2011 filed with the Securities and Exchange Commission, or SEC, and in Zillow's other filings with the SEC. Except as may be required by law, Zillow does not intend, and undertakes no duty, to update this information to reflect future events or circumstances.
Use of Non-GAAP Financial Measures
To provide investors with additional information regarding our financial results, this press release includes references to Adjusted EBITDA, which is a non-GAAP financial measure. We have provided a reconciliation of Adjusted EBITDA to net income, the most directly comparable GAAP financial measure, within this earnings release.
Adjusted EBITDA is a key metric used by our management and board of directors to measure operating performance and trends, and to prepare and approve our annual budget. In particular, the exclusion of certain expenses in calculating Adjusted EBITDA facilitates operating performance comparisons on a period-to-period basis.
Our use of Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:
- Adjusted EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments;
- Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;
- Adjusted EBITDA does not consider the potentially dilutive impact of share-based compensation;
- Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;
- Adjusted EBITDA does not reflect certain facility exit charges; and
- Other companies, including companies in our own industry, may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.
Because of these limitations, you should consider Adjusted EBITDA alongside other financial performance measures, including various cash flow metrics, net income and our other GAAP results.
About Zillow, Inc.
Zillow, Inc. (Nasdaq:Z) operates the leading real estate and home-related information marketplaces on mobile and the Web, with a complementary portfolio of brands and products that help people find vital information about homes, and connect with the best local professionals. Zillow's brands serve the full lifecycle of owning and living in a home: buying, selling, renting, financing, remodeling and more. In addition, Zillow offers a suite of tools and services to help local real estate, mortgage, rental and home improvement professionals manage and market their businesses. Welcoming 46 million monthly unique users in January, the Zillow, Inc. portfolio includes Zillow.com®, Zillow Mobile, Zillow Mortgage Marketplace, Zillow Rentals, Zillow Digs, Postlets®, Diverse Solutions®, Buyfolio™, Mortech™ and HotPads™. Zillow is headquartered in Seattle.
Zillow.com, Zillow, Postlets and Diverse Solutions are registered trademarks of Zillow, Inc.
Buyfolio, Mortech, HotPads and Digs are trademarks of Zillow, Inc.
iPad is a registered trademark of Apple, Inc.
The Zillow, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=10012.
(ZFIN)
| ZILLOW, INC. | ||
| UNAUDITED CONDENSED BALANCE SHEETS | ||
| (in thousands) | ||
| December 31, 2012 | December 31, 2011 | |
| Assets | ||
| Current assets: | ||
| Cash and cash equivalents | $ 150,040 | $ 47,926 |
| Short-term investments | 44,054 | 28,925 |
| Accounts receivable, net | 8,655 | 5,638 |
| Prepaid expenses and other current assets | 2,652 | 3,214 |
| Total current assets | 205,401 | 85,703 |
| Long-term investments | 9,389 | 15,285 |
| Property and equipment, net | 13,634 | 7,227 |
| Goodwill | 54,284 | 3,676 |
| Intangible assets, net | 21,248 | 4,532 |
| Other assets | 279 | 245 |
| Total assets | $ 304,235 | $ 116,668 |
| Liabilities and shareholders' equity | ||
| Current liabilities: | ||
| Accounts payable | $ 3,158 | $ 1,681 |
| Accrued expenses and other current liabilities | 6,318 | 4,893 |
| Accrued compensation and benefits | 2,514 | 1,587 |
| Deferred revenue | 8,349 | 5,769 |
| Deferred rent, current portion | 94 | 60 |
| Total current liabilities | 20,433 | 13,990 |
| Deferred rent, net of current portion | 3,485 | 1,347 |
| Other non-current liabilities | -- | 118 |
| Shareholders' equity: | ||
| Preferred stock | -- | -- |
| Class A common stock | 3 | 2 |
| Class B common stock | 1 | 1 |
| Additional paid-in capital | 351,981 | 178,817 |
| Accumulated deficit | (71,668) | (77,607) |
| Total shareholders' equity | 280,317 | 101,213 |
| Total liabilities and shareholders' equity | $ 304,235 | $ 116,668 |
| ZILLOW, INC. | ||||
| UNAUDITED CONDENSED STATEMENTS OF OPERATIONS | ||||
| (in thousands, except per share data) | ||||
| Three Months Ended | Year Ended | |||
| December 31, | December 31, | |||
| 2012 | 2011 | 2012 | 2011 | |
| Revenue | $ 34,337 | $ 19,891 | $ 116,850 | $ 66,053 |
| Costs and expenses: | ||||
| Cost of revenue (exclusive of amortization) (1) (2) | 3,806 | 2,961 | 14,043 | 10,575 |
| Sales and marketing (2) | 14,519 | 7,576 | 49,105 | 25,725 |
| Technology and development (2) | 9,079 | 3,994 | 26,614 | 14,143 |
| General and administrative (2) (3) | 6,422 | 4,463 | 21,291 | 14,613 |
| Total costs and expenses | 33,826 | 18,994 | 111,053 | 65,056 |
| Income from operations | 511 | 897 | 5,797 | 997 |
| Other income | 38 | 25 | 142 | 105 |
| Net income | $ 549 | $ 922 | $ 5,939 | $ 1,102 |
| Net income attributable to common shareholders | $ 549 | $ 922 | $ 5,939 | $ -- |
| Net income per share attributable to common shareholders — basic | $ 0.02 | $ 0.03 | $ 0.20 | $ -- |
| Net income per share attributable to common shareholders — diluted | $ 0.02 | $ 0.03 | $ 0.18 | $ -- |
| Weighted-average shares outstanding — basic | 33,408 | 27,748 | 30,194 | 19,815 |
| Weighted-average shares outstanding — diluted | 36,292 | 30,592 | 32,709 | 22,305 |
| _________ | ||||
| (1) Amortization of website development costs and intangible assets included in technology and development is as follows: | $ 3,603 | $ 1,466 | $ 11,179 | $ 5,384 |
| (2) Includes share-based compensation expense as follows: | ||||
| Cost of revenue | $ 109 | $ 54 | $ 380 | $ 189 |
| Sales and marketing | 1,084 | 129 | 2,433 | 388 |
| Technology and development | 704 | 235 | 1,886 | 546 |
| General and administrative | 359 | 236 | 1,912 | 822 |
| Total | $ 2,256 | $ 654 | $ 6,611 | $ 1,945 |
| (3) General and administrative includes a facility exit charge as follows: | $ -- | $ -- | $ -- | $ 1,737 |
| Other Financial Data: | ||||
| Adjusted EBITDA (4) | $ 6,838 | $ 3,312 | $ 25,181 | $ 11,869 |
| (4) See above for more information regarding our presentation of Adjusted EBITDA. | ||||
| ZILLOW, INC. | ||
| UNAUDITED STATEMENTS OF CASH FLOWS | ||
| (in thousands) | ||
| Year Ended December 31, | ||
| 2012 | 2011 | |
| Operating activities | ||
| Net income | $ 5,939 | $ 1,102 |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||
| Depreciation and amortization | 12,773 | 7,190 |
| Facility exit charge | -- | 1,737 |
| Share-based compensation expense | 6,611 | 1,945 |
| Loss on disposal of property and equipment | 353 | 157 |
| Bad debt expense | 1,227 | 594 |
| Deferred rent | 2,155 | 1,243 |
| Amortization of bond premium | 751 | 181 |
| Changes in operating assets and liabilities: | ||
| Accounts receivable | (3,458) | (2,208) |
| Prepaid expenses and other assets | 650 | (2,882) |
| Accounts payable | 991 | 916 |
| Accrued expenses | 1,776 | 2,460 |
| Deferred revenue | 2,530 | 2,391 |
| Net cash provided by operating activities | 32,298 | 14,826 |
| Investing activities | ||
| Proceeds from investment maturities | 28,434 | 4,750 |
| Purchases of investments | (38,397) | (47,772) |
| Purchases of property and equipment | (12,677) | (7,686) |
| Purchases of intangible assets | (4,073) | (1,135) |
| Acquisitions, net of cash acquired | (67,645) | (6,540) |
| Net cash used in investing activities | (94,358) | (58,383) |
| Financing activities | ||
| Proceeds from exercise of Class A common stock options | 7,448 | 2,917 |
| Proceeds from public offering, net of offering costs | 156,726 | 70,788 |
| Proceeds from concurrent private placement | -- | 5,500 |
| Net cash provided by financing activities | 164,174 | 79,205 |
| Net increase in cash and cash equivalents during period | 102,114 | 35,648 |
| Cash and cash equivalents at beginning of period | 47,926 | 12,278 |
| Cash and cash equivalents at end of period | $ 150,040 | $ 47,926 |
| Supplemental disclosures of cash flow information | ||
| Noncash transactions: | ||
| Capitalized share-based compensation | $ 2,379 | $ 600 |
| Class A common stock issued in connection with an acquisition | $ -- | $ 910 |
| Write-off of fully depreciated property and equipment | $ 2,986 | $ 2,133 |
Adjusted EBITDA
The following table presents a reconciliation of Adjusted EBITDA to net income, the most directly comparable GAAP financial measure, for each of the periods presented (in thousands, unaudited):
| Three Months Ended | Year Ended | |||
| December 31, | December 31, | |||
| 2012 | 2011 | 2012 | 2011 | |
| Reconciliation of Adjusted EBITDA to Net Income: | ||||
| Net income | $ 549 | $ 922 | $ 5,939 | $ 1,102 |
| Other income | (38) | (25) | (142) | (105) |
| Depreciation and amortization expense | 4,071 | 1,761 | 12,773 | 7,190 |
| Share-based compensation expense | 2,256 | 654 | 6,611 | 1,945 |
| Facility exit charge | -- | -- | -- | 1,737 |
| Adjusted EBITDA | $ 6,838 | $ 3,312 | $ 25,181 | $ 11,869 |
Revenue by Type
The following tables present our revenue by type and as a percentage of total revenue for each of the periods presented (in thousands, unaudited):
| Three Months Ended | Year Ended | |||
| December 31, | December 31, | |||
| 2012 | 2011 | 2012 | 2011 | |
| Revenue: | ||||
| Marketplace revenue | $26,838 | $13,746 | $ 86,670 | $42,190 |
| Display revenue | 7,499 | 6,145 | 30,180 | 23,863 |
| Total | $34,337 | $19,891 | $ 116,850 | $66,053 |
| Three Months Ended | Year Ended | |||
| December 31, | December 31, | |||
| 2012 | 2011 | 2012 | 2011 | |
| Percentage of Revenue: | ||||
| Marketplace revenue | 78% | 69% | 74% | 64% |
| Display revenue | 22% | 31% | 26% | 36% |
| Total | 100% | 100% | 100% | 100% |
Key Growth Drivers
The following tables set forth our key growth drivers for each of the periods presented:
|
Average Monthly Unique Users for the Three Months Ended |
|||
| December 31, | 2011 to 2012 | ||
| 2012 | 2011 | % Change | |
| (in thousands) | |||
| Unique Users | 34,535 | 23,507 | 47% |
Unique users source: We measure unique users with Google Analytics. Beginning in June 2012, the reported monthly unique users reflect the effect of Zillow's May 31, 2012 acquisition of RentJuice. Beginning in December 2012, the reported monthly unique users reflect the effect of Zillow's December 14, 2012 acquisition of HotPads.
| At December 31, | 2011 to 2012 | ||
| 2012 | 2011 | % Change | |
| Premier Agent Subscribers | 29,473 | 15,799 | 87% |