Zillow’s second-quarter 2024 earnings call with investors Wednesday evening marked a pivotal moment for the firm. It was the first since company co-founder Rich Barton announced he was stepping down as CEO.
Less than an hour before the call, Zillow Group announced that it had promoted Jeremy Wacksman, the firm’s chief operations officer, to CEO. Barton will remain on Zillow’s board of directors and has been named as co-executive chair of the board alongside Zillow co-founder and current executive chair Lloyd Frink.
“I have been CEO and/or chairman since the day Lloyd and I seed-funded the company in 2004, and I will remain engaged,” Barton told investors and analysts listening to the call. “My role, however, will shift to supporting and counseling Jeremy Wacksman and the leadership team, rather than daily operational leadership.”
Wacksman’s promotion was naturally a hot topic of conversation on the call, but the leadership team reassured listeners that this change would not result in significant changes to Zillow’s business plans or strategies.
According to Barton, Zillow organized most of the company around Wacksman three years ago when he was promoted to COO.
“He has been supported by an exceptional team and has successfully positioned the company to go after multiple large opportunities,” Barton said.
These opportunities include the continued roll-out of the Zillow “Housing Super App” along with integrated consumer and agent partner experiences across the country. Wacksman will also be tasked with increasing the “breadth of the company’s market coverage” and “the depth of its transaction penetration within those markets,” while growing its rental and mortgage businesses.
Zillow executives said that by focusing on these opportunities, which make up some of the major components of Zillow’s five growth pillars, the firm continues to outperform the wider industry.
During the second quarter, Zillow reported a 13% annual increase in revenue to $572 million, which was $39 million above the midpoint of its outlook range. While residential revenue growth rose 8% annually to $409 million, much of the overall residential growth was attributed to a 29% annual uptick in rental revenue to $117 million along with a 42% uptick in Zillow Home Loans revenue to $34 million.
The improved performance of Zillow’s mortgage sector was attributed to a 125% year-over-year increase in purchase loan origination volume, which reached $756 million in Q2 2024.
“The successes come despite a persistently challenging mortgage rate environment, as evidenced by our estimate of total industry purchase loan origination volume being down in single digits year over year in Q2,” Wacksman said.
Despite the increase in revenue, Zillow still reported a GAAP net loss of $17 million for the quarter, an improvement over the $35 million net loss reported in Q2 2023.
Despite the loss, Wacksman said Zillow’s successes to date give him confidence that the firm is on track to meet its 2024 goal of delivering double-digit revenue growth, and that it is on its way to “strong GAAP profitability over time.”
Barton shared a similar view, noting throughout the call that Zillow is on “firm footing.”
“I am super excited,” Barton said. “There is a ton of clear water in front of the company — lots of opportunity. Maybe the wind will change direction and come behind us one of these days. We certainly don’t need it, but I’m sure it will happen at some point.”
In order to reach their goals, Zillow executives said the firm would continue to focus on its five growth pillars, which include touring, financing, seller solutions, enhancing its agent partner network and integrating its services.
In Zillow’s first four enhanced markets, which fully encompass its integrated services and the Zillow “Housing Super App” vision, the firm said it has seen revenue growth per transaction increase by more than 80% since the beginning of 2023.
“As we expand, we are consistently seeing signs of repeatable success,” Wacksman said. “In the 13 markets we were in at the end of Q1, we are seeing gains in revenue per total transaction value. We see an opportunity to increase conversion and revenue per total transaction value even more from here as we launch the remaining enhanced markets this year.”
Looking ahead, executives said Zillow will continue to focus on the technology it provides both agents and consumers as it works to integrate and streamline the homebuying experience.
“Our conviction is that a rising digital tide lifts all boats,” Barton said. “A more digital industry, using our software, is better for consumers and for our partners — and ultimately, better for Zillow Group.”
“We continue to believe our more important investments are in tech innovations that improve the customer experience, which has helped us earn and maintain our strong brand position and massive engaged audience of movers,” Wacksman added.
