Zillow CEO Eyes Rental Revenue Boost
SEATTLE (TheStreet) -- Zillow(Z) saw strong first-quarter revenue growth after market close on Wednesday with CEO Spencer Rascoff confident of his firm's ability to weather any storms in the housing market.
The housing market has been in a downturn for almost seven years, although there have recently been signs of life. In the most recent report from the National Association of Realtors, March home sales contracts jumped 4.1% to a reading of 101.4, the highest since April 2010.
Despite the recent smattering of good news, Rascoff told TheStreet that he doesn't see the housing market turning around anytime soon, but is confident the company can prosper and grow even in a flat or weak market.
Zillow grew revenue 103% year-over-year in its most recent quarter, despite the company having less than 1% of the $6 billion agent advertising market.
The Seattle-based firm is also expanding its offerings, buying RentJuice for $40 million in cash. Rascoff noted that the startup is still losing money, but with over 300,000 listings, represents a tremendous opportunity for Zillow, with $4.5 billion spent on online rental tools every year. "Approximately 70% of all movers are rentals, and while we're not focused on monetizing rentals in the near term, we think it'll happen down the road," he told TheStreet.
One caveat investors may want to consider is a potential secondary offering, especially given Zillow's 87.94% jump in share price in 2012. Rascoff said no decision has been made on a secondary offering, but noted that the company has $60 million in cash after the RentJuice acquisition and has increased its credit line with Silicon Valley Bank(SIVB) from $4 million to $25 million.
Zillow, which runs Yahoo!'s(YHOO) Real Estate section, provided stronger-than-expected second-quarter revenue guidance, a sign of increased confidence going forward. It said it expects revenue to be between $25.5 million and $26.5 million, with adjusted EBIDTA between $3.25 million and $3.75 million. Wall Street analysts are looking for $24.84 million in revenue.