The second quarter brought in a net income of $69 million.
Zillow Group thinks that its business of advertising for real estate agents is going to be in trouble soon.
One of the company’s main businesses would be hurt by a slowdown in home sales, which was partly caused by a rise in mortgage rates.
Zillow CFO Allen Parker said on the company’s second-quarter earnings call Thursday that agents saw less demand and longer cycles for their customers to close. “At a time like this, it’s only natural for them to cut back a little on advertising as a safety measure.”
In the second quarter, Zillow had a net income of $69 million. This was up from $16 million in the first quarter. But the company’s stock price went down after the company’s guidance for the third quarter was lower than expected.
Rich Barton, CEO of Zillow, said, “Despite the challenges of the macroeconomic environment, we’re making progress in key growth areas, such as financing, tours, and seller solutions, that bring us closer to our vision of an integrated digital experience that helps customers with all their real estate needs.”
Zillow’s homes segment brought in $505 million more than expected because the company’s iBuying arm, Zillow Offers, went out of business faster than expected.
The company said earlier this year that iBuying would cost it $880 million in 2021 because it didn’t work out.
It also announced a partnership with iBuyer Opendoor, which will, according to the company, give customers the option of a cash offer.
Customers who sell through Zillow will have the option of taking this offer or selling the old-fashioned way. If they choose Opendoor, Zillow will get a referral fee.
Barton said, “Almost everyone starts their journey by using Zillow products and services, but we only make money on 3% of real estate transactions.”
When asked about how CoStar Group’s new Citysnap MLS competes with Zillow’s StreetEasy in the New York City market, Barton said that Zillow feels “terrific in New York in terms of competition.”
He said, “We feel really good. StreetEasy is the brand in New York City. It has a very high level of customer engagement, but what’s maybe even more interesting is that most brokers in New York City use it to manage their inventory. There, we’re in a very strong position.”