WEBVTT - Zillow CEO Jeremy Wacksman Talks Q3 Revenue

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news. Let's take a look

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<v Speaker 1>at another mover to the upside, and that is Zillow

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<v Speaker 1>up a couple of percentage points here in the after

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<v Speaker 1>hours trade after the real estate marketplace reported earnings beat

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<v Speaker 1>on several key metrics. Revenue six hundred and seventy six

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<v Speaker 1>million dollars in the most recent quarter here EPs at

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<v Speaker 1>forty four cents a share for the most recent quarter,

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<v Speaker 1>and guidance for the fourth quarter. This says that expect

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<v Speaker 1>revenue for the current quarter in a range of six

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<v Speaker 1>forty five to six fifty five million dollars, a low

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<v Speaker 1>end of that range just above the average of street estimates.

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<v Speaker 1>Jeremy Waxman joins us right now, please to say, the

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<v Speaker 1>CEO of Zilo Groups, talk a little bit more about

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<v Speaker 1>the performance and your core business did well, Jeremy, and

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<v Speaker 1>I am curious as to what drove that. Was there

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<v Speaker 1>sort of macroeconomic factors behind that marketing.

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<v Speaker 2>What Yeah, thanks for having me. Q three was a

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<v Speaker 2>great one for Zillo. As you said, revenue up sixteen

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<v Speaker 2>percent year every year and was really across the board.

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<v Speaker 2>Our for sale revenue, which is mortgages and agent revenue

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<v Speaker 2>up ten percent, and our rentals marketplace, our rentals revenue

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<v Speaker 2>up forty one percent. And what's driving that outperformance against

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<v Speaker 2>a housing market that's up mid single digits is this

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<v Speaker 2>integrated transaction strategy building software for buyer, seleisi and renters

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<v Speaker 2>to use Zillo more and connect with professionals and get

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<v Speaker 2>more transactions done with our software and our partners. That's

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<v Speaker 2>coming to life in more places. So that's what's driving

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<v Speaker 2>the revenue growth and for sale, that's what's driving the

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<v Speaker 2>revenue growth and rentals, and that's what's driving a great

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<v Speaker 2>Q three for US.

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<v Speaker 1>I am curious about the home loans business. I know

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<v Speaker 1>a small part of your business, there was some decent

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<v Speaker 1>growth there. What are your ambitions for that, Jeremy, Does

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<v Speaker 1>that need to be bigger or are you comfortable with where

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<v Speaker 1>it sits right now in your portfolio.

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<v Speaker 2>We expect that to be a bigger business for US

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<v Speaker 2>over time. Eighty percent of all buyers need a mortgage,

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<v Speaker 2>and those buyers are shopping on Zilo. They're using Zilo

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<v Speaker 2>to find their agent, to find the home with their dreams,

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<v Speaker 2>and they want a one stop shop. They want the

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<v Speaker 2>ability to transact all in one place in that Zilo app,

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<v Speaker 2>so being able to offer them Zilo home loans as

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<v Speaker 2>one of their choices of financing. It makes sense from

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<v Speaker 2>a consumer experience standpoint, and then it's a great business

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<v Speaker 2>because it's more efficient for them to use one platform

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<v Speaker 2>and get multiple services. So you're right, it is very

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<v Speaker 2>small today, it is growing nicely. It's growing double digits

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<v Speaker 2>and has all year. We would love to see that

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<v Speaker 2>business continue to grow over time. And as I said,

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<v Speaker 2>the strategy there is really offer that service to our

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<v Speaker 2>buyers inside a Zilo, offer it to our agents who

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<v Speaker 2>are working with those customers, and just become one of

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<v Speaker 2>their loan offerings for more of those transactions.

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<v Speaker 3>Jeremy, I'd love to get a little bit more detail

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<v Speaker 3>when it comes to the breakdown of buyers versus renters,

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<v Speaker 3>because with mortgage rates still at the levels that they are,

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<v Speaker 3>you know, one of the narratives out there is that

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<v Speaker 3>actually take a look at the monthly payment and for

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<v Speaker 3>a lot of folks it makes more sense to just

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<v Speaker 3>rent versus to buy something. And I'm w when you

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<v Speaker 3>take a look at the trends on Zillo, whether that's

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<v Speaker 3>still the case or are we starting to see that shift.

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<v Speaker 2>Yeah, Unfortunately, it is still a real affordability crisis in

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<v Speaker 2>the housing market, and one way to think about that

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<v Speaker 2>is just where are things versus pre pandemic. Home prices

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<v Speaker 2>are up nearly one hundred percent from pre pandemic levels,

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<v Speaker 2>So we talk a lot about mortgage rates and the

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<v Speaker 2>rise in mortgage rates from those lows, but it's really

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<v Speaker 2>home prices that are making things unaffordable rent affordability. Rent

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<v Speaker 2>prices have only gone up about thirty forty percent, so

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<v Speaker 2>it's still more challenging from pre pandemic, but it becomes

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<v Speaker 2>more affordable to rent versus buy in many markets, and

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<v Speaker 2>you're seeing many folks who are trying to be first

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<v Speaker 2>time home buyers that's just out of reach and they

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<v Speaker 2>are choosing to rent again. The good news for Zillo

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<v Speaker 2>is by offering both of those marketplaces, we can help

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<v Speaker 2>them with those needs.

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<v Speaker 1>Right.

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<v Speaker 2>You see our rentals business growing incredibly rapidly, right, and

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<v Speaker 2>that's now more than a quarter of our revenue. Those

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<v Speaker 2>renters are tomorrow's buyers. Yes, we're helping them find a

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<v Speaker 2>place to rent, but we're also helping them get ready

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<v Speaker 2>to buy. We are helping them report their rent to

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<v Speaker 2>the Credit bureers to start building their credit score to

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<v Speaker 2>get them ready for that home loan. We're helping them

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<v Speaker 2>with tools where they can understand what they could afford

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<v Speaker 2>when they go shop, because most of those folks, as

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<v Speaker 2>you point out, they are what we call dual tracking.

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<v Speaker 2>They are thinking about could I buy or should I

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<v Speaker 2>re rent? And having all those options in one place

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<v Speaker 2>is really what they need to make that decision.

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<v Speaker 3>I hear what you're saying, and you know in some

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<v Speaker 3>cases you're preaching to the choir as a renter who

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<v Speaker 3>would like to buy. But I want to talk a

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<v Speaker 3>little bit more about what the rentals market has meant

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<v Speaker 3>for you because a lot of folks think of Zillow

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<v Speaker 3>as a home buying app, a home buying website website,

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<v Speaker 3>but the rentals market has been a big driver of

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<v Speaker 3>your growth. I would love a little bit more detail

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<v Speaker 3>on that and where you see that evolving as it

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<v Speaker 3>comes to your business, the rental market versus the buying market.

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<v Speaker 2>Absolutely, rentals is a fast growing business for us, and

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<v Speaker 2>it's a really great experience for our consumers. You know,

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<v Speaker 2>our mission is to more and more people get home.

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<v Speaker 2>You can't do that if you're not helping renters get

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<v Speaker 2>home because there's so many more renters than buyers and

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<v Speaker 2>sellers every year. And what's great about our rentals business

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<v Speaker 2>is it's really solving the fundamental problem renter has. There

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<v Speaker 2>is no one database of all the rentals. You have

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<v Speaker 2>to scour everywhere online and off to find a place

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<v Speaker 2>on a very compressed timeframe. So we set out to

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<v Speaker 2>try and organize as much of the inventory as possible,

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<v Speaker 2>and we now have the most listings. We have two

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<v Speaker 2>and a half million rental listings on Zilo. Everything from

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<v Speaker 2>those big buildings to the single family homes that are

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<v Speaker 2>for rent in your neighborhood. That is what brings renters

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<v Speaker 2>to Zillo. You want to find a place, you want

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<v Speaker 2>to go where there are the most places to look for.

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<v Speaker 2>That's why we have the largest audience now. So Zilo

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<v Speaker 2>Rentals has thirty six million unique visitors per month coming

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<v Speaker 2>to Zilo. It's the largest audience. Those factors are now

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<v Speaker 2>why the revenue is growing. Advertisers, big property managers who

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<v Speaker 2>are looking to fill their vacancies. They want to tap

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<v Speaker 2>into that audience and so they're what's driving the revenue

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<v Speaker 2>growth up forty one percent in Q three. Multi family revenue.

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<v Speaker 2>Those advertisers are driv as sixty two percent year ofver

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<v Speaker 2>year revenue growth.

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<v Speaker 3>All right, Jeremy really appreciate you taking the time after earnings.

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<v Speaker 3>That is Jeremy Waxman. He is Zillo Group CEO.