Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: All right, want to get to a name that is
Speaker 2: certainly on our radar. Shares a Zillo down the most
Speaker 2: in nearly one year. The stock off more than nine percent,
Speaker 2: was down seventeen percent at its low. Today, the online
Speaker 2: real estate firm delivered a revenue forecast for the first
Speaker 2: quarter that fell sure the average analyst estinmate. Meantime, the
Speaker 2: company expects twenty twenty five to be its first profitable
Speaker 2: year since twenty twelve. Keep in mind it posted a
Speaker 2: net loss of one hundred and twelve million back in
Speaker 2: twenty twenty four.
Speaker 3: With more on the business and the US housing market
Speaker 3: with us as Zillo CEO Jeremy Waxman joining us from Seattle. Jeremi,
Speaker 3: thanks for joining us today. Likely I would imagine a
Speaker 3: tough day when the stock is down as much as
Speaker 3: seventeen percent, down nine percent right now. The housing market,
Speaker 3: it just hasn't recovered in the way that you want
Speaker 3: to see. What's the biggest thing holding it up?
Speaker 1: Thanks for having me. The housing market remains challenged. It
Speaker 1: was challenged in twenty twenty four, and we're expecting it
Speaker 1: to be so again in twenty twenty five. Zillo reported
Speaker 1: great results yesterday. Q four revenue up seventeen percent, and
Speaker 1: we hit our goals of growing revenue double digits last
Speaker 1: year and expanding our margins, and we also guided yesterday
Speaker 1: that we expect to continue to do that again this
Speaker 1: year with revenue growth in the low to mid teens,
Speaker 1: more margin expansion, and positive gat and income for the
Speaker 1: first time in a long time. And as you said,
Speaker 1: that's against a persistently challenged housing market. So we're able
Speaker 1: to grow and gain share both in twenty four and
Speaker 1: we planned it again in twenty twenty five, while the
Speaker 1: market remains depressed for volume and challenging for buyers.
Speaker 2: Jeremy, do you think investors have it wrong in terms
Speaker 2: of pushing your share price down a lot in reaction
Speaker 2: to what they got on the quarter? In the outlook, we.
Speaker 1: Don't really focus on the day to day voting machine
Speaker 1: of the stock market. If you zoom out and look
Speaker 1: over the long the long couple quarters, a couple of years,
Speaker 1: we've made great progress on our integrated super apps strategy.
Speaker 1: We're growing revenue nicely, we're outgrowing the category, and we
Speaker 1: can plan to continue to do that in twenty twenty five,
Speaker 1: and so over time the stock caacre of itself. The
Speaker 1: company grows in value as we really deliver on our
Speaker 1: promise of helping more buyers and sellers get home. That's
Speaker 1: really our goal at Zillo is to help more of
Speaker 1: our audience turn into transactions.
Speaker 2: Yeah, and I will point out the stock was up
Speaker 2: about twenty eight percent last year and up about almost
Speaker 2: eighty percent and twenty twenty three. In terms of the
Speaker 2: stress though, or maybe you're you know, kind of cautious
Speaker 2: outlook in terms of the housing market, is it all
Speaker 2: about mortgage rates and higher mortgage rates?
Speaker 1: You have the challenge or the housing market starts with
Speaker 1: mortgage rates, but it's really about availability and supply. We
Speaker 1: are expecting flat ish total dollar value housing marketing Q
Speaker 1: one and load mid single digit growth for the year.
Speaker 1: And as you said, if you look, it's not like
Speaker 1: twenty twenty four was that much better from a volume standpoint.
Speaker 1: The real challenge is with mortgage rates. Staying hi affordability
Speaker 1: is a challenge for buyers, but that really locks a
Speaker 1: lot of sellers into their homes as well. Right a
Speaker 1: seller is thinking about to do they want a trade out
Speaker 1: of that mortgage? Do they feel locked into that mortgage,
Speaker 1: and many are foregoing listing their home and making that move.
Speaker 1: So you're seeing still very low inventory. Inventory is up
Speaker 1: eighteen percent from last year, but it's still downs sharply
Speaker 1: from pre pandemic norms, and so lack of supply really
Speaker 1: makes it challenging for buyers. And then you add elevated
Speaker 1: rates and what they can afford of what there is
Speaker 1: to buy.
Speaker 3: Jeremy, the cost of housing certainly a theme in last
Speaker 3: year's presidential race. I'm wondering if you think that the
Speaker 3: federal government will be able to achieve bringing more supply
Speaker 3: of housing online. This came up with the vice presidential
Speaker 3: debate when Jade Vance talked about using federal lands to
Speaker 3: build homes. Do you think the federal government will have
Speaker 3: a meaningful effect on housing supply?
Speaker 1: The real challenge was supply. We talked about existing home
Speaker 1: inventory and what sellers are doing, but we are chronically
Speaker 1: underbuilt right we. Zilo estimates about four and a half
Speaker 1: million homes have not been built to keep up with
Speaker 1: the demand needed since the global financial crisis, and the
Speaker 1: solution of those problems really is at the state and
Speaker 1: local level. You need things like permitting reform and removing
Speaker 1: red tape in the process. To get starts done quickly,
Speaker 1: you need tax incentives and financing options so that builders
Speaker 1: can get their projects online more quickly. So the totality
Speaker 1: of the problem, you know, all nearly five million homes
Speaker 1: that we need to catch up on. We're not going
Speaker 1: to do that overnight, but slow and steady will definitely
Speaker 1: bring more supply to the market.
Speaker 2: I do wonder though, to you know, Jeremy, how much
Speaker 2: the YEP I get that, the permitting I mean, these
Speaker 2: are problems that have played certainly the housing market I
Speaker 2: feel like forever in terms of supply. But having said that,
Speaker 2: how much too? Is there some cautiousness on the part
Speaker 2: of home builders who still everybody still remembers two thousand
Speaker 2: and eight and the over bill. So is there also
Speaker 2: a part of that as some of the components in
Speaker 2: terms of supply.
Speaker 1: Well, you're seeing places where it works well, right, I
Speaker 1: mean Austin, Texas is one good exams sample that we've
Speaker 1: highlighted where a lot of multi family inventory and the
Speaker 1: rental market has come online and you've actually seen rent
Speaker 1: prices come down even with the population growth in Austin
Speaker 1: and so you know, you have to remember if you
Speaker 1: zoom out, there are still the counter forces of for
Speaker 1: sale and rentals working together, and you know, when folks
Speaker 1: can't get it done and find the home to buy,
Speaker 1: they end up rere renting, and you're seeing you know,
Speaker 1: rental inventory, you know, grow to satisfy that demand as well.
Speaker 1: So it is, as you said, it's a local issue,
Speaker 1: but there are places where it's working well and there
Speaker 1: are places where it can work even better.
Speaker 3: We got a hotter than expected CPI print earlier today,
Speaker 3: and my question is about how that changes the outlook
Speaker 3: for rates for the year and then in turn, how
Speaker 3: that affects your business. Does your OUTLOK for twenty twenty
Speaker 3: five change if rates don't come down.
Speaker 1: No. Our outlook that we put out yesterday assumes a
Speaker 1: pretty lousy housing market, and I think today's print probably
Speaker 1: just kind of confirms that fact. Right, we are expecting
Speaker 1: flatish housing market in Q one and load of single
Speaker 1: digits for the year, and I think we were maybe
Speaker 1: a little bit more embarrassed than most heading into the
Speaker 1: year on how the housing market's going to do. Now,
Speaker 1: the good news for ZILLO is we're out growing the
Speaker 1: category and we're gaining share. We did that in twenty
Speaker 1: twenty four and we expected to again in twenty twenty five.
Speaker 1: And that's in our for sale business, where we're helping
Speaker 1: more buyers meet their agents, we're helping originate more mortgages.
Speaker 1: That's also when our rentals business. Our rentals business grew
Speaker 1: twenty five percent in Q four. We expect that to
Speaker 1: accelerate in Q one as we bring more rental inventory
Speaker 1: to more renters across slow Hey.
Speaker 2: One thing I do wonder in our conversation coming off
Speaker 2: of the hot CPI print Jeremy, is that maybe we
Speaker 2: saw certainly the rates market, the US rates market, the
Speaker 2: treasury market react and move up today. But now the
Speaker 2: talk has moved to maybe even the next move. We
Speaker 2: need to start thinking about the Fed raising rates. If
Speaker 2: we see the FED start to raise rates, what does
Speaker 2: that do in your view to the housing market and
Speaker 2: how might that impact your business?
Speaker 1: Well, as I said, we're kind of near all time
Speaker 1: lows on volume right. We're down to basically folks who
Speaker 1: have to move and can get it done, get it done.
Speaker 1: And that's the thing about this market. Long term, real
Speaker 1: estate is a growth industry. You see volumes and total
Speaker 1: value grow Right now, you're seeing depressed volumes because of
Speaker 1: all the challenges, especially in the financial market with affordability
Speaker 1: for buyers. But folks are getting it done and they
Speaker 1: will get it done. And what we're here at Zilla
Speaker 1: to do is help them. Buyers who need to buy,
Speaker 1: many of them are starting that conversation with financing rather
Speaker 1: than just dreaming. We now see about as many buyers
Speaker 1: start with what can I afford and can I even
Speaker 1: buy right now as they do dreaming, shopping and going
Speaker 1: media an agent. So we've brought online tools like Buyability
Speaker 1: to help them truly understand their personalized payment information, what
Speaker 1: can they actually afford for themselves given their financial information,
Speaker 1: so they can have confidence to go get a pre
Speaker 1: approval letter, to actually go make an offer and win
Speaker 1: a house. So it is tough out there, it will
Speaker 1: remain challenging in twenty twenty five, but folks can get
Speaker 1: it done. We're there to help and that's exactly what's
Speaker 1: driving their results from us in Q four and why
Speaker 1: we expect to continue to grow and not go the
Speaker 1: category in twenty twenty five.
Speaker 2: Jeremy, you mentioned those buyability tools that you guys have
Speaker 2: on your platform. What does that show you about. Is
Speaker 2: it the first time home buyer that continues to find
Speaker 2: it really difficult, is it the trade up home buyer?
Speaker 2: What does it tell you about kind of the home
Speaker 2: buyer and in essence, the US consumer out there when
Speaker 2: it comes to buying a house.
Speaker 1: Yeah, I mean the demand and desire to buy a
Speaker 1: home still persists and exists across all demographics. You're seeing
Speaker 1: folks having to wait longer, save up more to make
Speaker 1: that down payment, and so it gets tougher. But you
Speaker 1: see the strong desire to buy a home really persist
Speaker 1: across all demographics, and we see that in folks who
Speaker 1: are using Zillo. Again. As I said, one of the
Speaker 1: things that is interesting to us is how much more
Speaker 1: financing and total cost of ownership is front and center
Speaker 1: for a buyer before they even start. You know, five
Speaker 1: ten years ago, everyone wanted to start by shopping, by touring,
Speaker 1: by virtual touring, by going into open houses, and now
Speaker 1: it's kind of a balance as many folks want to
Speaker 1: start in that state, as they want to start with
Speaker 1: just the reality of what's my budget look like? How
Speaker 1: do I set my budget and work with an agent
Speaker 1: to make sure the homes I fall in love with
Speaker 1: the ones that can actually buy hey.
Speaker 3: One thing we also learned recently from you guys is
Speaker 3: that Redfinn is teaming up with Zillo for rental listings.
Speaker 3: This partnership, to me, it sort of looks like frenemies
Speaker 3: teaming up. Like you guys are competitors here. Redfinn's market
Speaker 3: cap is about two billion dollars year, about eighteen billion dollars.
Speaker 3: Do you end up buying redfin at a certain point.
Speaker 1: We're really excited about this partnership we just announced with Redfinn.
Speaker 1: It's a big step in our overall rental strategy. It's
Speaker 1: important to zoom out and remember, unlike the FIRS sale marketplace,
Speaker 1: there's no national database for rentals. The big challenge a
Speaker 1: renter has is they can't find all the supply. They
Speaker 1: have a very short timeframe to find a place to rent,
Speaker 1: and so they scour the internet, they scour offline looking.
Speaker 1: So that's zilla strategy. Can we organize more and more
Speaker 1: of the rental listings out there nationwide so that renters
Speaker 1: on Zillo and on our partner sites can find them.
Speaker 1: That strategy is working great. That's what's driving having the
Speaker 1: leading audience and growing audience of renters, and that's bringing
Speaker 1: more property managers to Zillo and our partner sites to
Speaker 1: want to advertise that audience. So this partnership with Redfin
Speaker 1: to power their rentals business is just the next step
Speaker 1: in that strategy. Adding on to this great partnership we
Speaker 1: forged with real to dot com last year, it allows
Speaker 1: advertisers to come to Zilo and get advertising in front
Speaker 1: of Zillo sites, Redfin sites and realtor sites to reach
Speaker 1: an even bigger set of renters. And then renters get
Speaker 1: more choice, right, they see more inventory, which, again, as
Speaker 1: I started, that's the big problem in rentals is you
Speaker 1: cannot find all the inventory.
Speaker 3: And forgive me that Redfin market cap about one point
Speaker 3: one billion dollars, so shy of two billion dollars. I
Speaker 3: didn't hear a yes or a no, and no answer
Speaker 3: to my question about whether or not.
Speaker 1: Oh no, have no plans now, no plans. We're very
Speaker 1: excited about the partnership. We've worked with them on some
Speaker 1: other things before and we love how culturally aligned they
Speaker 1: are and just digitizing the transaction in real estate.
Speaker 2: Well, along those lines, how are real estate companies holding
Speaker 2: up through this extended housing market?
Speaker 3: Trough.
Speaker 2: I mean, any opportun ortunities for you guys to do
Speaker 2: some acquisitions as a result, along maybe the lines of
Speaker 2: I don't know, partnerships, but maybe even acquisitions.
Speaker 1: Yeah, the bright side of a challenge real estate market
Speaker 1: is it really allows the best professionals to gain share.
Speaker 1: Right when it's rainy and cloudy outside, those that do
Speaker 1: best sometimes come out ahead. And what's great about that
Speaker 1: is that aligns so nicely with Zillo strategy, Right. Zillo
Speaker 1: strategy is to partner with the best agents and agent
Speaker 1: teams in the industry. Eighty percent of the agents that
Speaker 1: we partner with are in that top twenty percent of
Speaker 1: producers nationwide. So these are the folks that are operating
Speaker 1: businesses at scale, training great agent teams to help delight customers.
Speaker 1: So even when there's less transactions to do, and even
Speaker 1: when it's a challenging conversation with many buyers and sellers,
Speaker 1: those folks command great price hold share and grow their business.
Speaker 1: And so in some ways having a choppier or a
Speaker 1: depressed housing market can advantage some of the best professionals.
Speaker 3: Hey, we're asking every CEO we talk to these days
Speaker 3: a couple of different questions about politics about AI politics
Speaker 3: is where I want to go and just hear from
Speaker 3: you about how you view this new Trump administration in
Speaker 3: terms of changes that you've made at the company as
Speaker 3: a result, or what it means for you as a business.
Speaker 1: One of the things youill focuses a lot on is
Speaker 1: AI and AI as it comes to relisted industry, right,
Speaker 1: both for us as employees, but more so for our
Speaker 1: customers and our partners, our agents, our loan officers. And
Speaker 1: we've been investing in and innovating around AI for decades
Speaker 1: and so now as general of AI comes to the forefront,
Speaker 1: you know, we've been really advocating for responsible regulation around
Speaker 1: AI that encourages and supports innovation so that companies like
Speaker 1: Zilo can continue to innovate on behalf of the customer.
Speaker 1: So one thing we're very excited about is to continued
Speaker 1: progress on the ability to progress with AI. And you know,
Speaker 1: AI for us is a feature, it is a tool
Speaker 1: for our customers, for our employees, but in the REALISTM industry,
Speaker 1: it's really about making the professionals more efficient and effective. Right.
Speaker 1: There's there's so much wasted work, busy work, paperwork, back
Speaker 1: office work, and when you talk to a great real
Speaker 1: estate agent or a great loan officer. That's not what
Speaker 1: they want to be doing. They want to be delighting customers.
Speaker 1: They want to be winning more business, they want to
Speaker 1: be getting more transactions done. So we're really excited about
Speaker 1: the ability to continue to lean in and innovate, not
Speaker 1: just on our tech platform generally, but on AI specifically,
Speaker 1: to really bring more of this transaction into your smartphone,
Speaker 1: make it more delightful and faster for the customer.
Speaker 2: All right, Jeremy, one last question is also a question
Speaker 2: we are asking too, heads of company CEOs and the like,
Speaker 2: anything that could come out of Washington and the new
Speaker 2: administration that could help or hurt your business. And just
Speaker 2: got about thirty seconds.
Speaker 1: Zillo is really focused on ensuring that real estate stays
Speaker 1: accessible for the customer. We've outlined our principles for the consumer,
Speaker 1: which are around transparency, access, and affordability, and any policies
Speaker 1: that come we look to help make sure they push
Speaker 1: forward and sure that consumers have access to all the
Speaker 1: information that's out there, have access to great professionals, and
Speaker 1: have better education on how the real estate industy works.
Speaker 1: Real estate is one of the largest industries that there
Speaker 1: is and it's the single biggest decision that most individuals
Speaker 1: are going to make, So making sure that people understand
Speaker 1: how it works, making sure that they have access to
Speaker 1: hiring the best professionals, that's one of the things we're
Speaker 1: very focus on Zilla and we continue we will continue
Speaker 1: to be so you're.
Speaker 2: Hopeful that the administration the policies will be supportive of
Speaker 2: the housing market.
Speaker 1: Just quickly. Yeah, We've been around for twenty years and
Speaker 1: have been fortunate to work with both both administrations. And again,
Speaker 1: as we talked about earlier, one of the real challenges
Speaker 1: in our industry is so much is done at the
Speaker 1: state and the local level to make sure that real
Speaker 1: estate can flow for the benefit of the buyer and seller.
Speaker 2: Really good point, Jeremy, Thank you for all this time.
Speaker 2: Jeremy Waxman, he's chief executive officer of Zillo.