In early 2022, real estate listing giant Zillow began discussing its visions for a “Housing Super App.” After initial confusion and skepticism over the app, Zillow’s vision has slowly become clearer. On Tuesday, roughly two years since Zillow first announced it, the firm’s CEO and co-founder Rich Barton said the Super App is here.
“It’s called Zillow,” Barton told investors and analysts listening to Zillow’s Q4 2023 earnings call Tuesday evening. “Zillow is now the container into which we will continually place new features and services that work together seamlessly to solve real customer and partner pain points in their moves.”
While the full version of Zillow’s Super App experience is currently only available in certain test markets, firm executives said that the company plans to expand its “enhanced” experience to a total of 40 markets nationwide by the end of 2024.
Central to Zillow’s Super App vision has been its growth pillars, which now include rentals in addition to touring, financing, seller solutions, enhancing its partner network and integrating its services.
“Our for-sale growth pillars mark the pathway to meeting our goals to grow customer transaction share from 3% to 6% by the end of 2025 and grow revenue alongside that transaction share growth,” Jeremy Wacksman, Zillow’s chief operating officer, said.
According to Wacksman, in Zillow’s first two enhanced markets, Phoenix and Atlanta, the firm’s strategy of integrating the “moving experience” (as Zillow refers to it) has resulted in its customer transaction share growing by more than 80% since 2022 in the two markets.
“Additionally, across our entire set of nine enhanced markets, we are seeing consistent out performance in connections growth versus the industry,” Wacksman said.
Financially, the transaction market share growth contributed to Zillow’s 9% annual revenue gain for the fourth quarter of 2023, with revenue coming in at $474 million. For the full year 2023, Zillow reported a 1% annual decrease in revenue to $1.9 billion. Despite the relatively strong revenue numbers, Zillow still reported a net loss for both Q4 2023 and the full year 2023. In Q4 Zillow lost $73 million, slightly worse than the $72 million loss reported in Q4 2022. In all of 2023, Zillow lost $158 million, compared to a $101 million loss in 2022.
Even with the lack of a profit, Zillow’s executives still found reasons to be happy with their firm’s financial performance. Executives highlighted strong year-over-year growth in the fourth quarter for Zillow’s residential revenue (up 3% annually to $349 million), its rental revenue (up 37% annually to $93 million), and its mortgage revenue (up 22% annually to $22 million). The firm attributed the growth of its mortgage revenue to a 105% annual increase in purchase loan origination volume at Zillow Home Loans to $487 million.
“Approximately 40% of all home buyers start their journey shopping for a mortgage and 80% of those buyers don’t have an agent yet,” Wacksman said. “Knowing that almost all of these mortgage seekers use Zillow positions us well to build a substantial direct consumer purchase mortgage business that is seamlessly integrated with our extensive Premier Agent partner network.”
In addition to addressing the firm’s financial performance and the ongoing evolution of its Super App vision, Zillow executives also addressed the commission lawsuits.
“We are monitoring the progress of numerous lawsuits facing several organizations within the industry,” Barton said. “We are confident in our ability to grow our company in this evolving climate.”
Barton also noted that Zillow is continuing to advocate for a marketplace that is transparent and fair for both agents and consumers, as well as equitable access to listings and information, independent buyer and seller representation, and the consumers’ right to be informed on agent compensation and their right to negotiate that compensation. As an example of this advocacy work, Barton noted the Zillow-supported legislation in Washington state that requires buyer’s agency agreements. The law went into effect at the start of 2024.
While the future of the home-buying process remains a bit uncertain due to the ongoing litigation, Zillow executives said the company is well-prepared to ride out any storms.
“Zillow today is a much different business from what it was several years ago,” Jeremy Hoffman, Zillow’s chief financial officer, said. “Our revenue base has diversified to the point where a majority of our revenue is now derived from sources other than buy side fees. We have growth pillar we are executing against, and we are excited about a $30 billion for-sale revenue opportunity accessible in our funnel today.”
