Zillow Group Inc Class C (Z)

History and Background

Zillow was founded in 2006 by Rich Barton and Lloyd Frink, former Microsoft executives. It revolutionized real estate by providing free access to property data and listings online. Over time, Zillow expanded its services to include home buying, selling, renting, and financing.

Core Business Areas

• Homes Segment: Involved in buying and selling homes directly through Zillow Offers. Discontinued in 2021, but may hold some residual assets from that program. Generated revenue through sales of homes.
• Internet, Media & Technology (IMT) Segment: This segment is core to Zillow. It provides services that include advertising on Zillow's websites and mobile apps, mortgage origination and technology services for real estate professionals, property management software, and various other real estate-related services.

Leadership and Structure

Zillow Group is led by CEO Rich Barton. The organizational structure consists of various departments responsible for different business functions, including technology, marketing, finance, and operations.

Key Offerings

• Description of Product 1, include any market share data or number of users or revenue from this product. Who are the competitors for this product:
• Zillow Premier Agent: Advertising program for real estate agents, connecting them with potential clients. Generates significant revenue. Market share data for agent advertising is difficult to pinpoint, but Zillow is a major player. Competitors include Realtor.com and regional MLS systems.
• Description of Product 2, include any market share data or number of users or revenue from this product. Who are the competitors for this product:
• Zillow.com & Trulia: Real estate portals providing property listings, data, and tools for buyers, sellers, and renters. Zillow has a large share of online real estate traffic. Competitors include Realtor.com, Redfin, and Apartments.com.
• Description of Product 3, include any market share data or number of users or revenue from this product. Who are the competitors for this product:
• Mortgages: Offers mortgage origination services and connects borrowers with lenders. Market share in mortgage origination is smaller compared to the real estate portal business. Competitors include Rocket Mortgage, Better.com, and traditional banks.

Industry Overview

The real estate industry is undergoing digital transformation, with increasing reliance on online platforms for property search, transactions, and related services. Economic factors, interest rates, and housing supply significantly impact the industry.

Positioning

Zillow is a leading online real estate marketplace, leveraging its brand recognition, data, and technology to connect buyers, sellers, renters, and real estate professionals. Its competitive advantages include its extensive database of properties and its large user base.

Total Addressable Market (TAM)

The TAM for the US real estate market is in the trillions of dollars, including home sales, rentals, mortgages, and related services. Zillow is positioned to capture a significant portion of this market through its various offerings.

Key Competitors

• RDFN
• MOVE
• EXPI

Competitive Landscape

Zillow has advantages in brand recognition and data. Redfin focuses more on brokerage services. Realtor.com is backed by the National Association of Realtors. E-X-P-I Realty is a fast growing brokerage with a different commission structure than traditional brokerages.

ShowingTime

• Year: 2021
• Acquisition Price (USD millions): 500
• Strategic Rationale: Acquisition was made to enhance its software offerings for real estate agents and streamline the home showing process, though some regulators were weary on monopolistic impact

Historical Growth: Zillow experienced significant revenue growth in its early years due to the increasing adoption of online real estate platforms. However, growth rates have fluctuated in recent years due to challenges such as the iBuying losses.

Future Projections: Analyst projections vary based on factors such as the housing market outlook, Zillow's strategic initiatives, and competitive pressures. Growth is expected to be driven by the IMT segment.

Recent Initiatives: Recent initiatives include focusing on core advertising and software solutions for real estate agents, streamlining operations, and exploring new revenue streams.

Zillow is a prominent player in the online real estate marketplace, boasting a strong brand and extensive data. Its strengths lie in its advertising and software services, but the company faces challenges related to housing market fluctuations and increased competition. The decision to exit iBuying was a significant strategic shift. Zillow needs to capitalize on its core business while navigating a dynamic and competitive landscape.

Data Sources:

• Zillow Group Investor Relations
• SEC Filings
• Third-party market research reports

Disclaimers:

This analysis is for informational purposes only and does not constitute financial advice. Investment decisions should be based on thorough research and consultation with a qualified financial advisor. Market share data is based on available estimates and may vary.