Zillow Group Inc (NASDAQ: Z) posted first quarter 2015 results on May 12. The online real estate database posted wider losses than anticipated but strong mobile growth. Much of the report reflected the Trulia acquisition; the competitor bought by Zillow in February for $2.5 billion. Zillow confirmed that Trulia’s integration is on track to be completed by the end of 2015.
Zillow posted revenue of $127.3 million, below the analyst consensus of $135.7. The company posted a GAAP net loss of $58.4 million for the quarter, which includes costs related to the Trulia acquisition and the restructuring that followed.
The company also posted pro forma figures, which includes the Trulia merger. Zillow posted pro forma revenue of $162.5 million, marking a 35% year-over-year increase. Pro forma real estate increased 35% year-over-year to $113.4 million. Zillow reaffirmed its outlook for full-year 2015, affirming projected pro forma revenue of $690 million. For the second quarter, Zillow projects second quarter revenue between $168 million and $169 million.
Zillow highlighted strong mobile growth, noting that nearly two-thirds of users access Zillow via a mobile device, and this figure jumps up to 70% on weekends.
Analysts quickly weighed in on Zillow following the earnings report.
On May 13, Mark Mahaney of RBC Capital maintained a Sector Perform rating on Zillow with a $103 price target. He summarized that Q1 earnings were “largely inline with expectations though the Q2 guide was somewhat light.” The analyst noted solid metrics across the board; growing independence for Zillow’s Multiple Listing Service; Zillow’s emergence as a market leader; and continued investment in Trulia. Mahaney concludes, “2015 is shaping up to be a transition year for Zillow as the company deals with the effects caused by the FTC delay to the Trulia acquisition and integration challenges. Nevertheless, long term, we believe that Zillow could potentially again become an attractive investment vehicle.” Mahaney points to Zillow’s large total available market, secular shifts towards the Internet, and Zillow’s competitive position within the sector.
