Shares of Zillow Group (NASDAQ:Z) (NASDAQ:ZG) were cruising higher today after the online real estate brokerage posted strong results in its fourth-quarter earnings report, beating estimates on both the top and bottom lines.
As of 10:48 a.m. EST, the stock was up 20%.
In the fourth quarter, Zillow posted revenue of $789 million, topping both its own guidance and analyst estimates at $741 million, even though revenue fell 16%. That was due to the company’s decision earlier in the pandemic to stop its iBuying program, which makes up the Zillow Homes segment. As a result, revenue from Zillow Homes, which gives instant offers to sellers, fell 50% in the fourth quarter to $304 million, but gross profit from the segment still expanded from $21.8 million to $27.3 million as the company benefited from rising home prices.
Its IMT segment — which stands for internet, media, and technology and consists of more conventional marketing and agency services — saw revenue increase 33% to $423.8 million, and revenue nearly tripled in its mortgages segment to $61 million as the company builds out that business.
Adjusted EBITDA of $170 million also topped the company’s guidance, and adjusted earnings per share was $0.41, ahead of the consensus at $0.27.
CEO Rich Barton said, “”Zillow’s strong results reflect exemplary execution and continued growth during the scary roller-coaster ride that was 2020. Many Americans who had previously dreamed of moving now have the flexibility to do so, and they flocked to Zillow in record numbers.”
Looking ahead, Zillow said it expects the housing market to be even stronger in 2021 than in 2020, projecting home sales to grow 21% and for double-digit price appreciation.
As for the business itself, the company expects first-quarter revenue of $1.069 billion to $1.112 billion, which is well ahead of the analyst consensus at $881 million, and also called for $114 million to $138 million in adjusted EBITDA, showing a strong rebound on the bottom line.
With the macro-level housing market on fire and guidance well ahead of expectations, it’s easy to see why the disruptive tech stock is surging today.