Q4 2021 Zillow Group Inc Earnings Call
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Good afternoon, My name is Jordan and I'll be your conference operator today at this time I would like to welcome everyone to the Zillow group fourth quarter 2021 conference call.
Speaker 2: Good afternoon, my name is Jordan and I'll be your conference operator today. At this time I would like to welcome everyone to the Zillow Group 4th Quarter 2021 Conference Call.
All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you'd like to ask a question. During this time simply press star one on your telephone keypad, if you'd like to withdraw your question. Please press star two.
Speaker 2: All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star 1 on your telephone keypads. If you'd like to withdraw your question, please press star 2. Please note this event is being recorded. Thank you. I would now like to turn the conference over to Brad Burning, Vice President of Investor Relations. Please go ahead.
Please note this event is being recorded.
I would now like to turn the conference over to Brad Berning, Vice President of Investor Relations. Please go ahead.
Speaker 3: Thank you, Jordan. Good afternoon and welcome to Zillow Group's fourth quarter 2021 conference.
Thank you Jordan good afternoon, and welcome to Zillow group's fourth quarter 2021 conference call.
Speaker 3: Joining me today to discuss our results are Zillow Group's co-founder and CEO , Rich Barton, and CFO , Alan Parker. In addition to our typical materials, today we also published an investor presentation, which is available on the Investor Relations website.
Joining me today to discuss our results are Zillow group's co founder and CEO , Rich Barton and CFO Allen Parker and.
In addition to our typical materials today, we also published an investor presentation, which is available on the Investor Relations website.
Speaker 3: This deck will provide additional color to much of what we are talking about today. During today's call, we'll be making forward-looking statements about our future performance and operating plans based on current expectations and assumptions.
This is Dirk will provide additional color to much of what we're talking about today.
Today's call, we'll be making forward looking statements about our future performance and operating plans based on current expectations and assumptions.
Speaker 3: These statements are subject to risks and uncertainties, and we encourage you to consider the risk factors described in our SEC filings for additional information. We undertake no obligation to update these statements as a result of new information or future events, except as required by law.
These statements are subject to risks and uncertainties and we encourage you to consider the risk factors described in our SEC filings for additional information we undertake no obligation to update these statements as a result of new information or future events, except as required by law.
Speaker 3: This call is being broadcast on the internet and is accessible in our investor relations website.
This call is being broadcast on the Internet and is accessible on our Investor Relations website. During the call, we will discuss GAAP and non-GAAP measures, including adjusted EBITDA, which we referred to as EBITDA. We encourage you to read our shareholder letter and our earnings release, which can be found on our Investor relations website as they contain important information about our GAAP and non-GAAP .
Speaker 3: During the call, we will discuss GAAP and non-GAAP measures, including adjusted EBITDA, which we refer to as EBITDA. We encourage you to read our shareholder letter and our earnings release, which can be found on our investor relations website, as they contain important information about our GAAP and non-GAAP results, including reconciliations of historical non-GAAP financial measures.
Results, including reconciliations of historical non-GAAP financial measures. In addition, please note we will refer to our Internet media and Telecom technology segment as our IMT segment. We will now open the call with remarks, followed by live Q&A and with that I will turn the call over to rich.
Speaker 3: In addition, please note, we will refer to our Internet, media, and telecom technology segment as our IMT segment. We will now open the call with remarks followed by live Q&A. And with that, I will turn the call over to Rich.
Thank you Brad.
Speaker 4: Hello everyone. I hope you and your families are safe and healthy despite volatility.
Hello, everyone I Hope you and your families are safe and healthy despite volatility.
Speaker 4: stubborn COVID variants, mixed macro signals and the geopolitical environment, I'm feeling grounded and excited by what's happening at Zillow and the opportunity in front of us.
Stubborn curve at variance mixed macro signals in the geopolitical environment I'm, feeling grounded and excited by what's happening at Zillow and the opportunity in front of us.
Speaker 4: Today, we're going to walk through the next steps for Zillow as we grow our core business, innovate to make it easier for people to move, and provide a progress report on the wind down of our Zillow-owned homes inventory.
Today, we're going to walk through the next steps for Zillow as we grow our core business innovate to make it easier for people to move.
And provide a progress report on the wind down of our Zillow owned homes inventory.
Speaker 4: First, on the inventory wind down, we are selling homes faster than we anticipated at better pricing levels than we projected.
First on the inventory wind down we are selling homes faster than we anticipated at better pricing levels than we projected.
Speaker 4: We have now sold or entered into agreements to sell or dispose of more than 85% of our inventory, which Alan will speak about more.
We have now sold or entered into agreements to sell or dispose of more than 85% of our inventory, which Allen will speak about more.
The wind down process is running smoothly and efficiently and we expect to generate positive cash flow.
Speaker 4: The wind down process is running smoothly, efficiently, and we expect it to generate positive cash.
Speaker 4: We felt confident in November and we feel even more confident today that exiting iBuying and eliminating housing market balance sheet risk to our company and our shareholders was a great decision while giving full respect.
We felt confident in November and we feel even more confident today that exiting I buying and eliminating housing market balance sheet risk to our company and our shareholders was a great decision.
While giving full respect to the affected employees.
Speaker 4: Moving forward, we know our customers better than we ever have before because we've been in the trenches with them buying and selling thousands of homes. We developed valuable software, services and support that persists.
Moving forward, we know our customers better than we ever had before because we've been in the trenches with them buying and selling thousands of homes, we developed valuable software services and support that persist.
Speaker 4: And we've been freed up to turn our formidable R&D capabilities and capacity towards innovating for a much broader set of mover customers than the narrow focus that iBuying allows.
And we've been freed up to turn our formidable R&D capabilities and capacity towards innovating for a much broader set of mover customers than the narrow focus that I buying allowed.
Speaker 4: As we look to the future, we have the building blocks in place, and now it's about stacking them in new, impactful ways to solve more problems for more customers and partners.
As we look to the future we have the building blocks in place and now it's about stacking them in new impactful ways to solve more problems for more customers and partners.
I'd like to emphasize that the problem, we're solving is not new to us.
Speaker 4: I'd like to emphasize that the problem we are solving is not new to us.
Throughout these past 16 years, our mission has been to give people.
Speaker 4: Throughout these past 16 years, our mission has been to give people power, power to the people, to unlock life's next chapter.
Power power to the people to.
Unlock life's next chapter and to move.
Speaker 4: So even now, the real estate industry continues to be archaic, primarily offline and fragmented.
So even now the real estate industry continues to be archaic primarily offline and fragmented.
Speaker 4: Throughout Zillow's history, beginning with his estimate, Zillow has turned on the lights with data and information and empowered customers in a way that began to transform the industry. But it wasn't until Zillow was born that Zillow was born again.
Throughout <unk> history, beginning with this estimate Zillow has turned on the lights with data and information and empowered customers in a way that began to transform the industry.
But it wasn't happening fast enough.
Speaker 4: So three years ago, we shifted strategic focus from a purely ad-based business model to one that expanded our focus down funnel to the transaction itself. This marked our transition from Zillow to the market.
So three years ago, we shifted our strategic focus from a purely AD based business model to one that expanded our focus down funnel to the transaction itself.
This marked our transition from Zillow, one point out to point out.
Over the past three years, we have focused on helping customers navigate the real estate transaction and an easier simpler way with our suite of tech enabled solutions and an ever improving partner network.
Speaker 4: Over the past three years, we have focused on helping customers navigate the real estate transaction in an easier, simpler way with our suite of tech enabled solutions and an ever improving partner network.
We all know that moving as complicated time consuming and full of loops and hoops to jump through and a disjointed and opaque process.
Speaker 4: We all know that moving is complicated, time-consuming, and full of loops and hoops to jump through in a disjointed and opaque process.
Anyone who has been through a move knows how challenging it can be to research shop select finance appraise close and have to connect all these separate vendors and spend time chasing down information and managing the process yourself.
Speaker 4: Anyone who has been through a move knows how challenging it can be to research, shop, select, finance, appraise, close, and have to connect all these separate vendors and spend time chasing down information and managing the process yourself.
Speaker 4: Sometimes you do all of this and still end up losing out on your dream home, especially in this competitive market.
Sometimes you do all of this and still end up losing adding a dream home, especially in this competitive market.
On top of the time and energy we expanded on this taxing process. All of these pieces add up to between 26000 $40000 of extra expense on an average priced home.
Speaker 4: On top of the time and energy we expended on this taxing process, all of these pieces add up to between $26,000 and $40,000 of extra expense on an average priced home. Moving is exhausting and expensive, and to us it's painfully clear that customers deserve and demand more control.
Moving is exhausting in expenses.
And to us, it's painfully clear that customers deserve and demand more control.
Our opportunity is to create create the housing Super App.
Speaker 4: Our opportunity is to create the housing super house.
Speaker 4: An integrated digital experience in which Zillow connects all of the fragmented pieces of the moving process and brings them together on one transaction platform, empowering customers with data, a suite of Zillow-owned solutions at their fingertips, and a network of best-in-class partners to make it easier for them to move, start to finish. Our customers will be able to do everything within the Zillow ecosystem. That's the dream we're building towards.
An integrated digital experience in which Zillow connects all of the fragmented pieces of the moving process and brings them together on one transaction platform empowering customers with data a suite of Zillow owned solutions at their fingertips and a network of best in class partners to make it easier for them to move start to finish.
Our customers will be able to do everything within the Zillow ecosystem.
That's the dream we're building towards.
Accompanying this dream is a significant addressable market housing.
Speaker 4: Housing-related transaction fees were roughly a $300 billion industry in 2021. This includes residential real estate, rentals, mortgage, title, and escrow.
Housing related transaction fees were roughly a 300 billion dollar industry. In 2021. This includes residential real estate rentals mortgage title and escrow and escrow.
Speaker 4: It does not include more speculative future potential in adjacent services like renovations, home insurance, moving services, and appraisals.
It does not include more speculative future potential in adjacent services like renovations home insurance moving services and appraisals.
The Tam is large and currently we are very small part of it despite our outsized audience and trusted brand.
Speaker 4: And TAM is large, and currently we are a very small part of it, despite our outsized audience and trusted brand.
Speaker 4: We are well positioned to capitalize. So doing so requires relentless innovation in both product and business.
We are well positioned to capitalize though.
Doing so requires relentless innovation in both product and business model.
So why do I feel so good about this well we have an unbelievably solid foundation from which to innovate and a great track record of growth in our core business.
Speaker 4: So why do I feel so good about this? Well, we have an unbelievably solid foundation from which to innovate and a great track record of growth in our core business.
Speaker 4: No company in our category has a stronger claim to hearts and minds at the top of the funnel, with nearly 200 million unique users flocking to our sites and apps every month.
No company in our category has a stronger claim to hearts and minds at the top of the funnel with nearly 200 million unique users flocking to our sites and apps every month the.
Speaker 4: The strength of our brand is unmatched with Zillow searched more on Google than the term realistic.
The strength of our brand is unmatched with Zillow searched more on Google than the term real estate.
Similarly, no other company has our track record of technology innovation in the housing industry.
Speaker 4: Similarly, no other company has our track record of technology innovation in the housing industry.
Speaker 4: Over the past 15 plus years, we have steadily grown the size and quality of our team of engineers, designers, product managers, data scientists and analysts, and many more that make up a formidable investment in R&D, reflecting our belief in the opportunity ahead.
Over the past 15, plus years, we have steadily grown the size and quality of our team of engineers designers product managers data scientists and analysts and many more that make up a formidable investment in R&D, reflecting our belief in the opportunity ahead.
In 2021, we Forex our software releases into production versus our releases in 2015.
Speaker 4: In 2021, we 4Xed our software releases into production versus our releases in 2015. And we are investing in our ability to further accelerate our pace of innovation for customers and for partners. What businesses use Azure Azure
And we are investing in our ability to further accelerate our pace of innovation for customers and for partners.
We have also done while using acquisition as an accelerant.
Speaker 4: Late last year, we closed our purchase of showing time, the industry's leading for sale home touring reservations.
Late last year, we closed our purchase of showing time, the industry's leading for sale home touring reservation system.
Showing time receives tens of millions of Turing requests severe and last year. It facilitated 63 million home tours.
Speaker 4: Showing Time receives tens of millions of touring requests a year, and last year it facilitated 63 million home tours.
Speaker 4: We acquired Showing Time because we recognize how critically important tours are to the shopping experience.
We acquired showing time, because we recognize how critically important tours are to the shopping experience.
Speaker 4: People come to Zillow to look at homes and the next logical step in the moving process is to tour them.
People come to Zillow to look at homes in the next logical step in the moving processes to tour them.
Speaker 4: Booers are where much of the magic happens. It's the point of sale moment for agents, and it's a powerful mechanism for identifying high-intent movers and helping them get to the next step of their moving journey.
Tours are where much of the magic happens, it's the point of sale moment for agents and it has a powerful mechanism for identifying high intent movers and helping them get to the next step that Theyre moving journey.
Our opportunity is to transform a manual phone call based reservation system into a digital one with software, making touring more integrated and simpler for all agents and customers in the industry.
Speaker 4: Our opportunity is to transform a manual phone call based reservation system into a digital one, with software making touring more integrated and simpler for all agents and customers in the industry.
We believe in.
Speaker 4: We believe in and are investing in software that underpins an increasingly digital industry as a whole, with the firm belief that a rising tide lifts all boats, including our own.
And our investing in software that underpins, an increasingly digital industry as a whole.
With the firm belief that a rising tide lifts all boats, including our own.
Showing times platform will help convert more shoppers into transact doors and.
Speaker 4: Showing Times platform will help convert more shoppers into trans actors.
In fact, our internal data shows us that the transaction conversion rate of a customer who request a tour on Zillow is three times higher than any other connection point, our customers have with our partner agents.
Speaker 4: In fact, our internal data shows us that the transaction conversion rate of a customer who requests a tour on Zillow is three times higher than any other connection point our customers have with our partner agents.
So buyers who requested tour with a premier agent partner are more likely to buy a home with that partner.
Speaker 4: So buyers who request a tour with a Premier agent partner are more likely to buy a home with that partner.
Speaker 4: We assume this conversion boost from a tour is similar for the industry as a whole, much of which uses showing time, as I've said.
We assume this conversion boost from mature is similar for the industry as a whole much of which uses showing time as I've said.
Yet we see so much opportunity to increase both the quality and quantity of tours that are facilitated throughout the industry.
Speaker 4: Yet we see so much opportunity to increase both the quality and quantity of tours that are facilitated throughout the industry.
As a proxy today, we are fulfilling less than one third of tours requested on Zillow.
Speaker 4: As a proxy, today we are fulfilling less than one third of tours requested on Zillow.
The combination of showing time and new product releases should drive better touring experiences and higher conversion rates across the industry and for Zillow moving forward.
Speaker 4: The combination of showing time and new product releases should drive better touring experiences and higher conversion rates across the industry and for Zillow moving forward.
Speaker 4: We have big ambitions across our business, which I'll take you through next.
We have big ambitions across our business, which I'll take you through next but before I do so I want to highlight how strong our business is today.
Speaker 4: But before I do so, I want to highlight how strong our business is today.
Speaker 4: We reported positive fourth quarter results, which Alan will speak more about.
We reported positive fourth quarter results, which Allen will speak more about.
And our IMT segment from 2018 to 2021 revenue increased 57% and adjusted EBITDA increased from $240 million to $853 million about three five times growth.
Speaker 4: In our IMT segment from 2018 to 2021, revenue increased 57% and adjusted EBITDA increased from 240 million to 853 million, about 3.5 times.
Our strong gross profit generation and IMT, coupled with our healthy cash position of $3 1 billion gives us the flexibility to invest in R&D and innovation.
Speaker 4: strong gross profit generation in IMT coupled with our healthy cash position of $3.1 billion gives us the flexibility to invest in R&D and innovation.
Speaker 4: accelerate business development and drive growth moving forward.
Accelerate business development and drive growth moving forward.
Since our <unk> wind down announcement to consistent question. We've gotten asked has been where does growth come from now.
Speaker 4: Since our iBUY and wind-down announcement, the consistent question we've gotten asked has been, where does growth come from now?
Speaker 4: Brad mentioned that we posted an updated investor deck on our website, which I encourage you to peruse when you have time.
Brad mentioned that we posted an updated investor deck on our website, which I encourage you to peruse when you have time.
Speaker 4: But while I have your attention, I want to outline where I expect growth to come from moving forward. First, let's...
I have your attention I want to outline where I expect growth to come from moving forward.
First let's ground ourselves in the U S housing market.
In 2021, $6 1 million existing homes exchanged hands in the country.
Speaker 4: In 2021, 6.1 million existing homes exchanged hands in the country. For every home exchange
For every home exchange their two customer transactions, one on the buy side and one on the sell side, which result in $12 2 million customer transaction Tam.
Speaker 4: One on the buy side and one on the sell side, which results in 12.2 million customer transaction per.
I sighed shopping much.
Speaker 4: Buy-side shopping, much like the house tour, is where consumers are super engaged and energetic.
Much like the House tour.
This is where consumers are super engaged and energetic.
Speaker 4: Moving is about life's next chapter, and the next home is the aspiration.
Moving is about life's next chapter and the next home is the aspiration.
Speaker 4: Helping movers dream and shop is our historical power alley and the wellspring of our massive audience and engagement.
Helping movers dream and shop is our historical power Alley, and the wellspring of our massive audience and engagement.
Of the $6 1 million buy side customer transactions that occurred last year, we estimate that $4 1 million of those actual buyers were on our sites and apps, which accounts for two thirds of all buyers in the U S.
Speaker 4: Of the 6.1 million buy side customer transactions that occurred last year, we estimate that 4.1 million of those actual buyers were on our sites and apps, which accounts for two-thirds of all buyers in the U.S.
Speaker 4: This seems remarkable, but shouldn't surprise us given how it tracks the unique user and app tracking data we all look at across the category.
This seems remarkable but shouldnt surprise us given how it tracks the unique user and App tracking data, we all look at it across the category.
Speaker 4: What may surprise you all is that roughly 1.4 million actual home buyers asked to connect with a Zillow Premier agent last year. Wow.
What may surprise, you all is that roughly one 4 million actual homebuyers.
Asked to connect with a zillow premier agent last year Wow.
Speaker 4: That means about one quarter of all buyers in the US last year clicked a button to connect to a Zillow Premier agent.
That means about one quarter of all buyers in the U S last year clicked, a button to connect to a zillow premier agent.
Speaker 4: This tells us that we are the preeminent place for high intent movers to find their next.
This tells US that we are the preeminent place for high intent movers to find their next home.
Of those $1 4 million high intent movers, we estimate that about 360000 customers ended up transacting with us.
Speaker 4: Of those 1.4 million high intent movers, we estimate that about 360,000 customers ended up transacting with
That number is primarily buyers, but we do have some customers today, who connect with the premiere agent and ended up selling their existing home with our partner as well.
Speaker 4: That number is primarily buyers, but we do have some customers today who connect with the primary agent and end up selling their existing home with our partner as well.
Speaker 4: Overall, we estimate that our buy-side market share today is roughly 5%, and our overall customer transaction share is roughly 3%.
Overall, we estimate that our buy side market share today is roughly 5% and our overall customer transaction share is roughly 3%.
We worked hard over 15 plus years to achieve this 3% transaction penetration and we are proud of what we've accomplished today, but.
Speaker 4: We worked hard over 15 plus years to achieve this 3% transaction penetration, and we are proud of what we've accomplished to date. But oh my, do I see an opportunity to increase our share of customer transactions from 3% to 6% in 2025, and meaningfully higher than that longer term by vastly improving our customer experience and funnel.
But <unk> do I see an opportunity to increase our share of customer transactions from 3% to 6% in 2025 and meaningfully higher than that longer term by vastly improving our customer experience and funnel.
Let's take each of these critical numbers and break down what we are doing to improve the fidelity of our funnel and customer experience from beginning to end.
Speaker 4: Let's take each of these critical numbers and break down what we are doing to improve the fidelity of our funnel and customer experience from beginning to end.
First we are going to grow engagement with the roughly $4 1 million homebuyers, who use our product.
Speaker 4: First, we are going to grow engagement with the roughly 4.1 million homebuyers who use our product.
Speaker 4: We will do this by leveraging our tech and product innovation and investment to deliver personalized, immersive content and curated experience like experiences like 3D tours integrated with interactive floor plans and intuitive tools to understand affordability early in the customer journey.
We will do this by leveraging our tech and product innovation and investment to deliver personalized immersive content and curated experience like experiences like <unk> tours integrated with interactive floor plans and intuitive tools to understand affordability early in the customer journey.
At the same time, we will continue to improve our core experience in <unk> estimate search and find and other expanded services.
Speaker 4: At the same time, we will continue to improve our core experience in Zestimate, Search and Find, and other expanded services.
Speaker 4: Next, we plan to grow both the roughly 1.4 million actual home buyers who raised their hands to connect with us last year and the roughly 360,000 home buyers and sellers who transacted with us. We expect to do this.
Next we plan to grow both the roughly $1 4 million actual homebuyers, who raise their hands to connect with us last year and the roughly 360000, homebuyers and sellers, who transacted with US we expect to do this in three ways.
Speaker 4: One, we'll be leveling up that critical touring experience with showing time to make it easier for movers to tour homes and connect with our partners.
One will be leveling up that critical touring experience with showing time to make it easier for movers to tour homes and connect with our partners.
Two will be an increased focus on preparing these customers to be transaction ready through intuitive and digitized financing offerings.
Speaker 4: Two, will be an increased focus on preparing these customers to be transaction ready through intuitive and digitized financing opportunities.
And three we will develop seller solutions by leveraging learnings from our <unk> experience to stand up new more asset light services.
Speaker 4: And three, we will develop seller solutions by leveraging learnings from our iBuying experience to stand up new, more asset light services.
As we take all of the energy potential from buyers on Zillow and open up broader seller solutions and financing opportunities. We expect to increase the number of people who raise their hand to transact with zillow.
Speaker 4: As we take all of the energy potential from buyers on Zillow and open up broader seller solutions and financing opportunities, we expect to increase the number of people who raised their hand to transact with Zillow.
Speaker 4: and open up access to the 6.1 million sell-side customer transactions that mirror the 6.1 million buy-side transactions that we've been focused on today.
And open up access to the $6 1 million sell side customer transactions that mirrored the $6 1 million buy side transactions that we've been focused on to date.
Speaker 4: We will couple these product improvements with an enhanced partner agent network and how we interact with support and improve the experience for our partners as well as our mutual customers.
We have a couple of these product improvements with an enhanced partner agent network and how we interact with support and improve the experience for our partners as well as our mutual customers.
Speaker 4: Here, we will continue to focus on working with high-performing agents who have demonstrated stellar customer service, a proven ability to close, and an appetite to grow with us as partners as we
Here, we will continue to focus on working with high performing agents, who have demonstrated stellar customer service a proven ability to close and an appetite to grow with us as partners as we expand.
One of the great benefits of these products and service improvements is they have an eye towards integration, which is a win for the customer a win for our partners and our win Brazil, because it will drive more transactions and more revenue per transaction.
Speaker 4: One of the great benefits of these product and service improvements is they have an eye towards integration, which is a win for the customer, a win for our partners, and a win for Zillow because it will drive more transactions and more revenue per transaction.
One prominent way to do this will be integrating zillow home loans into the shopping experience to better serve our customers.
Speaker 4: One prominent way to do this will be integrating Zillow Home Loans into the shopping experience to better serve our customers.
Speaker 4: Today, nearly 90% of all homebuyers finance for the mortgage, and many of them want to get prequalified before finding an agent.
Today, nearly 90% of all homebuyers finance for the mortgage and many of them want to get prequalified before finding an agent.
By offering intuitive and reliable preapproval and Prequalification services earlier in a shopper's journey, we hope to keep customers engaged in our funnel and improve their overall experience.
Speaker 4: By offering intuitive and reliable pre-approval and pre-qualification services earlier in a shopper's journey, we hope to keep customers engaged in our funnel and improve their overall experience.
Getting prequalified with financing is a strong signal of a mover serious intent to buy a home.
Speaker 4: Getting pre-qualified with financing is a strong signal of a mover's serious intent to buy a home. And referring a customer that already has financing is more valuable and efficient for our premier agent partners as well.
Referring a customer that already has financing is more valuable and efficient for our premier agent partners as well.
We see expanded seller services and closing services as key to the integration we expect to provide and are hard at work cooking up what's next based on our learnings from having now bought and sold thousands of Av homes.
Speaker 4: We see expanded seller services and closing services as key to the integration we expect to provide, and are hard at work cooking up what's next based on our learnings from having now bought and sold thousands of homes.
When we put all of these ingredients into the pot, we see an opportunity to meaningfully increase the number of customers who raised their hands to work with us and the number of customers, who ultimately transact with us.
Speaker 4: When we put all of these ingredients into the pot, we see an opportunity to meaningfully increase the number of customers who raise their hands to work with us and the number of customers who ultimately transact with us.
Speaker 4: We know that the size of the prize is large when we become the central integrator connecting pieces of the fragmented process and turning dreamers into transactors within the Zillow housing super app ecosystem.
We know that the size of the prize is large when we become the central integrator connecting pieces of the fragmented process and turning dreamers into trans actors within the Zillow housing Super App ecosystem.
Speaker 4: We expect all of these efforts to translate into $5 billion in annual revenue by the end of 2025 with strong gross profits that will allow us to invest in the opportunities we'll have in front of us, while also translating into healthy 45% EBITDA margins.
We expect all of these efforts to translate into $5 billion in annual revenue by the end of 2025 with strong gross profits that will allow us to invest in the opportunities we'll have in front of us while also translating into healthy 45% EBITDA margins for our shareholders.
Speaker 4: Before I hand it over to Alan, I want to acknowledge that the past few months have been challenging for us all. Zillow employees and investors alike.
Before I hand, it over to Allen I want to acknowledge that the past few months have been challenging for us all.
Hello employees and investors alike.
Innovation is a bumpy road.
Speaker 4: I'm really proud of our history of innovation, and I have 100% confidence in our ability to accelerate innovation in the months and years ahead.
I'm really proud of our history of innovation and I have 100% confidence in our ability to accelerate innovation in the months and years ahead.
Speaker 4: Our company was built on big swings and we're going to continue taking them.
Our company was built on big swings and we're going to continue taking them.
Speaker 4: We take big swings on products, on technologies, on business models, and even on the future of how our employees.
Take big swings on products and technologies on business models, and even on the future of how our employees work.
Big swings are as core to Zillow as those estimates and they are part of what makes our company. So special.
Speaker 4: Big swings are as core to Zillow as the Zestimate, and they are part of what makes our company so special.
Speaker 4: Finally, a really wild and wonderful characteristic of being Zillow is that we throw a much longer shadow than we are tall.
Finally, a really wild and wonderful characteristic of being though is that we throw a much longer shadow then we are tall.
Speaker 4: In the last year, we have experienced the upside and the downside of capturing the hearts and minds of so many. People care about our brand and their homes deeply.
And the last year, we have experienced the upside and the downside of capturing the hearts and minds of so many people care about our brand in their homes deeply.
Speaker 4: There is something particularly gratifying and motivating knowing that we are solving a problem that is so near and dear to people, so meaningful. And because of that, everyone is watching.
There is something particularly gratifying and motivating knowing that we are solving a problem that is so near and dear to people, so meaningful and because of that everyone is watching.
Speaker 4: Within all of that meaningfulness is a massive business opportunity to help people move using our housing super app to help them unlock life's next chapter and to help our partners grow their business.
Within all of that Meaningfulness is a massive business opportunity to help people move using our housing Super happy Super App to help them unlock life's next chapter and to help our partners grow their businesses.
As I said earlier, our foundation and positioning are strong and we are so much smarter more experienced and more battle hardened now than we were a year ago.
Speaker 4: As I said earlier, our foundation and positioning are strong, and we are so much smarter, more experienced, and more battle-hardened now than we were a year ago.
Speaker 4: As many of you know, I'm the largest individual shareholder and co-founder of Zillow in addition to being CEO .
As many of you know I'm the largest individual shareholder and co founder of Zillow. In addition to being CEO .
Speaker 4: For the past 16 years, I've thought about Zillow every day.
For the past 16 years I thought about Zillow every day at <unk>.
Speaker 4: care about the long-term meaning of the Zillow brand and the value of our company in a way that couldn't be more personal. And I'm continuously awed by the sheer size of the opportunity and the relative immaturity of technology's advance into residential real estate.
About the long term, meaning of the Zillow brand in the value of our company in a way that couldnt be more personal and I'm continuously awed by the sheer size of the opportunity and the relative immaturity of technologies advance into residential real estate, such a large incredibly important.
Speaker 4: such a large, incredibly important, and endlessly entertaining industry.
And endlessly entertaining industry.
Speaker 4: Thank you for your continued support. I enjoy being on the journey with you. I'll now pass the line over to Alan.
Thank you for your continued support I enjoy being on the journey with you I'll now pass the line over to Allen.
Speaker 3: Thank you, Rich. And hello, everyone. I'm going to take a brief moment to provide an update on the progress of winding down our I buying operation.
Thank you rich and Hello, everyone.
I'm going to take a brief moment to provide an update on the progress of winding down our <unk> operations I will then discuss our quarterly results and Q1 outlook.
Speaker 3: I'll then discuss our quarterly results and Q1 outlook and will conclude with comments on our newly announced 2025 targets.
We will conclude with comments on our newly announced 2025 targets.
Speaker 5: As previously discussed, we expected a wide range of potential results for the home segment this quarter.
As previously discussed we expected a wide range of potential results for the homes segment this quarter.
Speaker 5: As we work to free up operational and renovation capacity and pursue retail strategies in order to protect the value of our assets and optimize the speed of the wind down, all while respectively managing our people. This quarter, we reported home segment revenue of $3.3 billion, well exceeding our updated outlook range of $2.3 to $2.9 billion provided in early December .
As we work to free up operational and renovation capacity and pursue retail strategies in order to protect the value of our assets and optimize the speed of the wind down all while respectively managing our people. This.
This quarter, we reported home segment revenue of $3 3 billion well exceeding our updated outlook range of two three to $2 9 billion provided in early December .
Speaker 5: The revenue outperformance benefited from a combination of better renovation capacity that allowed us to accelerate listings in Q4, as well as better resale velocity.
The revenue outperformance benefited from a combination of better renovation capacity that allowed us to accelerate listings in Q4 as well as better resale velocity.
Speaker 5: With a better than expected resale and better prices, we had $93 million of write-down in the quarter, compared to previously expected additional losses of $240 to $265 million in Q4.
With a better than expected better than expected resale and better prices, we had $93 million of write down in the quarter compared to previously expected additional losses of $240 million to $265 million in Q4.
This brings our total write down to $405 million for Q3, and Q4, an improvement of $160 million compared to the midpoint of our initial estimated range.
Speaker 5: This brings our total write down to 405 million for Q3 and Q4, an improvement of 160 million compared to the midpoint of our initial estimated rate.
Speaker 5: The better than expected write down resulted in Q4 EBITDA loss of $206 million, $141 million better than our outlook range for a loss of $347 million at the midpoint.
Better than expected write down resulted in Q4, EBITDA loss of $206 million $141 million better than our outlook range for a loss of $347 million at the midpoint.
Speaker 5: We continue to make good progress on winding down this business and have now sold or entered into agreements to sell or dispose more than 85% of the homes in the home segment that we expected to resell during the entire wind down process.
We continue to make good progress on winding down this business and have now sold or entered into agreements to sell or dispose more than 85% of the homes in the home segment that we expected to resell during the entire wind down process in.
In January we finished acquiring all the homes that we plan to buy.
Speaker 5: In January , we finished acquiring all the homes that we planned to buy.
Speaker 5: We continue to expect to sell most of our remaining homes inventory by the end of Q2 2022, with a small number of homes remaining thereafter.
We continue to expect to sell most of our remaining inventory homes inventory by the end of Q2 2022 with a small number of homes remaining thereafter.
Speaker 5: We have updated our expected iBind wind down restructuring costs to $175 million to $205 million in aggregate compared to the $175 to $230 million we previously expected.
We have updated our expected <unk> wind down restructuring costs to 175 million to $205 million in aggregate compared to the 120 175 to 230 million we previously expected.
Speaker 5: 71 million was recognized in Q4, and the remainder we expect to be realized in 2022.
<unk> 1 million was recognized in Q4 and the remainder we expect to be realized in 2022.
We expect the approximately $800 million of cash equity that was in the inventory at the end of Q3, we will more than cover the realized losses on inventory operating cost and the cash portion of restructuring costs of the wind down.
Speaker 5: We expect the approximately 800 million of cash equity that was in the inventory at end of Q3 will more than cover the realized losses on inventory, operating costs, and the cash portion of restructuring costs of the wind down. As a result, we now expect the net effect of the wind down of iBuying operations to be cash flow positive in aggregate, slightly better than our prior outlook of at least cash flow neutral at the end of Q3.
As a result, we now expect the net effect of the wind down of <unk> operations to be cash flow positive in aggregate slightly better than our prior outlook of at least cash flow neutral at the end of Q3.
I would like to sincerely. Thank our dedicated employees, who have made executing the wind down process.
Speaker 5: I would like to sincerely thank our dedicated employees who have been executing the wind-down process.
Moving to the core business results, we'll start with IMT revenue, which was $483 million growing 14% year over year and 51% on a two year stack basis, which accelerated compared to the 43% two year growth in Q3.
Speaker 5: Moving to the core business results, we'll start with IMT Revenue, which was $483 million, growing 14% year-over-year and 51% on a two-year stack.
Speaker 5: which accelerated compared to the 43% two-year growth in Q3.
Speaker 5: Our IMT segment revenue came in slightly above the $481 million midpoint of our guidance driven primarily by premier agent revenue at the low end of our outlook range and better than expected results in our rentals.
IMT segment revenue came in slightly above the $481 million midpoint of our guidance driven primarily by premiere agent revenue at the low end of our outlook range and better than expected results in our rentals business.
Speaker 5: PA revenue grew 13% year-over-year, which outperformed industry growth of 4%, and posted accelerating two-year stack growth of 52% compared to 49% two-year growth in Q3. The Omicron variant and severe cold weather resulted in lower new for sale listings in late Q4, which had a slight impact on our results, but remained within our expected seasonal range and out.
<unk> revenue grew 13% year over year, which outperformed industry growth of 4% and posted accelerating two year stack growth of 52% compared to 49% two year growth in Q3 and.
Beyond the crime variant and severe cold weather resulted in low lower new for sale listings in late Q4, which had a slight impact on our results, but remained within our expected seasonal range and outlook.
Rentals revenue was flat year over year, but better than we anticipated. Despite continued pressures from high occupancy rates, which dampens demand for rentals advertising, we saw stronger than expected customer interest in applications and success and renters leasing properties.
Speaker 5: Rentals revenue was flat year over year, but better than we anticipated, despite continued pressures from high occupancy rates, which dampens demand for rentals advertising. We saw stronger than expected customer interest in applications and success in renters leasing property.
Speaker 5: Rentals also faced a difficult second half comp due to strong 2020 results following the initial impacts from COVID-related volatility a year ago.
Rentals also faced a difficult second half comps due to the strong 2020 results. Following the initial impacts from COVID-19 related volatility a year ago.
IMT segment, EBITDA and margin were $220 million and 46% for Q4, respectively.
Speaker 5: IMT segment EBITDA and margin were 220 million and 46% for Q4 respectively, exceeding our outlook of 200 million and 42% at the mid-to-mid-2040s.
<unk>, our outlook of $200 million and 42% at the midpoint.
Speaker 5: The outperformance was driven by increased operating efficiency as well as lower than anticipated advertising and marketing spend.
The outperformance was driven by increased operating efficiency as well as lower than anticipated advertising and marketing expense.
Speaker 5: For 2021, IMT segment adjusted EBITDA was $853 million, or 45% of IMT segment revenue, representing more than 2,100 basis points of margin expansion over 2019.
For 2021, IMT segment, adjusted EBITDA was $853 million or 45% of IMT segment revenue, representing more than 2100 basis points of margin expansion over 2019.
Speaker 5: We have continuously driven operating efficiencies by prioritizing and streamlining internal processes and recognizing the efficiency of market.
We have continuously driven operating efficiencies by prioritizing and streamlining internal processes and recognizing the efficiency of marketing I.
Speaker 5: I would also like to call out that our high growth margins enabled us to invest in innovating on behalf of our customers, partners, and our platform customers to drive future growth while delivering industry-leading EBITDA within online real estate.
I would also like to call out that our high gross margins enabled us to invest in innovating on behalf of our customers partners and our platform customers to drive future growth, while delivering industry, leading EBITDA within online real estate.
Speaker 5: Mortgages segment revenue of 51 million came in at the high end of our Q4 outlook range as refinancing loan originations did not slow as much as expected, while gain on sale margins compressed within our expectations.
Mortgages segment revenue of $51 million came in at the high end of our Q4 outlook range as refinancing loan originations did not flow as much as expected while gain on sale margins compressed within our expectations.
Speaker 5: Segment-adjusted EBITDA was a loss of $14 million near the midpoint of our outlook, as we expected lower profitability due to lower purchase volume from unwinding our iBuying operation.
Segment, adjusted EBITDA was a loss of $14 million near the midpoint of our outlook as we expected lower profitability due to lower purchase volume from unwinding, our <unk> operations.
Speaker 5: I would like to reiterate that Zillow's financial position remains strong and flexible.
I would like to reiterate that Zillow financial position remains strong and flexible we ended the quarter with $3 1 billion in cash and investments slightly less than $3 2 billion at the end of Q3 after the impact of our $302 million in share repurchases in December largely offset by earnings from our IMT segment.
Speaker 5: We ended the quarter with $3.1 billion in cash and investments, slightly less than $3.2 billion at the end of Q3, after the impact of our $302 million in share repurchases in December largely offset by earnings from our IMT segment.
Speaker 5: The wind down leaves us in a strong position to invest in more scalable customer solutions that are less capital intensive as we execute on our vision and make strategic long term investments.
The wind down leaves us in a strong position to invest in more scalable customer solutions that are less capital intensive as we execute on our vision and make strategic long term investments.
Speaker 5: Our expectation is that we will continue to be a positive earnings and positive cash flow company with our revised product strategy.
Our expectation is that we will continue to be a positive earnings and positive cash flow company with a revised product strategy.
Turning to our outlook for the first quarter and our IMT segment, we expect 9% year over year revenue growth in Q1 at the midpoint within an outlook range of 7% to 11% and 47% two year growth.
Speaker 5: Turning to our outlook, for the first quarter in our IMT segment, we expect 9% year-over-year revenue growth in Q1 at the midpoint, within an outlook range of 7% to 11%, and 47% two-year growth.
Speaker 5: Within the IMT segment, we expect premier agent revenue to be between 358 to 368 million, up 9% year over year, and up 50% over Q1 2020 at the midpoint of our outlook.
Within the IMT segment, we expect premiere agent revenue to be between $358 million to $368 million up 9% year over year and up 50% over Q1 2020 at the midpoint of our outlook.
Speaker 5: Our wider than normal IMT and PAQ1 outlook revenue ranges are informed by the following.
Our wider than normal IMT and Q1 outlook revenue ranges are informed by the following.
We saw a slower housing activity late in Q4, and I have also seen a slow start to new for sale inventory listings in Q1 <unk>.
Speaker 5: We saw slower housing activity late in Q4, and I've also seen a slow start to new for sale inventory listings in Q1. Despite that, our customer and agent activity levels indicate strong customer demands, which is consistent with the conference board's December consumer survey indicating plans to buy a home during the next six months were at record levels and recovered sharply from lower levels at the end of September .
Despite that our customer and agent activity levels indicate strong customer demand, which is consistent with the conference Board's December consumer survey, indicating plans to buy a home during the next six months, we're at record levels and recovered sharply from lower levels at the end of September .
And other IMT, we continue to expect headwinds in rentals from the continued low industry vacancy rates in our new construction because of builders low inventory levels. We.
Speaker 5: In other IMT, we continue to expect headwinds and rentals from the continued low industry vacancy rates. And in new construction, because of builders.
Speaker 5: We expect Q1 IMT EBITDA margin to be 41% at the midpoint of our outlook.
We expect Q1, IMT EBITDA margin to be 41% at the midpoint of our outlook. This margin reflects the investment level, we believe is necessary to drive innovation and execution towards our 2025 targets.
Speaker 5: This margin reflects the investment level we believe is necessary to drive innovation and execution towards our 2025 targets.
Speaker 5: We expect our mortgages segment revenue to be between 44 to 49 million in Q1, which is down sequentially from Q4.
We expect our mortgages segment revenue to be between 44% to $49 million in Q1, which is down sequentially from Q4.
Our Q1 outlook reflects slower industry refinance activity from the recent move in interest rates consistent gain on sales spreads and slower growth in purchase originations impacted by the wind down of our <unk> operations.
Speaker 5: Our Q1 outlook reflects slower industry refinance activity from the recent moves in interest rates, consistent gain on sales spreads, and slower growth and purchase originations impacted by the wind down of our iBuying operation.
Speaker 5: As a result of lower sequential revenue and continued investments to grow mortgage originations, we expect the mortgages segment EBITDA to be between a loss of $17 million and a loss of $12 million. As we focus on preparing customers to be transaction ready through intuitive and digitized mortgage offerings, we are working to integrate mortgages across our platform with a focus on purchase originations. We expect these efforts to make progress over.
As a result of lower sequential revenue and continued investments to grow mortgage originations, we expect our mortgages segment EBITDA to be between a loss of $17 million and a loss of $12 million as we focus on preparing customers to be transaction ready through intuitive and digitize mortgage offerings, we are working to integrate mortgages.
Across our platform with a focus on purchase originations. We expect these efforts to make progress over the course of this year.
Speaker 5: In Q1, we expect our home segment revenue to be $2.75 billion and adjusted EBITDA to be a loss of $37.5 million at the midpoint of our outlook.
In Q1, we expect our homes segment revenue to be $2 75 billion and adjusted EBITDA to be a loss of $37 5 million at the midpoint of our outlook range.
Given the wind down of our <unk> operations and the path forward. We see we think it is prudent to initiate new financial targets for year end 2025.
Speaker 5: Given the wind down of our I buying operations and the path forward we see, we think it is prudent to initiate new financial targets for year end 2020.
Before doing so we wanted to remind you of where we stand on our February 2019, three to five year targets.
Speaker 5: Before doing so, we wanted to remind you of where we stand on our February 2019 three to five year target.
Speaker 5: We have just completed the third year of the original targets and are expecting to soon be run rating the 2 billion IMT segment revenue targets, and we are already well above our original IMT segment EBITDA targets of 600 million or 30% mark.
We have just completed the third year of the original targets and are expecting to soon be run rating. The 2 billion IMT segment revenue targets and we are already well above our original IMT segment, EBITDA targets of $600 million or 30% margin.
Speaker 5: As we wind down iBuying operations, the original home segment and related Zillow home loans attached related targets are no longer relevant.
As we wind down I buying operations, the original homes segment and related Zillow home loans attached related targets are no longer relevant.
With that I'll take a moment to walk through the 2025 financial model that we've included in the Investor deck published on the IR website today.
Speaker 5: With that, I'll take a moment to walk through the 2025 financial model that we've included in the investor deck published on the IR website today.
Speaker 5: Our long-term growth model shows how we plan to deliver Zillow's new 2025 financial targets. The model is quite simple. Industry customer transactions, times transaction share, times average revenue per customer transaction for our PA, ZHL, and ZCS services.
Our long term growth model shows how we plan to deliver <unk>, new 2025 financial targets. The model is quite simple.
Industry customer transactions times transaction share trying to average revenue per customer transactions for our PPA DHL and Vcs services.
Speaker 5: added to other services and marketplaces revenue that include rentals, new construction, mortgage marketplace, and real estate industry services.
Added to other services and marketplaces revenue that include rentals, new construction mortgage marketplace and real estate industry services.
Speaker 5: It's important to note that we are assuming no growth in overall existing home sales from 2021 levels and only 3% annual home price appreciation for the industry.
It is important to note that we are assuming no growth in overall existing home sales from 2021 levels and only 3% annual home price appreciation for the industry.
Speaker 5: This is not a macro Paul we are making on our outlook. It is merely the approach we've took to look at how we can drive strong secular.
This is not a macro call we are making on our outlook. It is merely the approach we took to look at how we can drive strong secular growth.
Speaker 5: Simply put, we expect to grow our share of customer transactions from 3% to 6%.
We put we expect to grow our share of customer transactions from 3% to 6%.
Speaker 5: which should drive over 700,000 customer transactions annually.
Which should drive over 700000 customer transactions annually.
Speaker 5: We have a good understanding of our customers' key paying points and are focused on executing better connections, touring, mortgage approvals, and expanding seller service.
We have a good understanding of our customers' key pain points and are focused on executing better connections touring mortgage approvals and expanding seller services.
By better meeting their needs, we expect our customers to remain engaged deeper into our funnel, which should double our market share and also drive higher revenue per transaction via the expanded services.
Speaker 5: By better meeting their needs, we expect our customers to remain engaged deeper into our funnel, which should double our market share and also drive higher revenue per transaction via the expanded services.
Speaker 5: This model implies 24% revenue CAGR yielding our 2025 targets of $5 billion in annual revenue and $2.25 billion in EBITDA, which equates to 45% EBITDA margin.
This model implies 24% revenue CAGR, yielding our 2025 targets of $5 billion in annual revenue and $2, two 5 billion in EBITDA, which equates to 45% EBITDA margin.
Speaker 5: We expect margins to scale with our revenue while we continue to invest prudently where we see opportunities to drive.
We expect margins to scale with our revenue, while we continue to invest prudently, where we see opportunities to drive growth.
As we look forward our priorities remain focused on innovating and executing on behalf of our customers and partners. We plan to grow our customer engagement through a compelling dream in shop experience.
Speaker 5: As we look forward, our priorities remain focused on innovating and executing on behalf of our customers and partners.
Speaker 5: We plan to grow our customer engagement through a compelling dream and shop experience.
Speaker 5: deliver a more integrated customer transactional experience to drive customers to choose to transact with us and our partners.
Deliver a more integrated customer transactional experience to drive customers to choose to transact with us and our partners.
Speaker 5: Invest in sustainable top-line growth opportunities across the company, including new integrated services that are more scalable, less subject to earnings volatility, and more capital efficient. And lastly, manage our cost structure and improve productivity to drive a profitable, scalable, and positive cashflow company. And with that, operator, we'll open the line for questions.
Invest in sustainable topline growth opportunities across the company, including new integrated services that are more scalable less subject to earnings volatility and more capital efficient and lastly, manage our cost structure and improved productivity to drive a profitable scalable and positive cash flow company and with that operator, we'll open the law.
<unk> for questions.
Thank you at this time I would like to remind everyone in order to ask a question. Please press Star then one on your telephone keypad.
Speaker 2: Thank you. At this time, I would like to remind everyone, in order to ask a question, please press star then 1 on your telephone keypad. We'll pause for a minute to compile a Q&A roster.
We'll pause for a minute to compile a Q&A roster.
Our first question comes from Brian Nowak of Morgan Stanley Brian The line is yours.
Speaker 2: Our first question comes from Brian Nowak of Morgan Stanley . Brian , the line is yours.
Great. Thanks for taking my questions guys I have a couple about the multiyear targets the first one.
Speaker 6: Great, thanks for taking my questions, guys. I have a couple about the multi-year targets. The first one said the 24% annualized growth on the new $5 billion target. It's pretty healthy growth. I guess, Rich, I'd be curious to hear first about how you think about some of the keys to execution the next couple years to sort of realize that type of growth, and how should we think about the slopes of the next couple years' growth relative to the, call it the next four?
24% annualized growth on the new $5 billion target.
It's a pretty healthy growth I guess rich I'd be I'd be curious to hear first about how you. How you think about some of the keys to execution. The next next couple of years to sort of realize that type of growth and how should we think about the slopes of the next couple of years growth relative to the call. It. The next four and then the.
Speaker 6: And then the second one is, if I do some math around the transactions, it looks like you already have a decent amount of seller-side transactions on the platform. Can you just talk to us again, remind us about where are you on monetizing seller leads, and how big of a part is that in the long-term targets? Thanks.
The second one is if I do some math around the transactions. It looks like you already have a decent amount of seller side transactions on the platform can you just talk to US again remind us about where are you on monetizing seller leads and how big of a part is that in the long term targets.
Okay, Brian Hey, thanks.
Speaker 4: Well, maybe I'll maybe I'll set the table and then Alan, you can serve serve the real food on this one. We did drop a whole bunch of new stuff on you all this quarter.
Well maybe I'll.
Maybe I'll set the table and then Allen you can serve serve the real food.
On this one we did drop a whole bunch of new stuff on you all this quarter.
Speaker 4: I'll tell you, we had a lot of fun putting together these 2025 long-term targets, as well as putting together this, you know, I think it's a pretty tight
I'll tell you we had a lot of fun, putting together these 2025 long term targets as well as putting together this.
It's a pretty tight tight deck that maybe many of you are looking at right now that really gets to answering Brian exactly what youre talking about.
Speaker 4: tight deck that maybe many of you are looking at right now, that really gets to answering, Brian , exactly what you're talking about. You know, but from a table-setting perspective, it's really important to, you know, the new stuff we've said is we've made it a little crisper just what we mean by such a huge engaged audience.
But from a from a table setting perspective, it's really important too.
The new stuff, we've said as we've made it a little CRISPR, just what we mean by such a huge engaged audience.
Speaker 4: Okay, we have always talked about the 200 million or so unique users. We've put a little bit finer point on that by focusing on the app, by saying we get about 4 million daily app users, which is three times the size of our nearest competitor. And the key to growth really is nothing more complicated than converting more of those 4 million daily app users into transacting customers, okay?
Hi.
We have always talked about the $200 million are so unique users we put a little finer point on that by focusing on the app by saying, we get about 4 million daily App users, which is three times the size of our nearest competitor.
And the key to growth really is nothing more complicated than converting more of those 4 million daily app users into transacting customers.
Okay, another kind of <unk>.
Speaker 4: really interesting and eye opening data point that I talked about in my script was that we actually have 1.4 million of the actual home buyers last year raise their hand to connect with us.
Really interesting and eye opening data points that I talked about in my script was that we actually have one 4 million of the actual homebuyers last year raised their hand to connect with us alright, and yet we've only ended up with 3% customer.
Speaker 4: All right, and yet we've only ended up with 3% customer transaction share. We said 360,000 transactions.
Transaction sure. We said 360000 transactions so the big long lever is converting users into transactions into customer transactions.
Speaker 4: So the big long lever is converting users into transactions, into customer transactions.
Speaker 4: We're better at it. We're going to be better at it. We have a history of driving that transaction penetration.
Were better at it we're going to be better.
We have a history of driving that transaction penetration no question in innovation in both product and business model has been what that's about but we have a lot more experience now because we have been.
Speaker 4: No question. And innovation in both product and business model has been what that's about. But we have a lot more experience now because we have been, you know, in the guts of the business buying and selling thousands of homes. We built a bunch of stuff to support that. And that puts us in a terrific position to now build what we're calling this housing super app, which will act as the integration and dashboard of bringing these disparate components of the process all together in one place in a really interesting way.
In the guts of the business buying and selling thousands of homes, we built a bunch of stuff to support that and that puts us in a terrific position to now build what we're calling this this housing Super App, which will act as the integration and dashboard of bringing these disparate components of the process altogether in one place in a really.
Interesting way.
Speaker 4: I'll pass it over to Alan by saying the 2020, highlighting that the 2025 targets.
I'll pass it over to Allen by saying the 2020, highlighting that the 2025 targets assume that we take that 3% trends transaction share to 6% transaction share and given all the stuff, we're doing especially say in the closer term.
Speaker 4: assume that we take that 3% transaction share to 6% transaction share, and given all the stuff we're doing, especially, say, in the closer term,
Speaker 4: In terms of touring and financing with mortgages, we think that is achievable and exciting.
In terms of touring and financing.
With mortgages.
Think that is achievable and and exciting.
Yes, thanks rich.
Speaker 5: And thanks for asking the question, Brian . So, I guess I'll start with, you know, the 2025 financial targets was an opportunity for us to add some more transparency about the opportunity that's ahead of us that we're excited about as well as clarify the strong position we currently are in.
And thanks for asking the question, Brian So I guess I'll start with.
The 2025 financial targets with an opportunity for us.
To add some more transparency about.
The opportunity that's ahead of us that we're excited about.
As well as clarify the strong position. We currently are in.
Speaker 5: And so as we think about that path to 5 billion and 45% EBITDA, you know, as we've talked about, it's driven by this expectation that broader integrated offerings are going to drive both more transactions and higher revenue per transaction than where we are today.
And so as we think about that that path of $5 billion and 45% EBITDA.
As we've talked about it's driven by this expectation that broader integrated offerings are going to drive both more transactions and higher revenue per transaction than where we are today.
Speaker 5: Um, and from a modeling perspective, it's starting with the 12.2 customer Tam, um, both the buy side and sell side. Uh, we talked about, you know, the 360,000 transactions we participate in today and just growing that share of 3%. Let's see,
And from a modeling perspective, it's starting with the $12 two customer Tam.
Both the buy side and sell side.
We've talked about the 360000 transactions, we participate in today and just growing that share of 3% to six.
Speaker 5: In addition to that, it's taking the revenue for transaction we get today of around $4,100.
In addition to that it's taking the revenue per transaction, we get today of around $4100.
Speaker 5: and growing that to $5,200 a transaction. And we think that comes from having more customers using more of our services in an integrated way. In addition, I'll just call out that those 2,025 targets.
And growing that to $5200 a transaction and.
And we think that comes from having more customers using more of our services in an integrated way.
In addition, I'll just call out that that those 2025 targets.
Speaker 5: include our other marketplace and industry software solution businesses growing from 609 million in 2021 to 1.2 billion in 2025.
<unk>, our other marketplace and industry software solution businesses growing from $609 million and.
In 2021 to $1 2 billion in 2025.
Speaker 5: You know, as we think about the slope, we provided, you know, guidance for Q1.
As we think about the slope.
We provided guidance for Q1.
We think that this model is driven off of our ability to control and drive secular growth by serving the customer and.
Speaker 5: We think that this model is driven off of our ability to control and drive secular growth.
Speaker 5: by serving the customer and integrating better with our partners.
Integrating better with our partners and I think there are some more near term things and some longer term things as we innovate that's that's kind of the innovation.
Speaker 5: And I think there are some more near term things and some longer term things as we innovate. That's kind of the innovation path. And we'll continue to share as we can, how that slope may play out. But right now, I think what we'd say is we feel really comfortable based on position we're in today with our brand, our audience, our partner network.
Pat.
And we will continue to share as we can how that slope may play out, but right now I think what we'd say is we feel really comfortable based on position. We're in today with our brand our audience our partner network.
Speaker 5: Our current standing with the number of the 1.4 million buyers who utilize our site today and the financial position we are in and the business model that can generate positive cash flow to execute well on the 2025 target.
Our current standing with the number of the one four.
Buyers, who utilize our site today and the financial position, we are in and the business model that can generate positive cash flow to execute well on the 2025 targets I.
Speaker 4: I guess I served some of the dinner in there and we overlapped, but there were two other things in there. You were talking about the slope, Alan, in Brian's question, and that is kind of implicit in it is kind of where are we in the S-curve of penetration? Where are we in the S-curve of market share?
And I guess I guess I served some of the dinner in there and we overlap but there were two other things in there you were talking about the slope Allen in Brian's question and that is a kind of an implicit in it is kind of where are we in the S curve.
Penetration where are we in the S curve.
<unk> market share in and.
Speaker 4: And is the path from here to 2025 convex, linear, concave? What is it? You know, here, my expectations are that once we get to the 6%
And is that the path from here to 2025 convex linear concave what is it.
My expectations are that it once we get to the 6% given this giant gap between the 6% and our usage and engagement numbers, which are you know.
Speaker 4: given this giant gap between the 6% and our usage and engagement numbers, which are, you know.
Two thirds of the industry.
Speaker 4: two thirds of the industry of actual buyers are using using this site, I would expect, it is my expectation that we will be continuing to invest for growth in a in a prudent way at that point. And so I expect continued growth. I don't know what that means about the the implications of the curve. But you know, I hope it's I hope it's winning.
Fuel buyers are using using this side I would expect it is my expectation that we will be continuing to invest for growth in a prudent way at that point and so I expect continued growth I don't know what that means about the implications.
<unk> is in the curve, but.
I hope, it's I hope, it's linear or better.
Speaker 4: And then on the sell-side transaction question, yeah, I think you can kind of connect dots based on what we shared and get at what our estimated sell-side transactions that we are monetizing today is. You know, it is a non-trivial chunk of our 360,000 customer transactions that we estimate. And mainly that is because
And then on the sell side transaction.
<unk>, Yes, I think you can kind of connect dots based on what we shared.
And get at what our estimated sell side transactions that we're getting that we're monetizing today is.
It's a it is a non trivial chunk of our 360000 customer transactions that we estimate and mainly that is because.
People, who are coming to buy homes with Zillow and with our partners at least half of them are also selling their home and a whole bunch of them do end up selling with our premiere agent partners and so we already access the sell side of the market now we want to enhance that and drive share there with more <unk>.
Speaker 4: People who are coming to buy homes with Zillow and with our partners, at least half of them are also selling their home, and a whole bunch of them do end up selling with our Premier Agent partners. And so we already access the sell side of the market. Now, we want to enhance that and drive share there with more products and the super app, but we already have a terrific foothold today. All right. That was a long answer, Brian . I'm sorry, but thanks for the question.
<unk> and the Super App, but we already have a terrific foothold today alright that was a long question long answer Brian I'm, sorry, but thanks for the question.
Okay. Thank you both.
Our next question comes from Brad Erickson of RBC capital markets. Brian . Please go ahead.
Speaker 2: Our next question comes from Brad Erickson of RBC Capital Markets. Brad, please go ahead.
Hi, Thanks, just a couple there. So you mentioned now a few times that you are engaging with this quarter of all buy stat.
Speaker 6: I think just have a couple there. So you mentioned now a few times that you're engaging with this quarter of all buy stat last year versus market share at about 5%, I guess.
Last year versus market share at about 5% I guess can you just give a little more color on how either.
Speaker 6: Can you just give a little more color on how either, you know, MVP or flex may be contributing there as you look to reduce that leakage and any sense of the mix between the two models? And second.
MBP or flex may be contributing there as you look to reduce that leakage in any sense of the mix between the two models.
And second I guess little related to the first on the seller leads that Youre looking to drive you mentioned some that you've talked about before some of the calls to action that youre looking to implement on the site just curious to hear maybe a bit more about how you might serve to sort of tease out that signal of potential sellers in any maybe early proof points.
Speaker 6: I guess, little related to the first, on the seller leads that you're looking to drive, you mentioned some of the, you've talked about before, some of the calls to action that you're looking to implement on the site.
Speaker 6: curious to hear maybe a bit more about how you might serve to sort of tease out that signal of potential sellers and any maybe early proof points as to how that's going. Thank you.
How that's going thanks.
You want me to start with the MVP flex transaction rich.
Speaker 5: You want me to start with the MVP Flex transaction, Rich?
Thanks, Brad I'll take the first part of the question.
Speaker 5: Thanks, Brad. I'll take the first part of the question. Sorry, I was on mute, yes. That's OK. So I guess how I would describe it, Brad, is that we feel like we have a very strong premier agent partner network, both across our MVP and our flex models.
Yes, okay.
So I guess, how I would describe it Brad is that we feel like we have a very strong premiere agent partner network.
Both across our MVP and our flex models.
Speaker 5: Flex in and of itself is not.
Flex in and of itself is not a driver for transactions, but it is a driver for better alignment between ourselves our customers and our partners, we feel and so.
Speaker 5: a driver for transactions, but it is a driver for better alignment between ourselves, our customers and our partners, we feel.
Speaker 5: And so, you know, we will continue to innovate and iterate on ways to align our partners.
We will continue to innovate and iterate on on ways to align our partners.
Speaker 5: with our products and services and our customers in ways to generate more transactions, higher conversion, and more revenue per transaction. So, you know, we.
With our products and services and our customers in ways that generate more transactions higher conversion and more revenue per transaction. So.
We're very pleased with where we are both on the MVP and flex model and I wouldn't call one or the other out as the biggest driver.
Speaker 5: We're very pleased with where we are both on the MVP and flex model. And I wouldn't call one or the other out as the biggest driver of the journey to the 2025 targets, but I think the key is alignment. And as rich mentioned, the more integrated transaction, uh, with tools that serve our customers well, and also serve our partner network.
The journey to the 2025 targets, but I think the key is alignment and as rich mentioned a more integrated transaction.
With tools that serve our customers well and also serve our partner network.
And on your second part.
Speaker 4: And on your second part, Brad, look, what we what we have come to fully realize is something that I guess we should all intuitively understand.
Look what we what we have come to fully realized is something that I guess, we should all intuitively understand.
And that is.
Speaker 4: I don't know how to put it, like Ford, for the Super Bowl ads that they have coming up, is not gonna make an advertisement that says sell your current car.
I don't know if I had to.
Got it.
Forward for the Super Bowl ads that they have coming up.
Is not going to make an advertisement that says sell your current car.
Okay.
What they do what their marketing one on the Super Bowl AD is the dream of the new car with the Red Red Bell on it in the driveway.
Speaker 4: What they're marketing on the Super Bowl ad is the dream of the new car with the red bow on it in the driveway.
Speaker 4: The housing equivalent of that, it holds. People, the inspiration and aspiration of the move is the new place, the greatest.
The housing equivalent of that it holds people the inspiration and aspiration of the move is the new place the greatest.
Speaker 4: a seller lead opportunity we have is in helping people dream about the new house, okay, and we have a really fantastic position in that that we're already converting into some sell-side business today. Now we also understand that solving this kind of painful but necessary
Seller lead.
<unk>, we have is in helping people dream about the new house, Okay, and we have a really fantastic position and that they were already converting into some sell side.
Business today now we also understand that solving this kind of painful but necessary.
Part of the Super App part of the moving process of selling your house is a big deal and having good solves for that.
Speaker 4: Part of the super app, part of the moving process of selling your house is a big deal and having good solves for that, you know, with creative new solutions.
With creative New solutions.
Speaker 4: is an important area of innovation, and we are fully embracing that. As you well know, we ran a big giant experiment with iBuying, so we know a whole lot more about that now. So we'll pitch a big tent.
Is is an important area of innovation and we are fully embracing that as you well know we ran a big giant experiment with eye buying so we know a whole lot more about that now so we'll pitch a big tent over that and are innovating and working with partners to make sure we have compelling offerings to solve that particular problem.
Speaker 4: over that and are innovating and working with partners to make sure we have compelling offerings to solve that particular problem.
Got it thank you.
Yep. Thanks.
Our next question comes from John Colon, Tony of Jefferies. John . Please go ahead.
Speaker 2: Our next question comes from John Colantoni of Jefferies. John , please go ahead.
Speaker 7: Thanks for taking my questions. I wanted to start with the housing market. Maybe you could just walk us through what you're seeing today from a macro perspective and how your outlook for the housing market over the next three years ties into your 2025 target.
Thanks for taking my questions I wanted to start with the housing market, maybe you could just walk us through what youre seeing today from a macro perspective and how your outlook for the housing market over the next three years ties into your 2025 targets.
Speaker 7: And second, you outlined plans to increase the 1.4 million homebuyers who tried to connect on Zillow last year, which is already an impressive figure. One of the initiatives you mentioned is developing asset-light seller solutions by leveraging your learnings from iBuy. Given the seller side has been more elusive for Zillow in the past, can you provide any specifics around the products that you're planning to roll out that will help bolster seller connections? Thanks. Thanks, everyone. Thanks for joining us. Thanks for joining us.
Second you outlined plans to increase the $1 4 million homebuyers, who tried to connect on Bill last year, which is already an impressive figure of one of the initiatives. You mentioned is developing asset light seller solutions by leveraging your learnings from <unk>.
Given the seller side has been more elusive for zillow in the past can you provide any specifics around the products that you are planning to rollout that will help bolster seller connections.
Okay, Hey, John .
You want me to Allen I'll start with the macro stuff and you've heard and maybe Brad jump in if I get it if and when I get it wrong.
Speaker 4: You want me to, Alan, I'll start with the macro stuff and maybe Brad jump in if I get it, if and when I get it wrong. You know, I realize that.
I realize that.
Speaker 4: We're in a particularly interesting macro environment given the high level of uncertainty.
We are in a particularly interesting macro environment, given the high level of uncertainty okay.
Speaker 4: uh... we are well aware that it's more uncertain than usual uh... but our economist
We are well aware that it's more uncertain than usual.
But our economists forecast strong macro and strong housing market. This year following up a very strong market in 2021 in fact.
Speaker 4: forecast strong macro and strong housing market this year, following up a very strong market in 2021. In fact, I think.
I think highest trends number of transactions since 2006, Brad am I right.
Speaker 4: number of transactions since 2006, Brad, am I right?
Speaker 4: Am I getting a nod? Correct, yeah. All right. Correct. Thank you. I don't want to get that wrong. It didn't certainly feel like that last year, did it? Because inventory was so low and inventory continues.
Am I getting a nod correct, yes, alright, correct. Thank you I don't want to I don't want to get that wrong. It didn't certainly feel like that last year did it because inventory was so low in inventory continues to be low but that doesn't mean, there can't be a lot of transactions.
Speaker 4: to be low. But that doesn't mean there can't be a lot of transactions. And while our economists are forecasting that, we are taking, you know, Alan and his team are certainly taking the more uncertain than usual into account. What's driving
And while our economists are forecasting that we are taking Allen and his team are certainly taking the more uncertain than usual into account what's driving the.
Speaker 4: The strength is this kind of millennial tide that's rising. They are really this demographic.
The strength is this kind of millennial tide thats rising they are really does demographic.
Speaker 4: tide is rising on the industry and that coupled with, you know, supply that's not rising as fast is making this, you know, we think they're continuing to be a strong, you know, a strong market. Did I say that okay?
<unk> is rising on the industry and <unk>.
That coupled with <unk>.
Supply, that's not rising as fast as making this.
Think of continuing to be strong.
Strong market did I say that okay Allen Brad.
Speaker 5: Yeah, and I'll just add on top of that, that as you mentioned, Rich, you know, our Q1 guide reflects some of that macro uncertainty that Rich talked about in the short term. The lower new sale listings, high occupancy rates and rentals and lower builder inventory are all reflective.
Yes, and I'll just add on top of that debt as you mentioned rich our Q1 guide reflect some of that macro uncertainty that rich talked about in the short term.
The lower new sale listings high occupancy rates in rentals and lower builder inventory are all reflective.
Speaker 5: in an informed RQ1 guide. But we continue to see strong demand signals on our site and strong interest from our partners with very low churn.
And informed our Q1 guide.
But we continue to see strong demand signals on our site and strong interest from our partners with very low churn.
And so.
<unk>.
Speaker 5: The opportunity, we feel well-positioned as we look at this opportunity and this path to the 2025 targets to focus on the customer, improving our partner network and providing them tools in that we believe that the 2025 targets are appropriately aggressive but achievable through a lot of the things that Rich talked about.
The opportunity, we feel well positioned.
As we look at this opportunity and this path to the 2025 targets to focus on the.
The customer improve.
Improving our partner network.
And providing them tools and that we believe that 2025 targets are appropriately aggressive, but achievable through a lot of the things that rich talked about.
Speaker 5: Just to get on the macro and how it affects our 25 targets, I just want to reiterate that, you know, our 2025 financial targets are based on flat industry transaction assumptions. So no increase in industry transactions and low single digit HPA assumptions. So our model and the KPIs that we built really are based on our opportunity to innovate.
Just to get on the macro and how it affects our 'twenty five targets I just want to reiterate that.
Our 2025 financial targets are based on flat industry transaction assumptions, so no increase in industry transactions and low single digit HPA assumption, so our model and the Kpis that we built really are based on.
Our opportunity to innovate and integrate our services and drive secular secular growth.
Speaker 5: and integrate our services and drive secular growth based on the strong foundation that we have. Okay, but what Alan said about, you know, low single
Based on the strong foundation that we have okay, but what Allen said about <unk>.
Low single digit.
Speaker 4: You know, 3% HPA, home price appreciation in flat transactions. That's not a macro call we're making. We're just, that's just for modeling purposes. That's, that's what we've done. So that's not our macro call. I mean, that, that 3% compares to what? 9% CAGR since 1971?
3%.
HPA home price appreciation and flat transactions, that's not a macro call. We're making we're just that's just for modeling purposes.
What we've done so thats not a macro call.
That 3% compares to what 9% CAGR since 1971.
Speaker 4: Or is that total industry? Anyway, you know, one more thing. Sorry, I'd be remiss if I didn't say amidst all this macro conversation.
Or is that total or is that total industry anyway.
One more thing sorry, I'd be remiss, if I didn't say.
Install this macro conversation.
Speaker 4: which I understand is important for a read through to all of our businesses in the economy, I get it. But really the big shift that we are on the leading edge of is the shift.
Which I understand is important for.
A read through to all of our businesses and the economy I get it.
But really the big shift that we are on the leading edge of as the shift.
Speaker 4: in a giant industry, the largest perhaps in the U.S., of moving from the offline non-digital way of doing things to the online digital way of doing things with us as the leader in that. And that actually is really the most important lever and shift from a macro perspective to our long-term results.
In a giant industry the largest perhaps in the U S of moving from the offline non digital way of doing things to the online digital way of doing things with us as the leader in that and that actually is really the most important lever and shift.
From a from a macro perspective to our long term results.
Thank you Bob.
Yes. Thank you.
Speaker 2: Our next question comes from Mark Mahaney with Evercore ISI. Mark, the line is yours.
Our next question comes from Mark Mahaney with Evercore ISI Mow the lawn as yours.
Speaker 6: Okay, I'll go back to that 2025 outlook, and I love the idea of swinging for the fences, Rich, and Alan, and laying out these long-term markers. I look at the assumptions that are in there, and the one that strikes me as most aggressive is that 6% share of transactions. I know it's up 3%, but that's a doubling of the share from, you know, what you had in
Okay I'll go back to that 2025.
Look and love the idea of swinging for the fences rich and Allen and laying out. These long term markers I look at the assumptions that are in there and the one that that strikes me is most aggressive is that 6% share of transactions I know, it's up 3%, but that's a doubling of the share from what you had in <unk> and 'twenty one so maybe just doubleclick.
Speaker 6: and twenty one to maybe just double click on that a little bit uh... deal the other assumptions don't seem as aggressive that one does seem aggressive uh... maybe we need some context that uh... where that if it was three percent in twenty one where what where was before or if you look at all of the different things you could do to increase that going from three percent to six percent what do you think of the easiest things to do and what would be the hardest things to do just just on that particular metric i think that's pretty key to this uh... five billion uh... outlook
That a little bit the other assumptions don't seem as aggressive that one does seem aggressive maybe we need some context as to where that if it was 3% in 'twenty, one where where it was before or if you look at all of the different things you could do to increase that Goldman from 3% to 6%. What do you think are the easiest things to do and what would be the hardest things to do just just.
On that particular metric because I think that's pretty key to this $5 billion outlook. Thanks a lot.
Speaker 4: Hey, Mark, maybe I'll start, and Alan, you guys jump in. When you break it down into the components, it feels doable to me, Mark, and I'm a big believer in...
Hey, Mark.
Maybe I'll start and Allen you guys you guys.
Jumping.
When you break it down into the components. It doesn't feel it feels doable to me Mark and I'm, a big believer in.
Speaker 4: you know, in beehives. I don't even know if I call this beehive, big area audacious goal. It is it is no doubt not timid. Okay, but but you know, these goals end up being self-fulfilling because of the creativity they tend to release internally with all the smart people we have and given the resources we have I'm calm. I'm confident but
In <unk>, because I don't even know if I'd call. This <unk> big hairy audacious goal it is.
It is no doubt not timid, okay, but but.
These goals ended up being self fulfilling because of the creativity. They tend to release internally with all the smart people, we have and given the resources, we have comp im confident but.
Speaker 4: You know, two rather low, you know, bits of hanging fruit. We've talked about a bit on conversion here is Getting on top of and really taking advantage of our position with
Two rather low.
Bits of hanging fruit, we've talked about a bit on conversion here is.
Getting on top of and really taking advantage of our position with home touring and building a digital home tour reservation system.
Speaker 4: home touring and building a digital home tour reservation system.
Speaker 4: Right now, it's super complicated to schedule a home tour, and so, you know, a good deal of home tour request demand goes unfulfilled. I don't know what the
Right now it's super complicated.
To schedule a home tour.
And so.
Good deal of home tour request demand goes on fulfilled I don't know what the what the.
Speaker 3: data point on that. Is that right? We might actually get 23% of our tours only that we're fulfilling today. Yeah, we have meaningfully opportunities to upside those. And the other point just to throw in for to hit here is we get about double the conversion rate on a tour of our other leads. And so
Data point on that is that Brad we might actually yes, it's 23% of our tours only that we're fulfilling today yes.
Okay.
Have meaningfully opportunities upside those and the other point just to throw in for to hit here as we get about double the conversion rate on a tour of our other leads and so growing the mix of touring is pretty significant to help drive conversion rate I think in my script I said three times the conversion right.
Speaker 4: growing the mix of touring is pretty significant to help drive conversion rate. I think in my script, I said three times the conversion, Brad. I'm not, I'm not sure, but I'm sorry. Correct. You're correct. Yeah. Okay. So three times the conversion, uh, uh, when we actually connect a partner with, uh, with, uh, a customer, um, on a tour.
But I am sorry, correct aircraft right, yes, okay. So three times the conversion.
When we actually connect to partner with.
Our customer.
On a tour and so.
Speaker 4: You know that it doesn't take too much imagination to see how us wiring up that into the Zillow super app experience could drive increased conversion rate.
That it doesn't take too much imagination to see how us wiring up that into the Zillow Super App experience could drive increased conversion rate to transaction. Another one is financing.
Speaker 4: to transaction. Another one is financing. You know, I did, you know, mortgages. I talked already quite a bit about that, but we had our guns and mortgages all trained towards iBuying. So all the work we've really been doing for the last couple of years with.
It did.
Mortgages, I talked already quite a bit about that but we had our guns and mortgages all trained towards buying so all the work we've really been doing for the last couple of years with.
Speaker 4: Zillow Home Loans and building our own mortgage operation was in service to iBuying, and a lot of it was actually pretty interesting. And we have this factory. We had not been focused on the bigger lever and the bigger opportunity, which is basically distributing a mortgage product directly to our customers and via our premier agent partners.
Zillow home loans and building our own mortgage operation was in service to our buying and a lot of it was actually pretty interesting.
And we have this factory, we had not been focused on the bigger lever in the bigger opportunity, which is basically distributing mortgage product directly to our customers and via our premiere agent partners.
Speaker 4: In this time period, we are confident that we will be able to develop our fantastic partner network into a distribution network for our mortgage that will then be just integrated into the super app in a way that puts the mortgage in its proper place, which really is kind of a, you know, painful but important support.
This time period, we are confident that we will be able to develop.
Our fantastic partner network into a distribution network for our mortgage that will then be just integrated into the Super App in a way that puts the mortgage in its proper place, which really is kind of a.
Painful but important support.
Speaker 4: stepping stone along the way to the new house. We just want it to be integrated right into the super app.
Stepping stone along the way to the New House, we just wanted to be integrated right into the Super App.
Speaker 4: I don't know if that, I mean, there is a lot more to driving that to that 6%, but those are two of the big ones. Yeah. And the only thing that I just, I guess, reiterate.
I don't know if that.
There is a lot more to do.
Driving that to that 6% that those those are two of the big ones, Yes, and the only thing that I just I guess reiterate you talked about some of the features and services that we think are going to improve conversion, but starting with this 25% of homebuyers are ready.
Speaker 5: You talked about some of the features and services that we think are going to improve conversion. But starting with this, you know, 25% of homebuyers are ready, you know, asking to speak to an agent. And so those being customers that have raised their hand, you know, is a great starting point. And us only, you know, being one in four right now.
Asking to speak to an agent.
And so those being customers that have raised their hand.
A great starting point in us only.
Being one and four right now.
Speaker 5: gives us confidence that these services and improved features and integration should give us quite a bit of leverage as we go through and grow this transaction count.
It gives us confidence that the services and improved features and integration.
Gave us.
Quite a bit of leverage as we go through and grow this transaction count.
Okay. Thank you very much.
Our final question comes from Ryan Kennedy of settlement and Associates, Brian . Please go ahead.
Speaker 2: Our final question comes from Ryan McKeveney of Zellman & Associates. Ryan, please go ahead.
Speaker 8: Hey, thanks Rich and Alan, and I appreciate all the detail, all the new stuff, and Rich, I agree with you. Shout out to the designers and marketing folks.
Hey, Thanks, Rich and Allen.
Appreciate all the detail all the new stuff and rich I agree with you shout out too.
The designers and marketing folks in data folks.
Speaker 8: content of the deck is very good, so I appreciate that. But back to my question. So I've got two on the long-term opportunity. First one, somewhat similar to others, so focusing on this movement from 3% market share to 6% market share. Maybe I'll ask a bit more in terms of how we can look at the past to possibly help think about the future. So slide 7, you show 360K transactions.
Content.
Of the deck is very good so I appreciate that.
But back to my question. So I've got two on the long term opportunity first one somewhat similar to others. So focusing on this movement from 3% market share.
6% market share, maybe I'll ask a bit more in terms of how the how we can look at the past, possibly help think about the future. So.
Slide seven you show a 360 K transactions in 2021 on $1 4 million connections, so about a 25% conversion rate.
Speaker 8: 1 on 1.4 million connections, so about a 25% conversion rate. Can you share any insight on how that conversion rate from connection to consumer or to
Can you share any insight on how that conversion rate from connection to consumers or to customer compares to maybe the last 2345 years.
Speaker 8: compares to maybe the last, you know, 2, 3, 4, 5 years, you know, I'd imagine both the number of connections as well as the conversion rate has improved over time, but maybe seeing a bit of a trend line there on how things have trended will help us, you know, bridge to.
I'd imagine both the number of connections as well as the conversion rate has improved over time.
But maybe seeing a bit of a trend line there on how things have trended will help us bridge to what to expect in the future.
Allen you want to you want to take a stab at that.
Speaker 5: Yeah, yeah. You know, I guess what I'd say is that when we made the decision in 2018 to go deeper into the transaction,
Yeah Yeah.
I guess, what I'd say is that.
When we made the decision in 2018 to go deeper into the transaction.
Speaker 5: Um, we, you know, that was the start of us.
We that was the start of us.
Speaker 5: you know, taking a harder look at how can we drive transactions and success for our customer through the transaction, and maybe the proxy I'll use is connections. But since 2019, we've seen our ability to drive connections and conversion, you know, through our partner agent base grow. I don't have the, I guess, the analog to, or the.
A harder harder look at how can we drive transactions and success for our customers through the transaction.
And and maybe the the proxy all uses connections, but since 2019, we've seen our ability to drive connections and conversion through our partner agent base grow I don't have the I guess, the analogue to or the.
Speaker 5: the compared to the one for 360. But we have seen growth as we started to focus on ensuring our customers were connected with an agent were served well. And I think you've, you know, heard about us talk about connections, high intent customers and the things we've done.
Compared to the 100 <unk> hundred 60.
But we have seen growth as we started to focus on ensuring our customers were.
Connected with an agent, we're served well and I think.
Heard about us talk about connections high intent customers and the things we've done.
Speaker 5: to drive that in closed transactions versus the more ad-based or, you know, lead-based GIN that we had been prior to 19. I don't know, Brad or Rich, would you add anything to that? I just don't have the data. Well, it's taken a lot. I guess what I'd say, Ryan, is it
To drive that and closed transactions versus the more AD based or.
Lead based Jim that we had been prior to 19 I don't know Brad Rich would you add anything to that I just don't have the data while it has taken a lot I guess, what I would say Ryan is it.
Speaker 4: Like, strategically, you've been hearing us talk about Zillow 2.0 and the move towards the transaction for a few years, right?
Like strategically you've been hearing us talk about <unk> 2.0, and the move towards the transaction for a few years right.
And.
Speaker 4: And it's taken us this long to get to a point where we could even find the transaction to count.
It's taken us this long to get to a point, where we could even find the transaction to count given the diversity of our business model and so a big reason.
Speaker 4: given the diversity of our business model and so a big reason we don't have a good historical comp for you on that is that we don't have historical comps we we have we have worked really hard to come up with this with this estimate so that we can you know to communicate to you all for sure but this is how we want to manage our business and our strategy internally all right so this is super important for us to get right internally but you know as
We don't have a.
Good historical comp for you on that is that we don't have historical comps.
We have worked really hard to come up with this with this estimate so that we can to communicate to you all for sure. But this is how we want to manage our business and our strategy internally alright. So this is super important for us to get right.
Internally.
But.
As Alan pointed out the history of the company is about slowly, but surely driving conversion rates.
Speaker 4: As Alan pointed out, the history of the company is about slowly but surely driving conversion rates from user into customer. And now we have what we think should be a pretty good denominator for that.
From user into customer and now we have what we think it should be.
Any good denominator for that.
That makes sense. Thank you quick second question, Richard Big Picture, one for you so.
Speaker 8: Thank you. A quick second question. Rich, a big picture one for you. So, you know, after the ZO wind down, you're left with a significant amount of cash. You can focus on growth. You can repurchase stock as you have been, invest in R&D. I guess to focus a bit more on the M&A side of things, I guess I wonder, how do you think about the opportunity or the possibility to be more active with PropTech investments, you know, either directly investing?
After the <unk> wind down you're left with a significant amount of cash you can focus on growth and repurchase stock as you have been investing R&D I guess to focus a bit more on the M&A side of things I guess I Wonder how do you think about the opportunity or the possibility to be more active with prop tech investments.
Either directly investing in early stage prop tech startups or outright acquiring companies.
Speaker 8: early stage prop tech startups or outright acquiring companies. I'm almost thinking is there an opportunity to be somewhat of an incubator. I'm sure you see a lot of interesting tech early in the days as things get started and just wonder how you think big picture about that opportunity or just the M&A opportunity to tax.
I'm almost thinking is there an opportunity to be somewhat of an incubator I'm sure you'd see a lot of interesting tech early in the days.
Things get started and just wonder how you think big picture about that opportunity or just the M&A opportunity too.
Some good tuck on overtime.
Yeah, I mean, it's an opportunity I would looking at Zillow are history.
Speaker 4: Yeah, I mean, it's an opportunity. I would call looking at Zillow, our history is that consistent but opportunistic acquire acquire. Okay, when we see when we see opportunities to really accelerate what we're trying to do strategically, we will take advantage of that. And the showing time acquisition last year is a
Is that.
Consistent but opportunistic acquirer.
Acquirer, Okay. When we see when we see opportunities to really accelerate what we're trying to do strategically we will take advantage of that and the showing time acquisition last year.
Speaker 4: It was a good example of that a couple of years ago when we acquired Mortgage Lenders of America to not have a cold start on our mortgage operation, that was another one.
It was a good example of that a couple of years ago. When we acquired mortgage lenders of America to to get to get the nod.
Not have a cold start on our mortgage operation that was another one.
Jeremy Hoffman, who runs our Corp. Dev group in addition to strategy and IR.
Speaker 4: You know, Jeremy Hoffman, who runs our corp dev group in addition to strategy and IR, is probably the most popular guy in prop tech.
Is probably the most popular guy and prop tech.
Speaker 4: Um, so, uh, you know, we, we talk with, do run tests with partner with all of these companies in the space. We don't have an explicit incubation venture capital, you know, kind of corporate venture capital, um, uh, endeavor. We do have a lot of opportunity in that regard. We don't necessarily think we need to invest because when things want to trade, everything kind of lands on our doorstep first anyway.
So.
We talk with you run tests with partner with all of these companies in the space. We don't have an explicit incubation venture capital kind of corporate venture capital.
Endeavor, we do have a lot of opportunity in that regard, we don't necessarily think we need to invest because when things want to trade everything kind of lands on our doorstep first anyway.
Speaker 4: And I don't want to sound too opportunistic that way. We have really good relationships with these companies, and we think there's a lot of cool innovation happening. That's great, very helpful. Thank you.
And I don't want to sound opportunists to opportunistic that way, we have really good relationships with these with these companies and we think Theres a lot of cool innovation happening.
That's great very helpful. Thank you.
This can all right are we looked at times.
I'll now turn the call back to rich Barton.
Speaker 4: All right. Hey, thank you all for showing up. It is, as I said, as I said at the end of my prepared remarks, it's a really, really fun and entertaining, endlessly interesting industry real estate is. Maybe not quite as entertaining as Netflix, but not too far off. We're really psyched to be on the journey with you and we'll talk to you soon. Thanks.
Hum.
Hey, Thank you all for showing up.
It is as I said as I said at the end of my prepared remarks, it's really really fun and entertaining endlessly interesting industry real estate is maybe not quite as entertaining as netflix, but not too far off.
We were really excited to be on the journey with you and we'll talk to you soon thanks.
This concludes today's conference call you may now disconnect.
Speaker 2: This concludes today's conference call, you may now disconnect.
Okay. We are in the clinic.
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