Zillow hits profitability, posts 116% revenue gain in first earnings report as a public company
Well, we had a pretty good feeling that Zillow might post its first quarterly profit (at least on a net income basis) today. And the Seattle online real estate company didn't disappoint …
Context & Ripple Effects
Zillow arrives at this report fast: the Seattle company began trading on NASDAQ under ticker 'Z' barely a month ago, on July 20, opening at $60 per share and soaring 200% in its first trade to a $1.6 billion valuation. Before that, it was a venture-backed bet — $87 million raised through 2007 — that weathered what its own coverage called the worst economic crisis of a generation in a depressed real estate market.
Leadership was also reshuffled ahead of the debut: co-founder and CEO Rich Barton stepped down in September 2010 to become executive chairman, after months of rumors about a possible public offering. A first quarterly profit on 116% revenue growth in the debut earnings print is the earliest possible validation of that IPO window.
First-order effects
- Zillow converts its July IPO momentum into a fundamentals story — public-market investors now have a net-income profit, not just traffic, to justify the $1.6 billion debut valuation.
Second-order effects
- Rival online real-estate listing services face a competitor that is self-funding its growth, forcing them to defend advertiser budgets against a profitable incumbent rather than a cash-burning upstart.
Third-order effects
- If a consumer internet company can reach profitability within one quarter of going public during a housing downturn, the template strengthens for revenue-proven listings-and-media businesses leading the next wave of tech offerings.
The trend: Consumer web companies are shortening the path from venture funding to public-market profitability, with real-estate media emerging as a category that can monetize even in a depressed housing cycle.