Zillow posts record revenue of $32M, buys mortgage software firm Mortech
Another day, another acquisition for Zillow. — The fast-growing online real estate company today announced that it has entered into an agreement to purchase Mortech, a 25-year-old Lincoln, Nebraska software …
Context & Ripple Effects
Zillow's trajectory since its July 2011 NASDAQ debut has been steep: the stock opened at $60 on its first trade, valuing the company at $1.6 billion, and by August 2011 it had posted its first quarterly net income profit in its inaugural earnings report as a public company — all against a housing market still described in earlier coverage as the worst economic crisis of a generation.
This announcement pairs a record $32M revenue quarter with an agreement to buy Mortech, a 25-year-old mortgage software company based in Lincoln, Nebraska — a signal that Zillow intends to move beyond listings and advertising into the financing side of the transaction. The story traveled widely, with TechCrunch running multiple takes on the same day.
First-order effects
- Zillow gains in-house mortgage software capability, letting it offer lenders integrated tooling rather than sending financing activity off-site.
- Mortech, a quarter-century-old Nebraska software shop, is absorbed into a fast-growing public consumer brand with a national audience.
Second-order effects
- Rival real estate portals come under pressure to build or buy comparable mortgage capabilities or risk losing lender advertising budgets to a one-stop listings-plus-financing platform.
- Standalone mortgage-software vendors become likelier acquisition targets as portal operators race to replicate the same integration.
Third-order effects
- If the pattern holds, online real estate marketplaces shift from selling leads and display ads toward owning more of the home-financing workflow itself, raising the bar for pure listing sites.
- Vertical consolidation of this kind concentrates the consumer real estate funnel in fewer, fuller-stack platforms — a structural change regulators and lenders would eventually have to engage with.
The trend: Online real estate marketplaces are using acquisitions to extend from advertising businesses into mortgage and transaction infrastructure.