Zillow appears to be one of only a few of real estate brands who managed to squeeze out a win in the quarterly earnings game, with news that the company’s revenue was $496 million, up 3 percent year-over-year and above the midpoint of the company’s outlook range by $24 million.
Residential revenue of $362 million outperformed both the industry total transaction dollar decline of 14 percent and the high end of the company’s expectations, decreasing 3 percent annually. The company attributed the outperformance to connections growth to Premier Agent partners, which grew faster than the overall industry.
“Despite a residential real estate industry that is down 14 percent from last year, Zillow is reporting positive growth: 3 percent in our total revenue, 34 percent in our rentals revenue, and 88 percent in our purchase mortgage origination business,” said Zillow co-founder and CEO Rich Barton. “We have strong momentum across the board, and it’s because we’re focused on building a better, more integrated real estate transaction experience for both movers and partners.”
Even still, Zillow reported that traffic to Zillow Group’s mobile apps and websites in Q3 was 224 million average monthly unique users, down 5 percent year-over-year.
Over at Compass, the news was not quite as bright as the brokerage announced a revenue decline of 10 percent annually. Net loss was $39 million, an improvement of 74 percent from a net loss of $154 million in the third quarter of 2022.
For the second quarter in a row, Compass is free cash flow positive as we continue to execute our plan to drive operating expenses down while continuing to grow our agent count and expanding the features on our technology platform, the industry’s only proprietary first-contact to close platform,” said Robert Reffkin, Founder and CEO of Compass. “We expect to achieve our $900 million annualized non-GAAP operating expense run rate in Q4 2023. For 2024, we continue to identify efficiencies in the business and are targeting $850 million annualized non-GAAP operating expense, the bottom of our previously stated range of $850 million to $950 million. At these reduced levels, we believe we will still be able to continue to grow agent count and invest in building upon our technology advantage.”
Although the market is worse now than a year ago, Compass is a much stronger company with a lower cost base, better agent retention, revitalized post pandemic culture, enhanced technology platform, and a larger agent-to-agent client referral network,” Reffkin continued. “As we enter 2024, we believe we have positioned Compass for significant upside when the market recovers in the future.”
Despite an slight increase in its total agent count, RE/MAX also post a revenue decline, down 8.7 percent to $81.2 million. The company also suffered a net loss of $59.5 million compared to its net income of $100,000 in the third quarter of last year.
“We continue to make progress driving forward our core strategic initiatives amid the toughest real estate market in a decade,” said Steve Joyce, RE/MAX Holdings CEO. “In the third quarter, we also made two difficult but necessary moves in the current environment. First, we streamlined our operations and our cost structure. Second, we entered into a settlement to end costly litigation and protect the Company and RE/MAX network from multiple industry class-action lawsuits. Ultimately, we believe we will successfully navigate these challenging times and grow significantly when industry conditions improve—a pattern we’ve seen repeatedly for 50 years. The strength of our brands and networks are unmatched in many ways, and we believe our future is very bright.”