Zillow Group posted a quarterly loss for the first time this year.
The company reported on its earnings call that it lost $53 million in the last quarter due to market slowdowns.news comes a week later 300 employees dumpedthe second major layoff at the Proptech giant this year.
Zillow reported adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $130 million in the prior quarter, down from $156 million a year ago. The company’s mortgage segment was hit hard, with revenues down 63% year-over-year.
“We’re still seeing some big week-to-week fluctuations,” Chief Executive Officer Rich Burton said of the volatility in mortgage rates. “What this means is that buyers are recalculating how much they can afford on the spot and are unsure if they can afford to buy a home and buy it.”
Despite the decline, earnings and EBITDA exceeded expectations, and company executives sounded optimistic on the phone. Revenue from the rental sector was also positive as rising mortgage rates pushed more and more would-be buyers back into the rental market, up 10% from last year’s third quarter.
Also, the $53 million loss in the third quarter was well below the $329 million loss recorded a year ago.
“We are well aware of the dangers on the road, but our cars are charged and handling well,” Burton said.
The company officially closed its iBuying venture, Zillow Offers, on September 30. cost $881 million last year.
Despite a sharp drop in revenue from the mortgage sector, management says it generates $50 billion in origination revenue annually, which it says is key to growth.
Mr Barton said: “The top 25 domestic lenders only have about a third of the market share for purchase originations.”
But management said the situation could get worse before it gets better. Revenue from Premier Agents, a lead generation tool that brokers can pay to replace listing agents when buyers view their listings, was down 27% from the quarter a year ago.
“Preparing to start in the housing industry in 2023 looks daunting,” said Burton, adding, “There will be 60 million homes traded in the next 10 years, and that’s what we’re looking at. It is the basis for the long-term opportunities that lie ahead,” he added.