Residential tech firms wrapped up their fourth quarter earnings calls last week, announcing layoffs, losses and a new partnership between two of the sector’s leading platforms.
Ahead of its call on Feb. 11, Zillow announced it was teaming up with Redfin to advertise multifamily listings on its competitor’s website. The deal includes a five-year term with two options for two-year extensions and a one-time, $100 million payment to Redfin.
“We’re very similar mission companies,” Zillow CEO Jeremy Wacksman said on the call, referring to Redfin. “We’re trying to digitize the industry and turn on the lights. This agreement is really a great win-win.”
Executives at Redfin said the deal would double the number of apartment listings on its website.
The partnership is the second of its kind for Zillow, which has been displaying its multifamily listings on Realtor.com since the two agreed to a deal in October. On the call, Wacksman claimed Zillow had the largest audience of renters.
The executive also credited the partnership, along with an advertising campaign geared toward multifamily listings, with boosting revenue in its rental segment last quarter by 25 percent year-over-year.
The segment’s uptick added to a 17 percent annual rise in the firm’s overall revenue, which at $554 million, beat Zillow’s previous projections for the three-month period. Adjusted EBITDA — earnings before interest, taxes, depreciation and amortization — was $112 million.
Despite the income increase, Zillow posted a $52 million net loss, with executives pinning results to a “softer housing market” at the end of last year and mortgage rates that remained high despite the Federal Reserve’s long-awaited cuts.
Redfin also finished the quarter in the red, reporting a $36 million net loss. The total was more than the $23 million the firm lost in the same period in 2023. The company posted $244 million in revenue for the quarter, a 12 percent annual increase, and an adjusted EBITDA of $2.9 million.
Redfin executives attributed the loss, in part, to the cost of transitioning agents in some of its markets from salaried employees to independent contractors with commission splits. The company started switching agents to its Redfin Next model in 2023 and has continued to add cities and regions to its fold.
Along with news of the deal with Zillow, Redfin announced plans to lay off 450 employees between February and July, marking the latest round for the firm which already eliminated 50 employees in January.
While the company reduced its employees, it increased its agent headcount by 25 percent. CEO Glenn Kelman said the firm’s additions were “outperforming tenured agents in key sales metrics.”
Kelman also addressed his position on the National Association of Realtors’ Clear Cooperation Policy, which has come under fire in recent months. The rule, which requires agents to post listings to the MLS within one day of marketing, has been opposed especially by Compass CEO Robert Reffkin, whose company launched its own private exclusives listings database in areas not governed by the trade association’s policy.
“What’s notable to me is that the primary opponent of Clear Cooperation runs a website that a few years ago was 13th in the real estate category for traffic and has since fallen to 21st,” Kelman said. “The argument that withholding inventory and just publishing it on one website runs counter to the scale that you see large websites having.”
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Redfin is also bolstering its advertising in the first half of the year with a $40 million spend, about $15 million more than it usually allots for the period. Executives billed the move as a necessary push to compete with other listing platforms such as Homes.com, which shelled out $1 billion last year in a bid to drive traffic to their site.
“You go through a year like 2024 where you see how much competitors are advertising, and you just decide, we’ve got to restructure the business to make sure that we can go toe to toe with anybody,” Kelman said.
While Zillow and Redfin struck a deal, Homes.com and Realtor.com continue to wage war over traffic numbers. The two platforms have been locked in a legal battle since Realtor.com’s parent company, Move Inc., sued CoStar, Homes.com’s parent company, last summer, alleging one of its former employees stole confidential information and shared it with his new employer, CoStar.
The two platforms are also fighting over which has the most traffic behind Zillow. Move disputed CoStar’s reliance on Google Analytics, which it claims is less reliable than third-party sites like SimilarWeb and Comscore. Both Move and CoStar have challenged each other’s claims with the consumer watchdog group, BBB.
On CoStar’s earnings call on Feb. 18, CEO Andy Florance took aim at Realtor.com directly, doubling-down on the firm’s position that it’s beating the platform’s traffic metrics. Executives reported the platform received 110 million average monthly unique visitors last quarter.
“In less than one year, the Homes.com network became the second-largest real estate portal in the United States,” Florance said. “I think that’s remarkable. Realtor.com launched 30 years ago in its predecessor form back in 1995, and we passed them in apples-to-apples traffic in our first year of the relaunch.”
CoStar executives said the company plans to onboard 500 sales representatives geared toward Homes.com by the end of the year.
Homes.com is continuing the ad blitz it launched last year, which included 47,000 commercials, including spots aired during the Super Bowl, Olympics, Grammys and Emmys. The company also aired another round of Super Bowl commercials earlier this year with actors Heidi Gardner, Dan Levy and Morgan Freeman.
“We launched last year, but I really see this year as a real, full launch,” Florence said.