Zillow Group posted a quarterly loss for the first time this year.
The company reported during its earnings call that it lost $53 million last quarter as the market slowed. The news comes a week after it jettisoned 300 employees, the second major round of layoffs at the proptech giant this year.
Zillow posted adjusted EBITDA — earnings before interest, taxes, depreciation and amortization — of $130 million last quarter, down from $156 million a year ago. The company’s mortgage segment was hit hard, with revenues falling 63 percent year-over-year.
“Big weekly swings continue to occur as well,” CEO Rich Barton said of fluctuating mortgage rates. “What this means is that buyers are recalculating what they can afford on the fly and are uncertain about their ability to afford and purchase a home.”
Despite the declines, revenue and EBITDA exceeded expectations, which had company executives sounding upbeat on the call. Revenue from the rental side was another positive, increasing 10 percent over the third quarter last year, as would-be buyers are increasingly pushed back into the rental market by rising mortgage rates.
And the $53 million third-quarter loss was substantially less than the $329 million loss it posted a year ago.
“We are well aware of the dangers on the road but our vehicle is charged up and handling well,” said Barton.
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Despite a steep drop in revenue from the mortgage segment, executives said it produces $50 billion in origination revenue a year and is a key to growth.
“We see a real business opportunity in a large and fragmented market where we are well positioned to take share over time,” said Barton. “The top 25 lenders in the country have only about one-third market share of purchase originations.”
But things could get worse before they get better, executives said. Revenue from Premier Agent — a lead-generation tool that lets brokers pay to supplant the listing agent when buyers view a listing — fell 27 percent last quarter from a year ago.
“The set-up to begin 2023 in housing looks challenged,” Barton said, before adding, “Sixty million homes should trade hands over the next 10 years and that’s the basis of the long-term opportunity in front of us.”