Zillow looks to a future with Jeremy Wacksman at the helm

ZillowThe second-quarter 2024 earnings call with investors Wednesday evening marked a pivotal moment for the company. It was the first since company co-founder Rich Barton announced he was stepping down as CEO.

Less than an hour before the call, Zillow Group announced that it had promoted Jeremy Wacksman, the company’s Chief Operations Officer, to CEO. Barton will remain a member of Zillow’s board of directors and has been named co-executive chairman of the board, alongside Zillow co-founder and current executive chairman Lloyd Frink.

“I have been CEO and/or chairman since the day Lloyd and I financed the company in 2004, and I will remain involved,” Barton told investors and analysts listening to the call. “However, my role will shift to supporting and advising Jeremy Wacksman and the leadership team, rather than day-to-day operational leadership.”

Wacksman’s promotion was, of course, a hot topic of conversation on the call, but the leadership team assured listeners that this change would not result in significant changes to Zillow’s business plans or strategies.

According to Barton, Zillow organized most of its business around Wacksman three years ago when he was promoted to COO.

“He was supported by an exceptional team and successfully positioned the company to pursue several major opportunities,” Barton said.

These opportunities include the continued rollout of the Zillow “Housing Super App” along with integrated consumer and agent partner experiences across the country. Wacksman will also be tasked with increasing the “breadth of the company’s market coverage” and “the depth of its transaction penetration within those markets” while growing its rental and mortgage businesses.

Zillow executives said that by focusing on these opportunities, which are some of the key components of Zillow’s five growth pillarsthe company continues to outperform the broader sector.

During the second quarter, Zillow reported a 13% annual revenue increase to $572 million, which was $39 million above the midpoint of its guidance. While housing income growth rose 8% annually to $409 million, much of the total housing growth was attributed to a 29% annual increase in rental income to $117 million, along with a 42% increase in rental income. Zillow Home Loans sales up to $34 million.

Zillow’s improved mortgage industry performance was attributed to a 125% year-over-year increase in purchase loan volume, which reached $756 million in the second quarter of 2024.

“The successes come despite a continued challenging mortgage rate environment, as evidenced by our estimate that the industry’s total volume of new loans fell by single digits year over year in the second quarter,” Wacksman said.

Despite the revenue increase, Zillow still reported a GAAP net loss of $17 million for the quarter, an improvement from the $35 million net loss reported in the second quarter of 2023.

Despite the loss, Wacksman said Zillow’s successes to date give him confidence that the company is on track to achieve its 2024 goal of double-digit revenue growth, and that it is on its way to “a strong GAAP profitability over time.”

Barton shared a similar sentiment, noting throughout the conversation that Zillow is on “solid footing.”

“I’m super excited,” Barton said. “There is a lot of clear water for the company – a lot of opportunity. Maybe one of these days the wind will change direction and come after us. We certainly don’t need it, but I’m sure it will happen at some point.”

To achieve their goals, Zillow executives said the company would continue to focus on its five growth pillars, including touring, financing, seller solutions, improving its agent partner network and integrating its services.

In Zillow’s first four improved marketsthat fully encompass its integrated services and the Zillow “Housing Super App” vision, the company said it has seen revenue growth per transaction increase by more than 80% since the start of 2023.

“As we expand, we continue to see signs of repeatable success,” said Wacksman. “In the 13 markets we were in at the end of the first quarter, we are seeing an increase in revenue per total transaction value. We see an opportunity to further increase conversion and revenue per total transaction value from now on as we launch the remaining enhanced markets this year.”

Looking ahead, executives say Zillow will continue to focus on the technology it offers both agents and consumers as it works to integrate and streamline the homebuying experience.

“Our belief is that a rising digital tide will lift all boats,” said Barton. “A more digital industry that uses our software is better for consumers and for our partners – and ultimately better for Zillow Group.”

“We continue to believe that our most important investments are in technology innovations that improve the customer experience, which has helped us earn and maintain our strong brand position and a deeply engaged audience of movers,” Wacksman added.