Fresh off its initial public offering of common stock, real estate listing and mortgage rate search website company Zillow posted its first ever quarterly profit since its launch in 2006.
Zillow reported net income of $1.6 million off revenue of $15.8 million for the second quarter of 2011, the company said in a filing with the Securities and Exchange Commission.
Revenue more than doubled from $7.3 million in the second quarter of 2010, when Zillow posted a net loss of $2 million.
Subscription sales to Realtors who post property listings on Zillow's website and cost per click advertising purchased by mortgage lenders that list their rates on the Zillow Mortgage Marketplace (what the firm calls “marketplace revenues”) increased 269% to $9.7 million, from $2.6 million a year ago. Traditional banner and other graphical advertising, or “display revenue,” was $6.1 million during 2Q11, up 30% from $4.7 million in 2Q10.
The Seattle-based Zillow said it had 23.2 million unique visitors on its website and mobile applications during the month of July, an increase of 98% from July 2010.
In addition to its property listing application, Zillow launched its Mortgage Marketplace mobile app in June. The company said in a recent interview with Mortgage Technology magazine that mobile devices account for 20% of traffic on weekdays, which increases to 30% on weekends.
In addition, Zillow made various improvements to its automated valuation model during 2Q11, including the addition of 25 million residential properties and changes to its AVM algorithm that more accurately account for housing market volatility. The company said the adjustments improve accuracy by 33%, to an 8.5% median margin of error.
Zillow completed its IPO on July 20, listing its common stock on the NASDAQ exchange at $20 a share and raising nearly $70 million. The stock traded as high as $60 per share during its first day of trading, but has never closed higher than $36.43.
The stock got a boost Monday, closing at $33.04 per share, on news that analysts from Zillow's IPO underwriter Citi initiated coverage of the company with a “buy” rating and a $36 target price. Despite housing market woes, analyst Mark Mahaney wrote that Zillow has the potential to double its annual revenue because of the size of the real estate sales industry and its strong brand recognition.