Real Estate Listings Site Zillow Files For $51.75 Million IPO
As expected, real estate listings and search site Zillow has just filed its S-1, which indicates that the company will be pursuing a public offering. Zillow wants to raise $51.75 million in the offering, according to the SEC filing. It’s important to note that this is a placeholder amount that could change in the coming months. It appears that Citigroup is one of the underwriters of the IPO (others include Allen & Company, ThinkEquity, Needham & Company, and First Washington Corp.).
Zillow, which saw 19 million visitors in March, is now listing 100 million U.S. homes, including homes for sale, homes for rent and homes not currently on the market. For the years ended December 31, 2008, 2009 and 2010, the company generated revenues of $10.6 million, $17.5 million and $30.5 million, representing year-over-year growth of 49%, 65% and 74%, respectively. Unfortunately, in terms of income, Zillow has been taking a loss for the past three years, according to the filing.
Zillow, which launched a mortgage marketplace in 2008, expanded into rentals and mobile. The company’s traffic to its web and mobile sites is up 90 percent year-over-year and in March 2011, Zillow was used on a mobile device more than 8 million times, with more than 1.4 million homes viewed on mobile devices each day.
In terms of financial specifics, Zillow appears to be losing less money each year. The company lost $12.8 million in 2009, and lost roughly half of that ($6.7 million) in 2010. The company, which launched to the public in 2006, also revealed that as of December 31, 2010, it has an accumulated deficit of $78.7 million. Zillow forecasts that its revenue growth rate will decline in the future as a result of the “maturation” of its business.
Costs are also expected to rise for the company has it invests more money into product development; sales and marketing; technology infrastructure; strategic partnerships (Zillow powers Yahoo real estate listings) and acquisitions (Zillow just bought Postlets), and the general administration, including legal and accounting expenses related to being a public company.
From the filing, “If we fail to continue to grow our revenue and overall business and to manage our expenses, we may continue to incur significant losses in the future and not be able to achieve or maintain profitability.”
Marketplace revenues grew from $3.9 million in 2009 to $13.2 million (increase of 238 percent), and represented 43% of total revenues in 2010 compared to 22% of total revenues in 2009. Zillow says the increase in marketplace revenues was primarily due to the growth in the number of subscribers in its Premier Agent program from 2,764 as of December 31, 2009 to 8,102 as of December 31, 2010, which is an increase of 193%. Marketplace revenues also increased as Zillow began to charge mortgage lenders for participation in the mortgage Marketplace in January 2010.
Thanks to more traffic, display revenues increased from $13.6 million in 2009 to $17.2 million in 2010 and represented 57% of total revenues in 2010 compared to 78% of total revenues in 2009.
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