You Keep Missing Zillow's Open House

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Admit it. You've been avoiding Zillow (NAS: Z) since last year's explosive IPO, arguing that it's a big mistake to buy the richest house in a ho-hum neighborhood. However, with every passing quarter you realize that Zillow gets prettier and prettier. In your fruitless attempt to smoke out a bargain you're starting to realize that maybe the entire neighborhood isn't as undesirable as you first thought.

Zillow had another blowout quarterly report last night.

Of course.


Revenue soared 103% to $22.8 million, adjusted EBITDA popped fivefold, and adjusted profitability of $0.06 a share reversed a small quarterly deficit. Analysts were only holding out for net income of $0.03 a share on $21.5 million in revenue.

Zillow has now delivered four consecutive market-thumping quarters since going public at $20 this past summer.

The dot-com darling's strong showing doesn't mean that the residential real estate market is back. Analysts see Realtor.com parent Move (NAS: MOVE) posting a decline in revenue when it reports its quarterly results later today. Shares of Beazer Homes (NYS: BZH) fell more than 5% yesterday after the homebuilder missed Wall Street's revenue target.

However, the hungry homeowners are clearly out there. There was a monthly average of 31.8 million unique visitors to Zillow during the quarter, 84% ahead of last year. The biggest boost in traffic has come from Zillow's mobile app, which is now being used more than Zillow.com. A whopping 155 million homes were viewed on its smartphone and tablet app in March, well above the 44 million homes checked out on Zillow Mobile a year earlier.

The model works. Zillow continues to attract real estate pros to reach out to its growing audience through premium subscriptions. There are now 18,616 agents paying Zillow for enhanced access, a 74% boost over the past year.

Guidance for the current quarter is solid. Zillow sees revenue climbing 61% to 68% higher in the current quarter, well ahead of where the lowballing analysts are perched. Adjusted EBITDA is expected to contract -- both sequentially and year-over-year -- but that's a small sticking point for a company that's busy disrupting an industry where growth remains hard to come by.

I know. You're not buying. Zillow isn't cheap. However, the chances of you bellyaching that the stock continues to move higher without you will probably carry over to the next quarterly open house.

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At the time this article was published Motley Fool newsletter serviceshave recommended buying shares of Zillow. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story. Rick is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.

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