Zillow Is Building Something Good

Zillow (NAS: Z) keeps showing that even a banged-up niche like residential real estate can still produce a speedster.

The fast-growing real estate portal operator posted better-than-expected quarterly results last night. Revenue soared 108% to $19.9 million as a surge in traffic through both its website and industry-leading mobile app drew more advertisers and real estate agents to the site.

Adjusted EBITDA nearly tripled during the period, and profitability of $0.03 a share landed well ahead of the $0.01 a share that analysts were targeting.

Investors shouldn't be surprised. Zillow has now delivered three blowout quarters since going public at $20 this past summer.

Zillow's strong showing doesn't mean that the residential real estate market is showing signs of life. Realtor.com parent Move (NAS: MOVE) posted a 3% decline in revenue for the same quarter just last week. Even if we head out to China -- where there's still some speculative fervor for real estate and the means to pay for it -- China Real Estate Information (NAS: CRIC) is expected to post less than 10% in top-line growth for the same quarter. China Real Estate Information is currently in the process of being acquired by E-House (NYS: EJ) at a fraction of its IPO price.

Zillow's magnetic success stems largely from its rough yet instantly available home appraisals called Zestimates. There's a good reason Zillow's the top real estate app for consumers. If you're driving around a neighborhood you like, why wouldn't you want to know what homes were worth near the ones that are actually for sale? There were 100 million homes viewed through Zillow's smartphone and tablet app in December alone.

Attracting a monthly average of 23.5 million unique visitors -- 86% ahead of where it was a year earlier -- will work wonders in pulling in the real estate professionals who want to reach the open-house chasers. There are now 15,799 Premier Agent subscribers at Zillow, a 95% improvement over the past year.

Zillow knows how to cash in on its booming popularity. Taking a page out of the Bankrate (NYS: RATE) playbook, Zillow recently updated its apps to offer on-the-go access to its growing mortgage marketplace. Just as Bankrate offers access to competitive rates from competing mortgage providers, Zillow is now making it seamless within its app and website.

Guidance for the current quarter is solid. Zillow sees revenue climbing 81% to 90% higher in the first quarter, just ahead of where the pros are perched. Adjusted EBITDA should once again roughly triple.

Zillow's looking good now. Just imagine how it will look when folks are actually interested in buying and selling homes again.

Zillow has climbed 17% since I recommended it to Rule Breakers newsletter subscribers five months ago, but the growth stock service is aiming higher than that. Now it's time to discover the next rule-breaking multibagger. It's a free report. Want it? Get it.

At the time thisarticle was published Motley Fool newsletter services have recommended buying shares of Zillow. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure 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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