Zillow Reports Record Third Quarter 2012 Results

Zillow Reports Record Third Quarter 2012 Results

  *Record Total Revenue of $31.9 million, up 67% over third quarter 2011.
  *Record Marketplace Revenue of $23.6 million, up 99% over third quarter
    2011.
  *Record Quarterly Net Income of $2.3 million, resulting in basic and
    diluted EPS of $0.08 and $0.07, respectively.
  *Record Quarterly Adjusted EBITDA of $7.6 million, representing 24% of
    revenue.
  *Record usage across mobile and Web, reaching more than 1 billion home
    views on Zillow Mobile year-to-date, and a peak in July of 37 million
    monthly unique visitors.
  *Zillow enters into definitive agreement to acquire Mortech, a software and
    services company that provides mortgage-related solutions to lenders,
    bankers, credit unions and smaller community lenders.

SEATTLE, Nov. 5, 2012 (GLOBE NEWSWIRE) -- Zillow, Inc. (Nasdaq:Z), the leading
real estate information marketplace, today announced financial results for the
quarter ended September 30, 2012.

"Zillow had another great quarter with record usage across mobile and Web. In
fact, we reached a major milestone recently, topping 1 billion home views on
Zillow Mobile through the first three quarters of 2012," said Spencer Rascoff,
chief executive officer of Zillow. "During the quarter we also expanded our
suite of technology tools and services for professionals. Last week we
announced the acquisition of Buyfolio, a collaborative shopping tool that can
increase the conversion rates for agents, and further add value to our
successful Premier Agent program. We've made another important leap today with
the announcement of our planned acquisition of Mortech, which will further
extend the services we provide to the mortgage industry."

Third Quarter 2012 Financial Highlights

  *Total revenue increased 67% to $31.9 million from $19.1 million in the
    third quarter of 2011.

    *Marketplace Revenue increased 99% to $23.6 million from $11.8 million in
      the third quarter of 2011.
      
    *Display Revenue increased 15% to $8.3 million from $7.2 million in the
      third quarter of 2011.

  *Net income was $2.3 million, compared to a net loss of $0.6 million in the
    third quarter of 2011.
    
  *Basic and diluted earnings per share were $0.08 and $0.07, respectively,
    compared to basic and diluted loss per share of $0.02 in the same period
    last year.
    
  *Adjusted EBITDA was $7.6 million, or 24% of revenue, which was an increase
    from $3.7 million in the third quarter of 2011, or 19% of revenue.
    
  *In September 2012, we sold 3,844,818 shares of our Class A common stock,
    including 419,818 shares of our Class A common stock pursuant to the
    underwriters' option to purchase additional shares, and certain
    shareholders sold 575,000 shares of our Class A common stock, at a price
    of $43.00 per share. We received net proceeds of $156.7 million after
    deducting underwriting discounts and commissions and estimated offering
    expenses payable by us. We received no proceeds from the sale of our Class
    A common stock by the selling shareholders.

Operating and Business Highlights

  *Average monthly unique users on mobile and Web grew by 11.9 million
    year-over-year to 36.1 million in the third quarter of 2012. During July,
    Zillow had 37 million unique users – an all-time record.
    
  *Premier Agent subscribers increased by 4,007 in the third quarter of 2012,
    and totaled 26,703 at September 30, 2012, up 80% year-over-year. Average
    monthly revenue per subscriber in the third quarter of 2012 was $270,
    compared to $242 in the same period last year, an increase of 11%. Premier
    Agent revenue is reported as part of Marketplace Revenue. Additional
    information regarding average monthly revenue per subscriber is included
    below in this press release.
    
  *Zillow tipped to mobile in the first quarter of 2012, and that trend
    continues with more homes now viewed via Zillow on mobile devices than on
    desktops. By the end of the third quarter, users had viewed homes on
    Zillow Mobile more than 1 billion times in 2012. Zillow operates the most
    popular suite of mobile real estate applications, with 17 separate apps
    for consumers and professionals across every major platform, up from 7
    apps in the same period last year.
    
  *In October, Zillow launched the first free resource for consumers to find
    information about pre-foreclosures and foreclosed homes with the addition
    of 1.2 million "pre-market" homes to its home shopping search. These
    properties are not listed on an MLS, nor are they freely listed on other
    search sites. This innovative search experience allows home shoppers to
    search for distressed properties alongside traditional for-sale homes,
    which is especially important given current inventory constraints in many
    popular areas.
    
  *Zillow continues to evolve and develop products for professionals. In
    October, Zillow acquired Buyfolio, a New York City-based online and mobile
    collaborative shopping platform provider. Using Buyfolio, home shoppers
    can search, track, organize and discuss for-sale listings with their real
    estate agent, significant other or a private group. Buyfolio will enhance
    the increasing suite of tools Zillow offers to real estate agents in the
    Premier Agent program.
  *Announced separately today, Zillow has entered into an agreement to
    acquire Mortech, Inc.,a Lincoln, Nebraska-based software and services
    company which provides a product and pricing engine (PPE), lock desk, and
    prospect and lead management solutions to the mortgage industry, for
    approximately $12 million in cash and 150,000 shares of restricted stock.
    Thousands of lenders, bankers, credit unions and smaller community lenders
    use Mortech's tools. This acquisition will accelerate the development of
    Zillow Mortgage Marketplace and will allow Zillow to deliver valuable
    marketing and productivity solutions to mortgage professionals to help
    them manage their business.

  *Zillow Mortgage Marketplace saw substantial growth during the quarter.
    Nearly 9 million loan requests have been submitted by consumers in the
    first three quarters of this year. By comparison, there were 5.5 million
    loan requests submitted by consumers in Zillow Mortgage Marketplace for
    the full year of 2011.
    
  *In October, Zillow launched a new Zillow Mortgage Marketplace App for
    iPad. The App includes robust data visualization capabilities, and guides
    a user step-by-step through the mortgage search process. Unique to this
    iPad app, a user can be pre-qualified for a mortgage through a Zillow
    Certified Lender.
    
  *In October, Zillow continued building the most comprehensive and useful
    rental marketplace with the launch of Zillow Rentals — a free marketplace
    and set of tools for rental professionals. With the launch, Zillow brought
    RentJuice's technology solutions and services for rental pros, including
    the RentJuice mobile apps, under the Zillow Rentals brand.
    
  *In September, the company released the new Zillow Rentals for iPhone App
    and iPod touch, following the initial launch on Android in April. Designed
    specifically for renters, the Zillow Rentals App allows users to access
    unique market data found only on Zillow, including Rent Zestimates,
    customize and save searches based on location, and instantly contact
    landlords or property managers by phone or email, and easily keep track of
    these properties.

Business Outlook – Fourth Quarter 2012 and Full Year 2012

Zillow is providing Revenue and Adjusted EBITDA outlook for the fourth quarter
and full year of 2012 as follows:

  *Revenue for the fourth quarter of 2012 is expected to be in the range of
    $30.0 to $31.0 million. This represents 53% year-over-year growth at the
    midpoint of the range over fourth quarter of 2011 revenue of $19.9
    million.
    
  *For the full year of 2012, revenue is expected to be $113.0 million based
    on the midpoint of the range for the fourth quarter of 2012. This
    represents 71% year-over-year growth over full year of 2011 revenue of
    $66.1 million.
    
  *Adjusted EBITDA for the fourth quarter of 2012 is expected to be in the
    range of $3.0 to $3.5 million, representing 11% of revenue at the
    mid-point of the range, compared to fourth quarter of 2011 Adjusted EBITDA
    of $3.3 million, which represented 17% of revenue.
    
  *For the full year of 2012, Adjusted EBITDA is expected to be $21.6
    million, representing 19% of revenue, based on the mid-point of the range
    for the fourth quarter of 2012, an increase in Adjusted EBITDA of 82%
    compared to full year of 2011 Adjusted EBITDA of $11.9 million, which
    represented 18% of revenue.

Quarterly Conference Call

A conference call to discuss Zillow's third quarter of 2012 financial results
and business outlook will be webcast live today at 2 p.m. PST (5 p.m. EST).
The live webcast of the conference call will be available on the investor
relations section of Zillow's website at http://investors.zillow.com/. For
those without access to the Internet, the call may be accessed toll-free via
phone at 877-643-7152 with conference ID# 45276210. Callers outside the United
States may dial 443-863-7921 with conference ID# 45276210. Following
completion of the call, a recorded replay of the webcast will be available on
the investor section of the Zillow website until November 19, 2012. To listen
to the telephone replay, call toll-free 855-859-2056 with conference ID#
45276210. Callers outside the United States may dial 404-537-3406 with
conference ID# 45276210.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934 that involve risks and uncertainties, including, without
limitation, the statements regarding our belief about our traction gained in
providing meaningful tools and services for professionals while developing
products that delight our customers and enhance our real estate, mortgages and
rentals marketplaces, the expected benefits of our acquisition of Buyfolio,
our ability to extend the services we provide to the mortgage industry with
our planned acquisition of Mortech and the acquisition's impact on our total
addressable market, the integration of our RentJuice acquisition, and our
business outlook. Statements containing words such as "may," "believe,"
"anticipate," "expect," "intend," "plan," "project," "will," "projections,"
"business outlook," "estimate," or similar expressions constitute
forward-looking statements. Differences in Zillow's actual results from those
anticipated in these forward-looking statements may result from actions taken
by Zillow as well as from risks and uncertainties beyond Zillow's control.
Factors that may contribute to such differences include, but are not limited
to, Zillow's ability to maintain and effectively manage an adequate rate of
growth; the impact of the real estate industry on Zillow's business; Zillow's
ability to innovate and provide products and services that are attractive to
its users and advertisers; Zillow's ability to increase awareness of the
Zillow brand; Zillow's ability to maintain or establish relationships with
listings and data providers; Zillow's ability to attract consumers to Zillow's
mobile applications and websites; Zillow's ability to successfully close,
integrate and realize the benefits of our past or future strategic
acquisitions, including the planned acquisition of Mortech, or investments;
Zillow's ability to compete successfully against existing or future
competitors; the reliable performance of Zillow's network infrastructure and
content delivery processes; and Zillow's ability to protect its intellectual
property. The foregoing list of risks and uncertainties is illustrative, but
is not exhaustive. For more information about potential factors that could
affect Zillow's business and financial results, please review the "Risk
Factors" described in Zillow's Quarterly Report on Form 10-Q for the three
months ended June 30, 2012 and Zillow's Annual Report on Form 10-K for the
year ended December 31, 2011 filed with the Securities and Exchange
Commission, or SEC, and in Zillow's other filings with the SEC. Except as may
be required by law, Zillow does not intend, and undertakes no duty, to update
this information to reflect future events or circumstances.

Use of Non-GAAP Financial Measures

To provide investors with additional information regarding our financial
results, this press release includes references to Adjusted EBITDA, which is a
non-GAAP financial measure. We have provided a reconciliation of Adjusted
EBITDA to net income (loss), the most directly comparable GAAP financial
measure, within this earnings release.

Adjusted EBITDA is a key metric used by our management and board of directors
to measure operating performance and trends, and to prepare and approve our
annual budget. In particular, the exclusion of certain expenses in calculating
Adjusted EBITDA facilitates operating performance comparisons on a
period-to-period basis.

Our use of Adjusted EBITDA has limitations as an analytical tool, and you
should not consider it in isolation or as a substitute for analysis of our
results as reported under GAAP. Some of these limitations are:

  *Adjusted EBITDA does not reflect our cash expenditures or future
    requirements for capital expenditures or contractual commitments;
  *Adjusted EBITDA does not reflect changes in, or cash requirements for, our
    working capital needs;
  *Adjusted EBITDA does not consider the potentially dilutive impact of
    share-based compensation;
  *Although depreciation and amortization are non-cash charges, the assets
    being depreciated and amortized may have to be replaced in the future, and
    Adjusted EBITDA does not reflect cash capital expenditure requirements for
    such replacements or for new capital expenditure requirements;
  *Adjusted EBITDA does not reflect certain facility exit charges; and
  *Other companies, including companies in our own industry, may calculate
    Adjusted EBITDA differently than we do, limiting its usefulness as a
    comparative measure.

Because of these limitations, you should consider Adjusted EBITDA alongside
other financial performance measures, including various cash flow metrics, net
income (loss) and our other GAAP results.

About Zillow, Inc.

Zillow is the leading real estate information marketplace, providing vital
information about homes, real estate listings, rental listings and mortgages
through its mobile applications and websites, enabling homeowners, buyers,
sellers and renters to connect with real estate, rental and mortgage
professionals best suited to meet their needs. Nearly 35 million unique users
visited Zillow's mobile applications and websites in September 2012. Zillow,
Inc. operates Zillow.com^®, Zillow Mortgage Marketplace, Zillow Mobile, Zillow
Rentals, Postlets^® and Diverse Solutions™. Zillow is headquartered in
Seattle.

Zillow.com, Zillow, Zestimate and Postlets are registered trademarks of
Zillow, Inc. Diverse Solutions is a trademark of Zillow, Inc. WordPress is a
registered trademark of WordPress Foundation. Buyfolio is a trademark of
Zillow, Inc. Mortech is a trademark of Mortech, Inc.

iPhone and iPad are registered trademarks of Apple Inc. Android is a trademark
of Google Inc.

The Zillow logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=10012.

(ZFIN)

ZILLOW, INC.
UNAUDITED CONDENSED BALANCE SHEETS
(in thousands)
                                                           
                                         September 30, 2012 December 31, 2011
Assets                                                      
Current assets:                                             
Cash and cash equivalents                 $188,858         $47,926
Short-term investments                    40,024            28,925
Accounts receivable, net                 8,639             5,638
Prepaid expenses and other current assets 3,223             3,214
Total current assets                      240,744           85,703
Long-term investments                     --                15,285
Property and equipment, net               12,878            7,227
Goodwill                                  35,375            3,676
Intangible assets, net                    9,069             4,532
Other assets                              286               245
Total assets                              $298,352         $116,668
                                                           
Liabilities and shareholders' equity                        
Current liabilities:                                        
Accounts payable                          $2,660           $1,681
Accrued expenses and other current        5,387             4,893
liabilities
Accrued compensation and benefits         2,393             1,587
Deferred revenue                          8,720             5,769
Deferred rent, current portion            92                60
Total current liabilities                 19,252            13,990
Deferred rent, net of current portion     2,950             1,347
Other non-current liabilities             --                118
Shareholders' equity:                                       
Preferred stock                           --                --
Class A common stock                      3                 2
Class B common stock                      1                 1
Additional paid-in capital                348,363           178,817
Accumulated deficit                       (72,217)          (77,607)
Total shareholders' equity                276,150           101,213
Total liabilities and shareholders'       $298,352         $116,668
equity


ZILLOW, INC.
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
                                                                 
                                      Three Months Ended  Nine Months Ended
                                      September 30,       September 30,
                                      2012      2011      2012      2011
                                                                 
Revenue                                $31,915 $19,057 $82,513 $46,162
Costs and expenses:                                               
Cost of revenue (exclusive of          3,623    3,084    10,237   7,614
amortization) (1)(2)
Sales and marketing (2)                14,118   7,035    34,586   18,150
Technology and development (2)         6,687    3,849    17,535   10,148
General and administrative (2)(3)      5,192    5,695    14,869   10,151
Total costs and expenses               29,620   19,663   77,227   46,063
Income (loss)from operations           2,295    (606)    5,286    99
Other income                           39       36       104      79
Net income (loss)                      $2,334  $(570)  $5,390  $178
Net income (loss) attributable to      $2,334  $(570)  $5,390  $--
common shareholders
Net income(loss)per share
attributable to common shareholders —  $0.08   $(0.02) $0.19   $--
basic
Net income (loss) per share
attributable to common shareholders —  $0.07   $(0.02) $0.17   $--
diluted
Weighted-average shares outstanding —  30,040   24,020   29,115   17,141
basic
Weighted-average shares outstanding —  32,230   24,020   31,493   20,220
diluted
_________                                                         
(1) Amortization of website
development costs and intangible       $3,198  $1,461  $7,576  $3,918
assets included in technology and
development is as follows:
                                                                 
(2)Includes share-based compensation                             
expense as follows:
Cost of revenue                       $94     $48     $271    $134
Sales and marketing                   870      85       1,349    259
Technology and development            374      135      1,182    311
General and administrative            374      220      1,553    587
Total                                 $1,712  $488    $4,355  $1,291
                                                                 
(3) General and administrative
includes a facility exit charge as     $--     $1,737  $--     $1,737
follows:
                                                                 
Other Financial Data:                                             
Adjusted EBITDA (4)                    $7,624  $3,654  $18,343 $8,556
                                                                 
(4)See above for more information regarding our                   
presentation of Adjusted EBITDA.

Adjusted EBITDA

The following table presents a reconciliation of Adjusted EBITDA to net income
(loss), the most directly comparable GAAP financial measure, for each of the
periods presented (in thousands, unaudited):

                                                                  
                                        Three Months Ended Nine Months Ended
                                        September 30,      September 30,
                                        2012      2011     2012      2011
Reconciliation of Adjusted EBITDA to Net                           
Income (Loss):
Net income (loss)                        $2,334  $(570) $5,390  $178
Other income                             (39)     (36)    (104)    (79)
Depreciation and amortization expense    3,617    2,035   8,702    5,429
Share-based compensation expense         1,712    488     4,355    1,291
Facility exit charge                     --       1,737   --      1,737
Adjusted EBITDA                          $7,624  $3,654 $18,343 $8,556

Revenue by Type

The following tables present our revenue by type and as a percentage of total
revenue for each of the periods presented (in thousands, unaudited):

                        Three Months Ended Nine Months Ended
                        September 30,      September 30,
                        2012      2011     2012     2011
  Revenue:                                        
  Marketplace revenue    $23,616  $11,840 $59,832 $28,443
  Display revenue        8,299    7,217   22,681  17,719
  Total                  $31,915  $19,057 $82,513 $46,162
                                                 
                        Three Months Ended Nine Months Ended
                        September 30,      September 30,
                        2012      2011     2012     2011
  Percentage of Revenue:                          
  Marketplace revenue    74%       62%      73%      62%
  Display revenue        26%       38%      27%      38%
  Total                  100%      100%     100%     100%
                                                 

Average Monthly Revenue per Subscriber

The following table presents our average monthly revenue per subscriber for
each of the periods presented (unaudited):

                     Three Months Ended
                      September June   March  December September June   March
                     30,       30,    31,    31,      30,       30,    31,
                      2012      2012   2012   2011     2011      2011   2011
Average Monthly
Revenue per           $270    $263 $263 $258   $242    $233 $206
Subscriber

We calculate our average monthly revenue per subscriber by dividing the
revenue generated by our Premier Agent subscription products in the period by
the average number of Premier Agent subscribers in the period, divided again
by the number of months in the period. The average number of Premier Agent
subscribers is derived by calculating the average of the beginning and ending
number of Premier Agent subscribers for the period.

Key Growth Drivers

The following tables set forth our key growth drivers for each of the periods
presented:

               Average Monthly Unique Users for
              the Three Months Ended           2011 to 2012
               September 30,
              2012             2011            % Change
              (in thousands)                   
  Unique Users 36,096           24,238          49%

Unique users source: Beginning in October 2011, we measure unique users with
Google Analytics. Prior to October 2011, we measured monthly unique user
metrics with Omniture analytical tools. We believe Google Analytics and
Omniture result in materially consistent measurements of our monthly unique
users.

                           At September 30, 2011 to 2012
                           2012     2011    % Change
  Premier Agent Subscribers 26,703   14,876  80%

CONTACT: Raymond Jones 
         Investor Relations
         206-470-7137
         ir@zillow.com

         Katie Curnutte
         Public Relations  
         206-757-2785
         press@zillow.com

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