Zillow, Inc. Reports Record Fourth Quarter and Full Year 2012 Results

Zillow, Inc. Reports Record Fourth Quarter and Full Year 2012 Results

  *Record Quarterly Revenue of $34.3 million, up 73% over fourth quarter
  *Record Quarterly Marketplace Revenue of $26.8 million, up 95% over fourth
    quarter 2011.
  *Quarterly Net Income of $0.5 million, resulting in basic and diluted EPS
    of $0.02.
  *Quarterly Adjusted EBITDA of $6.8 million, representing 20% of revenue.
  *Quarterly traffic grew 47% year-over-year to 34.5 million average monthly
    unique users with more than 50% of visits coming from mobile devices in

SEATTLE, Feb. 13, 2013 (GLOBE NEWSWIRE) -- Zillow, Inc. (Nasdaq:Z), the
leading real estate and home-related information marketplace, today announced
financial results for the quarter and full year ended December 31, 2012.

"The fourth quarter was another terrific one as incredible execution by the
Zillow team re-accelerated year-over-year growth, and delivered revenue and
profit that exceeded our expectations," said Spencer Rascoff, chief executive
officer of Zillow, Inc. "The quarter capped off a pivotal year of tremendous
growth and we're looking forward to 2013 as we focus on three core priorities:
attracting more users with great products and services; growing our Premier
Agent business with unmatched value and tools; and accelerating our emerging
mortgage, rental and home improvement marketplaces."

Fourth Quarter 2012 Financial Highlights

  *Revenue increased 73% to $34.3 million from $19.9 million in the fourth
    quarter of 2011. Total revenue showed re-accelerating year-over-year
    growth when compared to year-over-year growth of 67% in the third quarter.

    *Marketplace Revenue increased 95% to $26.8 million from $13.7 million in
      the fourth quarter of 2011. Zillow achieved record Marketplace Revenue
      while executing a pricing model transition in the Premier Agent
    *Display Revenue increased 22% to $7.5 million from $6.1 million in the
      fourth quarter of 2011.
    *Net income was $0.5 million, compared to net income of $0.9 million in
      the fourth quarter of 2011. The fourth quarter of 2012 results include a
      year-over-year increase in depreciation and amortization expense, and
      share-based compensation expense, primarily related to acquisitions.
    *Basic and diluted earnings per share were $0.02, compared to basic and
      diluted earnings per share of $0.03 in the same period last year.
    *Adjusted EBITDA was $6.8 million, or 20% of revenue, which was an
      increase from $3.3 million in the fourth quarter of 2011, or 17% of

Full Year 2012 Financial Highlights

  *Revenue increased 77% to $116.9 million from $66.1 million in 2011.

    *Marketplace Revenue increased 105% to $86.7 million from $42.2 million
      in 2011.
    *Display Revenue increased 26% to $30.2 million from $23.9 million in

  *Net income was $5.9 million, compared to net income of $1.1 million in
    2011. Included in the full year financial results for 2012 is
    approximately $1.1 million of acquisition-related transaction costs,
    compared to 2011 transaction costs of $0.4 million.
  *Basic and diluted earnings per share were $0.20 and $0.18, respectively,
    compared to basic and diluted earnings per share of zero for the same
    period last year.
  *Adjusted EBITDA was $25.2 million, or 22% of revenue, which was an
    increase from $11.9 million in 2011, or 18% of revenue.

Operating and Business Highlights

  *Average monthly unique users grew 47% to 34.5 million in the fourth
    quarter of 2012 compared to 23.5 million average monthly unique users for
    the same period in 2011. In addition, January 2013 was a record traffic
    month with 45.9 million unique users, representing 45% year-over-year
    growth. In December, the company crossed another mobile milestone as more
    than half of the visits occurred on mobile devices. On weekends, 60% of
    Zillow's traffic comes from a mobile device.
  *Premier Agent subscribers increased by 2,770 in the fourth quarter of
    2012, and totaled 29,473 on December 31, 2012, up 87% year over year.
    Average monthly revenue per subscriber in the fourth quarter of 2012
    increased 3% to $267, compared to $258 in the same period last year.
    Premier Agent revenue is reported as part of Marketplace Revenue.
  *Zillow entered the home improvement market earlier this month with the
    launch of Zillow Digs™, on the Web at www.zillow.com/digs and on iPad®, as
    an important complement to the company's existing real estate, mortgage
    and rental marketplaces. Expanding into home improvement makes Zillow more
    relevant to consumers throughout the entire lifecycle of homeownership and
    expands its total addressable market, as the home improvement industry was
    expected to spend approximately $6 billion on advertising in 2012^1.
    Zillow Digs includes patent-pending Digs Estimates, the estimated costs of
    recreating actual kitchens and bathrooms.
  *In the fourth quarter, Zillow completed three acquisitions that accelerate
    its mortgage, rental and real estate marketplaces: Mortech, Inc., a
    Lincoln, Neb.-based software and services company that provides a CRM and
    pricing engine to the mortgage industry; HotPads™, a San Francisco-based
    consumer rentals shopping site and suite of mobile apps; and Buyfolio, a
    New York City-based online and mobile collaborative shopping tool.
  *Earlier this month, Zillow announced that HGTV's FrontDoor is joining the
    Zillow® Real Estate Network, the leading real estate network. Zillow now
    will be the exclusive provider of all real estate listings for HGTV's
    FrontDoor, giving agents and brokerages that list on Zillow substantial
    additional marketing for their listings. Scheduled to launch in the second
    quarter, Zillow Premier Agents also will receive exposure through

^1 According to Borrell Associates in their 2012 report forecasting the home
improvement market.

Quarterly Conference Call to Include Business Outlook

Zillow management will discuss Zillow, Inc.'s fourth quarter and full year
2012 financial results, as well as the first quarter and full year 2013
business outlook in a conference call today at 2 p.m. PST (5 p.m. EST) that
will also be webcast live. The live webcast of the conference call will be
available on the investor relations section of Zillow, Inc.'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#
91697215. Callers outside the United States may dial 443-863-7921 with
conference ID# 91697215. Following completion of the call, a recorded replay
of the webcast and a copy of the prepared remarks will be available on the
investor relations section of Zillow, Inc.'s website. The recorded replay will
be available until February 27, 2013. To listen to the telephone replay, call
toll-free 855-859-2056 with conference ID# 91697215. Callers outside the
United States may dial 404-537-3406 with conference ID# 91697215.

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 re-acceleration of
year-over-year growth, our belief about 2013 and our three core priorities,
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 integrate and realize the benefits of our past or future
strategic acquisitions 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, 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 and our other GAAP results.

About Zillow, Inc.

Zillow, Inc. (Nasdaq:Z) operates the leading real estate and home-related
information marketplaces on mobile and the Web, with a complementary portfolio
of brands and products that help people find vital information about homes,
and connect with the best local professionals. Zillow's brands serve the full
lifecycle of owning and living in a home: buying, selling, renting, financing,
remodeling and more. In addition, Zillow offers a suite of tools and services
to help local real estate, mortgage, rental and home improvement professionals
manage and market their businesses. Welcoming 46 million monthly unique users
in January, the Zillow, Inc. portfolio includesZillow.com®,Zillow Mobile,
Zillow Mortgage Marketplace,Zillow Rentals, Zillow Digs, Postlets®, Diverse
Solutions®, Buyfolio™, Mortech™ and HotPads™. Zillow is headquartered in

Zillow.com, Zillow, Postlets and Diverse Solutions are registered trademarks
of Zillow, Inc.

Buyfolio, Mortech, HotPads and Digs are trademarks of Zillow, Inc.

iPad is a registered trademark of Apple, Inc.

The Zillow, Inc. logo is available at


(in thousands)
                                          December 31, 2012 December 31, 2011
Current assets:                                             
Cash and cash equivalents                  $150,040        $47,926
Short-term investments                     44,054           28,925
Accounts receivable, net                  8,655            5,638
Prepaid expenses and other current assets  2,652            3,214
Total current assets                       205,401          85,703
Long-term investments                      9,389            15,285
Property and equipment, net                13,634           7,227
Goodwill                                   54,284           3,676
Intangible assets, net                     21,248           4,532
Other assets                               279              245
Total assets                               $304,235        $116,668
Liabilities and shareholders' equity                        
Current liabilities:                                        
Accounts payable                           $3,158          $1,681
Accrued expenses and other current         6,318            4,893
Accrued compensation and benefits          2,514            1,587
Deferred revenue                           8,349            5,769
Deferred rent, current portion             94               60
Total current liabilities                  20,433           13,990
Deferred rent, net of current portion      3,485            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                 351,981          178,817
Accumulated deficit                        (71,668)         (77,607)
Total shareholders' equity                 280,317          101,213
Total liabilities and shareholders' equity $304,235        $116,668

(in thousands, except per share data)
                                     Three Months Ended  Year Ended
                                     December 31,        December 31,
                                     2012      2011      2012       2011
Revenue                               $34,337 $19,891 $ 116,850 $66,053
Costs and expenses:                                               
Cost of revenue (exclusive of         3,806    2,961    14,043    10,575
amortization) (1) (2)
Sales and marketing (2)               14,519   7,576    49,105    25,725
Technology and development (2)        9,079    3,994    26,614    14,143
General and administrative (2) (3)    6,422    4,463    21,291    14,613
Total costs and expenses              33,826   18,994   111,053   65,056
Income from operations                511      897      5,797     997
Other income                          38       25       142       105
Net income                           $549    $922    $5,939   $1,102
Net income attributable to common     $549    $922    $5,939   $--
Net income per share attributable to  $0.02   $0.03   $0.20    $--
common shareholders — basic
Net income per share attributable to  $0.02   $0.03   $0.18    $--
common shareholders — diluted
Weighted-average shares outstanding — 33,408   27,748   30,194    19,815
Weighted-average shares outstanding — 36,292   30,592   32,709    22,305
(1) Amortization of website
development costs and intangible      $3,603  $1,466  $11,179  $5,384
assets included in technology and
development is as follows:
(2)Includes share-based compensation                             
expense as follows:
Cost of revenue                       $109    $54     $380     $189
Sales and marketing                   1,084    129      2,433     388
Technology and development            704      235      1,886     546
General and administrative            359      236      1,912     822
Total                                $2,256  $654    $6,611   $1,945
(3) General and administrative
includes a facility exit charge as    $--     $--     $--      $1,737
Other Financial Data:                                             
Adjusted EBITDA (4)                   $6,838  $3,312  $25,181  $11,869
(4)See above for more information regarding                       
our presentation of Adjusted EBITDA.

(in thousands)
                                                      Year Ended December 31,
                                                      2012         2011
Operating activities                                               
Net income                                            $5,939     $1,102
Adjustments to reconcile net income to net                         
cashprovided by operating activities:
Depreciation and amortization                          12,773      7,190
Facility exit charge                                   --          1,737
Share-based compensation expense                       6,611       1,945
Loss on disposal of property and equipment             353         157
Bad debt expense                                       1,227       594
Deferred rent                                          2,155       1,243
Amortization of bond premium                           751         181
Changes in operating assets and liabilities:                       
Accounts receivable                                    (3,458)     (2,208)
Prepaid expenses and other assets                      650         (2,882)
Accounts payable                                       991         916
Accrued expenses                                       1,776       2,460
Deferred revenue                                       2,530       2,391
Net cash provided by operating activities              32,298      14,826
Investing activities                                               
Proceeds from investment maturities                    28,434      4,750
Purchases of investments                               (38,397)    (47,772)
Purchases of property and equipment                    (12,677)    (7,686)
Purchases of intangible assets                         (4,073)     (1,135)
Acquisitions, net of cash acquired                    (67,645)    (6,540)
Net cash used in investing activities                  (94,358)    (58,383)
Financing activities                                               
Proceeds from exercise of Class A common stock options 7,448       2,917
Proceeds from public offering, net of offering costs   156,726     70,788
Proceeds from concurrent private placement             --          5,500
Net cash provided by financing activities              164,174     79,205
Net increase in cash and cash equivalents during       102,114     35,648
Cash and cash equivalents at beginning of period       47,926      12,278
Cash and cash equivalents at end of period             $150,040   $47,926
Supplemental disclosures of cash flow information                  
Noncash transactions:                                              
Capitalized share-based compensation                   $2,379     $600
Class A common stock issued in connection with an      $--        $910
Write-off of fully depreciated property and equipment  $2,986     $2,133

Adjusted EBITDA

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

                                       Three Months Ended Year Ended
                                       December 31,       December 31,
                                       2012      2011     2012      2011
Reconciliation of Adjusted EBITDA to                              
Net Income:
Net income                             $549    $922   $5,939  $1,102
Other income                            (38)     (25)    (142)    (105)
Depreciation and amortization expense   4,071    1,761   12,773   7,190
Share-based compensation expense        2,256    654     6,611    1,945
Facility exit charge                    --       --      --       1,737
Adjusted EBITDA                         $6,838  $3,312 $25,181 $ 11,869

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 Year Ended
                      December 31,       December 31,
                      2012      2011     2012       2011
Marketplace revenue    $26,838  $13,746 $86,670  $42,190
Display revenue        7,499    6,145   30,180    23,863
Total                  $34,337  $19,891 $ 116,850 $66,053
                      Three Months Ended Year Ended
                      December 31,       December 31,
                      2012      2011     2012       2011
Percentage of Revenue:                            
Marketplace revenue    78%       69%      74%        64%
Display revenue        22%       31%      26%        36%
Total                  100%      100%     100%       100%

Key Growth Drivers

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

            Average Monthly Unique Users for 
             the Three Months Ended
            December 31,                     2011 to 2012
            2012             2011            % Change
            (in thousands)                   
Unique Users 34,535           23,507          47%

Unique users source: We measure unique users with Google Analytics. Beginning
in June 2012, the reported monthly unique users reflect the effect of Zillow's
May 31, 2012 acquisition of RentJuice. Beginning in December 2012, the
reported monthly unique users reflect the effect of Zillow's December 14, 2012
acquisition of HotPads.

                         At December 31, 2011 to 2012
                         2012    2011    % Change
Premier Agent Subscribers 29,473  15,799  87%

CONTACT: Raymond Jones
         Investor Relations
         Katie Curnutte
         Public Relations

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