Zillow 1Q15 Earnings Call Notes

Looking for adjusted EBITDA of 80-85m

“Our first quarter financial results on a pro forma basis show revenue of nearly $163 million and adjusted EBITDA of almost $25 million. We are right on track to reach our stated pro forma operating goals for full year 2015 of $690 million in revenue and $80 million to $85 million in EBITDA.”

A media model

“Moving now to our second strategic priority, growing our audience. As I have said many times before, in a media model, we believe that advertisers follow audience. Our four leading consumer brands represent by far, the largest audience in real estate, rentals and mortgages, both on mobile and web”

Apple watch app

“The most recent product innovations for both Zillow and Trulia brands were our Apple Watch apps. In these apps consumers can receive notifications about new properties that come on market, scroll through photos, see local info, and examine property data.”

140m unique users is obviously not a real number

“At a 140 million in use we’ve probably already past the point where it makes sense to think about that number as a real metric, in a sense that it’s such an abstract number, we all know people have multiple devices; we know that people use multiple brands. And so it’s quite abstract. We use it as a benchmark to show the size of our audience and our huge scale which really dwarfs any other competitor in the category.”

Audience is abstract, but TAM is not

“So, I mean, you’re right in my characterization of audience as something abstract and hard to wrap your mind around. The total dollars of agent advertising of between $10 billion and $13 billion, is a number that I feel pretty good about because it — I feel excellent about the 60 billion to 70 billion in total commission number. That estimate I think is fairly solid and well accepted and it’s pretty well accepted rule of thumb that agents spend between 10% and 20% of their commissions on advertising. So, I do believe that agents probably spend about $10 billion a year on advertising. And so, I feel solid in that TAM.”

We spend a lot of time trying to debate how to provide investors with transparency

“In terms of metrics, I’m laughing because this is something that we’ve spent a lot of time internally trying to bid debate and trying to figure out how best to provide investors with transparency and an ability to model.”

We haven’t found the right metrics yet

“I don’t think we’d really found the right — the sort of perfect metrics which give investors transparency but don’t give competitors too much information and that helps outsiders understand the health of the business.’

(in response to analyst question on TAM) TAM grows as your provide value

“if you try to evaluate in the year 2000, how much revenue Google would have in a given vertical, you would probably looked at yellow page advertising and reached exactly the wrong conclusion. And when Google advertiser thinks about their standards and making money on the margin. So, as long as we provide any positive ROI, the TAM is infinite in theory, because the agents continue to buy money. And the agent that is a Zillow advertiser is a professional business person that has a team and uses a software and investing in our business and spending money to make money.”