Around the Block With Zillow

Real estate agents are increasingly turning to Zillow (Nasdaq: Z) to advertise and find leads. The real estate information provider, which has a database of more than 100 million US homes, in July attracted a record 37 million unique users to its Web and mobile sites, up 59% year over year.

In the June quarter, Zillow added 4,100 Premier Agent subscribers, bringing its total subscriber count to 22,696, up 70% from the year-ago period. With the company's most popular Platinum subscription offering, sold via six-month contracts, agents receive a premium placement next to individual Zillow property listings in their area, giving potential buyers the ability to contact the agent with just the click of a button.

Zillow has been a big beneficiary of the trend toward mobile because real estate naturally lends itself nicely to the location-based awareness of mobile apps. The company offers 13 mobile real estate apps across every major platform (up from five a year ago), and the majority of its listing are now viewed on a mobile device. In July, potential buyers and renters viewed an average of 63 homes a second on Zillow Mobile. Management says mobile users are three times as likely to contact an agent than a desktop user.

In the second quarter, Zillow's revenue jumped 75% to $27.8 million, above the consensus estimate of $27.1 million, driven by a 102% gain in marketplace revenue (subscriptions and mortgage services) to $19.6 million. Display revenue (advertisements mainly from builders, lenders, and home-related national brands) was up 33% to $8.1 million. Earnings before interest, taxes, depreciation, and amortization (EBITDA) advanced 35% to $5.3 million, representing an EBITDA margin of 19%.

Zillow continues to expand its service offerings to real estate pros. In May, the company launched Premier Agent Websites, a tool that helps agents quickly and affordably create custom Websites for marketing purposes. Last month, Zillow announced that 15 major real estate brokerages around the country are participating in the beta version of its new zPro for Brokers, a free program intended to improve the accuracy of listings, provide better listings performance metrics, and offer a more robust system for agents to follow up on referrals.

In June, Zillow completed its $40-million buyout of RentJuice, a provider of subscription-based rental relationship management software aimed at landlords, property managers, and rental brokers. With RentJuice, Zillow now has a broad suite of tools and services to help rental professionals market their inventory to renters (there are an estimated 4 million vacant units available for rent at any given time) and manage client relationships. RentJuice's mobile apps (for iOS and Android) allow rental professionals to access their listings on the go, instantly update property information/photos, and connect with prospective tenants in a timely manner.

For the third quarter, Zillow looks for revenue of $30 million to $31 million (in line with the consensus of $30.5 million), representing 60% growth at the midpoint, with EBITDA of $4.75 million to $5.25 million, versus $3.7 million in the year-ago quarter.

At a recent price of $38.83 a share, Zillow's market cap of $1.12 billion is 9.7 times the 2012 consensus revenue estimate of $114.5 million and 6.7 times the 2013 consensus of $167.4 million. Analysts on average are looking for revenue growth of 73% this year and 46% next year.

If new Yahoo (Nasdaq: YHOO) CEO Marissa Mayer is looking to spend some of the company's cash on smart acquisitions, she just might take a look at Zillow. The two companies recently expanded their exclusive advertising partnership to include rental listings, making Zillow the sole provider of both for-sale and for-rent listings on Yahoo Homes.