Online Real Estate Market Sees Two IPOs

Although a full recovery is still far away, analysts believe that the housing market may have begun to improve. In July 2012, sales of previously occupied homes grew 2.3% over the previous month. Over the past year, house sales have increased more than 10%. Home construction is also looking up. Market researchers predict that home construction will grow 0.2% in 2012, making it the first year since 2005 to register growth in the housing market. Meanwhile, the online real estate market has already seen Zillow’s IPO, and Trulia has also filed.

Zillow’s Financials
Zillow’s (Nasdaq:Z) Q2 revenues grew 76% over the year to $27.8 million and were ahead of the Street’s target of $27.1 million. EPS of $0.04 recorded a 43% decline over the previous year, which was in line with market expectations.

Zillow’s market reach is growing. During the quarter, the number of average monthly unique users grew 61% over the year to 33.5 million. Premier agent subscribers grew 70% to 22,696 as of the end of the quarter. Within the company’s mobile offerings, in June 2012 more than 168 million homes were viewed on Zillow Mobile. A year ago, 21 houses were viewed each second on a mobile device on Zillow. During the previous quarter, that number grew to 63 houses every second. Zillow claims to operate the most popular suite of mobile real estate applications and offers 13 apps for both consumers and professionals. Its apps are available across every major platform, including the Android, Kindle Fire, RIMM, iOS, and Windows Phone 7.

For the current quarter, Zillow projects revenues of $30 million-$31 million with adjusted EBITDA of $4.75 million-$5.25 million. The market expects revenues of $30.5 million and adjusted EBITDA of $5.19 million.

Zillow’s Rental Offerings
Zillow is focusing on growth within the rental segment, which will help it expand its market share. Recently, it spent $40 million to acquire RentJuice Corporation. RentJuice was a San Francisco–based startup that provided rental relationship management software for property owners. Its software helps manage client relationships, list series of listings on the market, and contact and screen potential renters.

Zillow estimates that $4.5 billion is spent annually in marketing rentals online. For now, though, the market is relatively small with an inventory of more than 400,000 rental properties which are accessed by nearly six million potential renters.

Zillow’s Online Expansion
To grow its online presence, Zillow launched tools to help local professionals manage and market their real estate businesses. Now, Zillow’s premier agents can develop their own Word Press–powered websites to market their own brand and business. The solution was labeled the “most innovative new technology” in the 2012 Innovator Awards at Real Estate Connect.

The stock is trading at $37.89 with a market capitalization of $1.11 billion. It peaked at $60 on listing earlier this year.

Trulia’s Financials
The much-awaited real estate IPO may soon be available. Trulia finally filed its S-1, revealing plans to come out with an IPO. Trulia is filing its IPO under the JOBS act and is allowed to keep the S-1 filing private up to 21 days prior to the marketing road-show. Trulia plans to raise $75 million through a listing on the NYSE under the ticker TRLA.

Trulia claims to have a user base of more than 20 million people. It earns revenues through ads and subscriptions that enable prominent listing of properties. Apart from including routine details about a property, Trulia’s site also offers insights into local schools and crime rates. During the first half of this year, Trulia saw revenues grow 78% to $28.9 million. However, the company has yet to turn a profit. For the six-month period ended June of this year, it reported a loss of $7.64 million, compared with $2.61 million a year ago.

Analysts are doubtful of its acceptance on the stock exchange given the continued losses. The recent debacles with Groupon and Facebook have already made investors more cautious. However, while Groupon’s business model is controversial, Trulia’s is a regular vertical search model and thus possibly more reliable.

Move’s Financials
Move’s (Nasdaq:MOVE) Q2 revenues grew from $48.9 million a year ago to $49.3 million. Net income of $0.04 per share was marginally higher than previous year’s $0.03. Realtor.com remained the leader in the industry and recorded viewing of more than 1.2 billion pages. Site visitors spent nearly 1.2 billion minutes on the Realtor.com website.

For the current quarter, Move projects revenues of $48.5 million-$49 million with an adjusted EBITDA margin of 14%. The company expects to end the year with revenues of $195 million-$197 million and an adjusted EBITDA margin of 14%.

Move’s Mobile Offerings
Move has also seen improved traction in mobile adoption. More than 40% of its viewed listings were viewed on mobile apps. It also saw improved mobile engagement and noted that the pages viewed and leads delivered were six to seven times that of the website. The enhanced Android app lets buyers and sellers access final sale prices, find and monitor foreclosed properties, and monitor price changes on homes so that they can make more informed pricing decisions for their own properties.

The stock is trading at $7.90 with a market capitalization of $310.59 million. It touched a 52-week high of $10.06 in March 2012.

ZipRealty’s Financials
ZipRealty’s (Nasdaq:ZIPR) Q2 revenues fell 14% over the year to $20.3 million. EPS of $0.02 was higher than the loss of $0.05 per share reported a year ago.

During the quarter, the total value of real estate transactions on ZipRealty closed fell to $734 million, compared to $952 million a year ago. Average net transaction revenue per close grew from $5,558 a year ago to $6,560. The total number of transactions closed in the quarter fell from 3,992 a year ago to 2,924. At the end of the quarter, there were 1,508 ZipRealty agents engaged compared with 2,197 agents a year ago and 1,624 agents a quarter ago.

ZipRealty’s Mobile Offerings
During the quarter, ZipRealty improved its website and mobile offerings. It added features to enable agent reviews, ratings and comments. As part of increasing user engagement, it introduced “Watch This Property,” a feature that lets registered users receive market notifications for off-market properties and keeps them informed about recent sale and purchase transactions in the market when they are not actively scouting the market. It also added push notifications to its mobile apps that alert mobile users when new listings come on the market that meet their search criteria. ZipRealty’s mobile apps have received positive reviews, and traffic to its apps on mobile devices has doubled over the year.

The stock is trading at $2.06 with a market capitalization of $42.53 million. It touched a 52-week high of $2.28 on August 15.

As I said earlier, the improving housing market conditions will help these real estate players improve their market position. They are also being helped by the continuous addition of newer features and improved apps that help address the smartphone and mobile device market.