Investing.com – Zillow Group stock (NASDAQ:ZG) surged 14% in premarket trading Friday after the company beat estimates for the fourth quarter and made speedier progress on winding down its home-flipping business.
A hot property market drove quarterly revenue up nearly five-fold to $3.9 billion. That robustness in business also helped the company sell its inventory quicker and at higher prices, translating into lower writedowns as it exits the Zillow Offers business -- $405 million against the $565 million expected when it took the decision in November.
Zillow Offers is a service to homeowners to sell without having to coordinate repairs or host open houses. After buying, Zillow prepares it for sale by doing the same type of projects a typical seller would, then lists it on the open market.
Zillow Offers suffered as the company tweaked its algorithms to grab higher share in a sellers’ market, overpaying for houses just when the prices were beginning to cool off. Left with a large inventory, it decided to exit the business to focus on the core platform. A consequence of that decision was a loss of a fourth of the employees, a process still underway.
Co-founder and CEO Rich Barton said the company is now focused on building a ‘housing super app’ to connect all the stakeholders in a market that’s still fragmented. Traffic growth at the company’s online platforms was flat at 198 million average monthly unique users in the December quarter.
Zillow is now targeting $5 billion in annual revenue and a 45% EBITDA margin by 2025. Adjusted loss per share was 41 cents and narrower than expected.