Zillow is looking to double its Premier Agent niche by 2025.
Zillow Returning to Roots of Agent Lead Gen for More Revenue
Zillow‘s financial success has always been built on its agent lead generation niche. After its recent iBuying debacle, Zillow’s current strategy is to return to its agent lead gen roots with hopes that its Premier Agent program will double in size by 2025 and add an additional +$1.5B to its bottom line.
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In 2021, Zillow”s revenue was $2.1B. The company’s goals include adding +$800M in adjacent services, +600M in IMT, and +1.5B in Premier Agent (paid for by real estate agents) to total $5B in its 2025 revenue, according to real estate strategist Mike DelPrete.
DelPrete calls this strategy an “audacious plan.”
Revenue Goal for Premier Agent
Zillow’s revenue plan looks like this:
– FY 2018 – $900M
– FY 2019 – $950M
– FY 2020 – $1.1B
– FY 2021 – $1.5B
– FY 2022 – $1.75B
– FY 2023 – $2B
– FY 2024 – $2.5B
– FY 2025 – $2.9B
Clearly, Premier Agent, Zillow’s core business and part of its IMT business, is stronger and generates more revenue than ever. Over the past three years, Premier Agent revenue has tripled thanks to unique pandemic-driven demand.
The potential concern with this revenue plan is that pandemic-driven demand will not endure forever. Already, for the first time in 18 months, revenue growth from Premier Agent dropped during Q4 2021.
Zillow Home Loans
Mortgage revenue from Zillow Home Loans, part of its Adjacent Services division, also slowed as did Premier agent during Q4 2021.
The underlying and recurring issue for Zillow Home Loans, however, is that this mortgage sector of Zillow’s overall business has been consistently unprofitable. Even during FY 2021 before pandemic demand noticeably began to sputter, Zillow Home Loans suffered a net loss of $50M.
Obviously, losing revenue in a business sector where others generate revenue is not a good sign. More obviously, consistently losing revenue even during a time of pandemic-inspired, unprecedented demand for that service is not a good sign.
Bottom Line for Zillow’s 3.0 Plan
Zillow’s strategy going forward towards 2025 centers around doubling transactions for Premier Agents and selling homebuying consumers its adjacent mortgage and title services…two business components already beginning to show cracks.
Perhaps DelPrete’s word choice of “audacious” for Zillow’s plan going forward is apt.
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Thanks to Mike DelPrete.
