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All right, want to get to a name that is certainly on our radar. Shares a Zillo down the most in nearly one year. The stock off more than nine percent, was down seventeen percent at its low. Today, the online real estate firm delivered a revenue forecast for the first quarter that fell sure the average analyst estinmate. Meantime, the company expects twenty twenty five to be its first profitable
year since twenty twelve. Keep in mind it posted a net loss of one hundred and twelve million back in twenty twenty four.
With more on the business and the US housing market with us as Zillo CEO Jeremy Waxman joining us from Seattle. Jeremi, thanks for joining us today. Likely I would imagine a tough day when the stock is down as much as seventeen percent, down nine percent right now. The housing market, it just hasn't recovered in the way that you want to see. What's the biggest thing holding it up?
Thanks for having me. The housing market remains challenged. It was challenged in twenty twenty four, and we're expecting it to be so again in twenty twenty five. Zillo reported
great results yesterday. Q four revenue up seventeen percent, and we hit our goals of growing revenue double digits last year and expanding our margins, and we also guided yesterday that we expect to continue to do that again this year with revenue growth in the low to mid teens, more margin expansion, and positive gat and income for the first time in a long time. And as you said,
that's against a persistently challenged housing market. So we're able to grow and gain share both in twenty four and we planned it again in twenty twenty five, while the market remains depressed for volume and challenging for buyers.
Jeremy, do you think investors have it wrong in terms of pushing your share price down a lot in reaction to what they got on the quarter? In the outlook, we.
Don't really focus on the day to day voting machine of the stock market. If you zoom out and look over the long the long couple quarters, a couple of years, we've made great progress on our integrated super apps strategy. We're growing revenue nicely, we're outgrowing the category, and we can plan to continue to do that in twenty twenty five, and so over time the stock caacre of itself. The company grows in value as we really deliver on our
promise of helping more buyers and sellers get home. That's really our goal at Zillo is to help more of our audience turn into transactions.
Yeah, and I will point out the stock was up about twenty eight percent last year and up about almost eighty percent and twenty twenty three. In terms of the stress though, or maybe you're you know, kind of cautious outlook in terms of the housing market, is it all about mortgage rates and higher mortgage rates?
You have the challenge or the housing market starts with mortgage rates, but it's really about availability and supply. We are expecting flat ish total dollar value housing marketing Q one and load mid single digit growth for the year. And as you said, if you look, it's not like twenty twenty four was that much better from a volume standpoint. The real challenge is with mortgage rates. Staying hi affordability is a challenge for buyers, but that really locks a
lot of sellers into their homes as well. Right a seller is thinking about to do they want a trade out of that mortgage? Do they feel locked into that mortgage, and many are foregoing listing their home and making that move. So you're seeing still very low inventory. Inventory is up eighteen percent from last year, but it's still downs sharply from pre pandemic norms, and so lack of supply really
makes it challenging for buyers. And then you add elevated rates and what they can afford of what there is to buy.
Jeremy, the cost of housing certainly a theme in last year's presidential race. I'm wondering if you think that the federal government will be able to achieve bringing more supply of housing online. This came up with the vice presidential debate when Jade Vance talked about using federal lands to build homes. Do you think the federal government will have a meaningful effect on housing supply?
The real challenge was supply. We talked about existing home inventory and what sellers are doing, but we are chronically underbuilt right we. Zilo estimates about four and a half million homes have not been built to keep up with the demand needed since the global financial crisis, and the solution of those problems really is at the state and local level. You need things like permitting reform and removing
red tape in the process. To get starts done quickly, you need tax incentives and financing options so that builders can get their projects online more quickly. So the totality of the problem, you know, all nearly five million homes that we need to catch up on. We're not going to do that overnight, but slow and steady will definitely bring more supply to the market.
I do wonder though, to you know, Jeremy, how much the YEP I get that, the permitting I mean, these are problems that have played certainly the housing market I feel like forever in terms of supply. But having said that, how much too? Is there some cautiousness on the part of home builders who still everybody still remembers two thousand and eight and the over bill. So is there also a part of that as some of the components in terms of supply.
Well, you're seeing places where it works well, right, I mean Austin, Texas is one good exams sample that we've highlighted where a lot of multi family inventory and the rental market has come online and you've actually seen rent prices come down even with the population growth in Austin and so you know, you have to remember if you zoom out, there are still the counter forces of for sale and rentals working together, and you know, when folks can't get it done and find the home to buy,
they end up rere renting, and you're seeing you know, rental inventory, you know, grow to satisfy that demand as well. So it is, as you said, it's a local issue, but there are places where it's working well and there are places where it can work even better.
We got a hotter than expected CPI print earlier today, and my question is about how that changes the outlook for rates for the year and then in turn, how that affects your business. Does your OUTLOK for twenty twenty five change if rates don't come down.
No. Our outlook that we put out yesterday assumes a pretty lousy housing market, and I think today's print probably just kind of confirms that fact. Right, we are expecting flatish housing market in Q one and load of single digits for the year, and I think we were maybe a little bit more embarrassed than most heading into the year on how the housing market's going to do. Now, the good news for ZILLO is we're out growing the
category and we're gaining share. We did that in twenty twenty four and we expected to again in twenty twenty five. And that's in our for sale business, where we're helping more buyers meet their agents, we're helping originate more mortgages. That's also when our rentals business. Our rentals business grew twenty five percent in Q four. We expect that to accelerate in Q one as we bring more rental inventory to more renters across slow Hey.
One thing I do wonder in our conversation coming off of the hot CPI print Jeremy, is that maybe we saw certainly the rates market, the US rates market, the treasury market react and move up today. But now the talk has moved to maybe even the next move. We need to start thinking about the Fed raising rates. If we see the FED start to raise rates, what does that do in your view to the housing market and how might that impact your business?
Well, as I said, we're kind of near all time lows on volume right. We're down to basically folks who have to move and can get it done, get it done. And that's the thing about this market. Long term, real estate is a growth industry. You see volumes and total value grow Right now, you're seeing depressed volumes because of all the challenges, especially in the financial market with affordability for buyers. But folks are getting it done and they will get it done. And what we're here at Zilla
to do is help them. Buyers who need to buy, many of them are starting that conversation with financing rather than just dreaming. We now see about as many buyers start with what can I afford and can I even buy right now as they do dreaming, shopping and going
media an agent. So we've brought online tools like Buyability to help them truly understand their personalized payment information, what can they actually afford for themselves given their financial information, so they can have confidence to go get a pre approval letter, to actually go make an offer and win a house. So it is tough out there, it will remain challenging in twenty twenty five, but folks can get
it done. We're there to help and that's exactly what's driving their results from us in Q four and why we expect to continue to grow and not go the category in twenty twenty five.
Jeremy, you mentioned those buyability tools that you guys have on your platform. What does that show you about. Is it the first time home buyer that continues to find it really difficult, is it the trade up home buyer? What does it tell you about kind of the home buyer and in essence, the US consumer out there when it comes to buying a house.
Yeah, I mean the demand and desire to buy a home still persists and exists across all demographics. You're seeing folks having to wait longer, save up more to make that down payment, and so it gets tougher. But you see the strong desire to buy a home really persist across all demographics, and we see that in folks who are using Zillo. Again. As I said, one of the things that is interesting to us is how much more financing and total cost of ownership is front and center
for a buyer before they even start. You know, five ten years ago, everyone wanted to start by shopping, by touring, by virtual touring, by going into open houses, and now it's kind of a balance as many folks want to start in that state, as they want to start with just the reality of what's my budget look like? How do I set my budget and work with an agent to make sure the homes I fall in love with the ones that can actually buy hey.
One thing we also learned recently from you guys is that Redfinn is teaming up with Zillo for rental listings. This partnership, to me, it sort of looks like frenemies teaming up. Like you guys are competitors here. Redfinn's market cap is about two billion dollars year, about eighteen billion dollars. Do you end up buying redfin at a certain point.
We're really excited about this partnership we just announced with Redfinn. It's a big step in our overall rental strategy. It's important to zoom out and remember, unlike the FIRS sale marketplace, there's no national database for rentals. The big challenge a renter has is they can't find all the supply. They have a very short timeframe to find a place to rent, and so they scour the internet, they scour offline looking.
So that's zilla strategy. Can we organize more and more of the rental listings out there nationwide so that renters on Zillo and on our partner sites can find them. That strategy is working great. That's what's driving having the leading audience and growing audience of renters, and that's bringing more property managers to Zillo and our partner sites to want to advertise that audience. So this partnership with Redfin to power their rentals business is just the next step
in that strategy. Adding on to this great partnership we forged with real to dot com last year, it allows advertisers to come to Zilo and get advertising in front of Zillo sites, Redfin sites and realtor sites to reach an even bigger set of renters. And then renters get more choice, right, they see more inventory, which, again, as I started, that's the big problem in rentals is you cannot find all the inventory.
And forgive me that Redfin market cap about one point one billion dollars, so shy of two billion dollars. I didn't hear a yes or a no, and no answer to my question about whether or not.
Oh no, have no plans now, no plans. We're very excited about the partnership. We've worked with them on some other things before and we love how culturally aligned they are and just digitizing the transaction in real estate.
Well, along those lines, how are real estate companies holding up through this extended housing market?
Trough.
I mean, any opportun ortunities for you guys to do some acquisitions as a result, along maybe the lines of I don't know, partnerships, but maybe even acquisitions.
Yeah, the bright side of a challenge real estate market is it really allows the best professionals to gain share. Right when it's rainy and cloudy outside, those that do best sometimes come out ahead. And what's great about that is that aligns so nicely with Zillo strategy, Right. Zillo strategy is to partner with the best agents and agent teams in the industry. Eighty percent of the agents that we partner with are in that top twenty percent of
producers nationwide. So these are the folks that are operating businesses at scale, training great agent teams to help delight customers. So even when there's less transactions to do, and even when it's a challenging conversation with many buyers and sellers, those folks command great price hold share and grow their business. And so in some ways having a choppier or a depressed housing market can advantage some of the best professionals.
Hey, we're asking every CEO we talk to these days a couple of different questions about politics about AI politics is where I want to go and just hear from you about how you view this new Trump administration in terms of changes that you've made at the company as a result, or what it means for you as a business.
One of the things youill focuses a lot on is AI and AI as it comes to relisted industry, right, both for us as employees, but more so for our
customers and our partners, our agents, our loan officers. And we've been investing in and innovating around AI for decades and so now as general of AI comes to the forefront, you know, we've been really advocating for responsible regulation around AI that encourages and supports innovation so that companies like Zilo can continue to innovate on behalf of the customer. So one thing we're very excited about is to continued
progress on the ability to progress with AI. And you know, AI for us is a feature, it is a tool for our customers, for our employees, but in the REALISTM industry, it's really about making the professionals more efficient and effective. Right. There's there's so much wasted work, busy work, paperwork, back office work, and when you talk to a great real estate agent or a great loan officer. That's not what they want to be doing. They want to be delighting customers.
They want to be winning more business, they want to be getting more transactions done. So we're really excited about the ability to continue to lean in and innovate, not just on our tech platform generally, but on AI specifically, to really bring more of this transaction into your smartphone, make it more delightful and faster for the customer.
All right, Jeremy, one last question is also a question we are asking too, heads of company CEOs and the like, anything that could come out of Washington and the new administration that could help or hurt your business. And just got about thirty seconds.
Zillo is really focused on ensuring that real estate stays accessible for the customer. We've outlined our principles for the consumer, which are around transparency, access, and affordability, and any policies that come we look to help make sure they push forward and sure that consumers have access to all the information that's out there, have access to great professionals, and have better education on how the real estate industy works.
Real estate is one of the largest industries that there is and it's the single biggest decision that most individuals are going to make, So making sure that people understand how it works, making sure that they have access to hiring the best professionals, that's one of the things we're very focus on Zilla and we continue we will continue to be so you're.
Hopeful that the administration the policies will be supportive of the housing market.
Just quickly. Yeah, We've been around for twenty years and have been fortunate to work with both both administrations. And again, as we talked about earlier, one of the real challenges in our industry is so much is done at the state and the local level to make sure that real estate can flow for the benefit of the buyer and seller.
Really good point, Jeremy, Thank you for all this time. Jeremy Waxman, he's chief executive officer of Zillo.