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Why Zillow Stock Soared Today

Source The Motley Fool

Shares of Zillow (NASDAQ: Z) (NASDAQ: ZG) were surging today after the online real estate platform delivered strong results and showed growth across several verticals.

The stock closed up 23.8% on the news.

Image source: Getty Images.

Zillow looks strong across the board

Overall revenue at Zillow rose 17% to $581 million, beating the midpoint of the company's guidance at $553 million and the consensus at $554.7 million.

Growth was broad based as residential revenue was up 12% to $405 million as more buyers and sellers worked with Zillow agent partners. Rentals revenue rose 24% to $123 million, and mortgage revenue jumped 63% to $39 million.

The company added new technology to improve its interface, including artificial intelligence (AI)-powered natural-search functionality, and its enhanced-markets strategy, which offers an end-to-end experience in dozens of metros, is also paying off.

On the bottom line, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) was $127 million, well ahead of guidance. On a generally accepted accounting principles (GAAP) basis, it posted a loss of $20 million, or $0.08 per share.

Calling it another strong quarter, CEO Jeremy Wacksman said, "We continue to invest in tech solutions to build the integrated transaction experience consumers demand and deserve.

What's next for Zillow

Zillow is the leading online real estate platform, and the company finally seems to be building out a business model worthy of that position.

Looking ahead to the fourth quarter, it sees total revenue of $525 million to $540 million, which was in line with estimates, and adjusted EBITDA of $90 million to $105 million.

Seventeen-percent growth in the quarter is clearly a strong sign as is improving EBITDA margins. If the housing market bounces back, Zillow could be set up to soar.

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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Zillow Group. The Motley Fool has a disclosure policy.

Disclaimer: For information purposes only. Past performance is not indicative of future results.

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