Seattle-based Zillow Group Inc. (Nasdaq: ZG) during the fourth quarter of 2021 generated significant revenue from Zillow Offers, an instant homebuying service the online real estate company is winding down over the coming quarters after absorbing steep losses last year.
In its fourth quarter and year-end financial results, released Thursday, Zillow revealed that Zillow Offers generated over $3.34 billion in revenue during the final three months of 2021, up from about $301.7 million during the fourth quarter of 2020. Zillow Offers represented about 86% of Zillow's total fourth quarter revenue, which was $3.88 billion.
"We’ve made significant progress in our efforts to wind down our iBuying business — selling homes faster than we anticipated at better unit economics than we projected," Zillow co-founder and CEO Rich Barton and CFO Allen Parker said in a shareholder letter released Thursday. "The wind-down process is running smoothly and efficiently, and we expect it to generate positive cash flow. We feel even more confident today that exiting iBuying and eliminating the housing market balance sheet risk to our company and our shareholders was the right decision."
Despite the revenue gains, the company still posted a net loss of $342 million on its homebuying business for the quarter and a loss of $881 million for the year in that segment.
Zillow announced in November it was shutting down Zillow Offers, a move that would take place over several quarters and result in cutting about 25% of its roughly 8,000-person workforce. The company began laying off employees in Seattle in early January. A Zillow spokesperson in November told the Business Journal the Seattle layoffs will leave Zillow with about 2,200 employees in Washington, down from 2,500 a year ago.
Overall, Zillow reported a net loss of $261 million in the fourth quarter and a loss of $528 million for all of 2021.
In its earnings presentation, Zillow touted its goal to become a "housing super app" that connects every piece of the moving, buying and selling processes. The company aims to become an immersive housing service that provides everything from digital touring, financing and searching all in one place.
Zillow aims to hit $5 billion in annual revenue by the end of 2025 with these efforts, Barton and Parker said in the shareholder letter. The company recorded $8.1 billion total revenue in 2021, but $6 billion of that came from Zillow Offers.
"We want to acknowledge the past few months have been challenging for us all — Zillow leadership, employees, and investors — but innovation is a bumpy road," Barton and Parker said in the letter. "Big swings are core to Zillow, and they are what make our company so unique. We are excited about the opportunity in front of us."
