Zillow shares climbed more than 8% in extended trading on Thursday after the digital real estate company reported third-quarter estimates that blew past analysts estimates and offered a better-than-expected forecast for the fourth quarter.
A combination of record low mortgage rates and a pandemic-related trend towards remote work has led Americans to move and spurred a surge in existing home sales. Zillow provides inventory across the country along with technology that allows prospective buyers to shop for homes and take virtual tours.
Zillow reported third-quarter earnings of 37 cents per share, excluding some items, on revenue of $657 million. Analysts had expected per share earnings of 11 cents on $572 million in revenue, according to Refinitiv. For the fourth quarter, Zillow expects sales of $709 million to $748 million, topping the average $683 million estimate.
"We believe these tailwinds are durable, supported by low interest rates and demographic shifts," CEO Rich Barton said in his letter to shareholders.
Prior to Zillow's report, the stock had already more than doubled this year. Early in the pandemic, the company had to pause its offers unit, which buys homes and sells them, because of Covid 19-related restrictions that limited physical contact.
While Zillow is building back its offers activity, the revenue growth now is coming form providing mortgages and facilitating purchasing activity on its online platform.
Mortgage revenue increased 114% in the third quarter to $54 million, "as we took advantage of refinance activity driven by low mortgage rates site," Zillow said in its investor presentation. Revenue in the internet-related business climbed 24% to $415 million as demand increased for online home purchases and rentals.