No error in Q2 earnings—here's how to trade: Zillow CEO

When asked about Zillow's seemingly confusing second-quarter earnings press release, CEO Spencer Rascoff said no errors were made and suggested that investors focus on other aspects of the company's performance for valuations.

Zillow's earnings press release Tuesday did not include stock-based compensation in its calculation of earnings per share, which confused the Street because it seemed to indicate a loss for the second quarter instead of a beat on expectations.

"It wasn't actually an error," Rascoff told "Squawk on the Street" Wednesday. "It was an 11 cent beat on EPS, but it's hard sometimes for people to compare apples to oranges when they're looking at EPS. … It's confusing to compare earnings per share from one source to another."

Investors shouldn't trade the stock of the real estate services company based on earnings per share but should concentrate on revenue and EBITDA growth, he advised.

"It was a tremendous quarter for Zillow," Rascoff said. "We delivered a solid beat on revenue, a solid beat on EBITDA, a beat on EPS. We raised revenue guidance for the full year. We're always a highly volatile stock, and we tend not to focus on what the stock does on a day-to-day or week-to-week basis."

Zillow said traffic to its website and mobile app surged during the quarter, with a record 54.3 million monthly unique users, on average. The number of agent subscribers grew 71 percent, to nearly 39,000.

Revenue rose 69 percent, to $46.9 million, topping analysts' prediction of $44.4 million. But costs more than doubled, to $57.3 million, as Zillow nearly tripled spending on marketing and advertising, while technology and development costs nearly doubled. The company also added employees.

(Read more: Zillow revenue soars, posts loss as costs grow)

That led to a loss of $10.2 million in the period of April through June, or 30 cents a share, versus a profit of $1.3 million, or 4 cents per share, in the year-earlier period. Analysts had predicted a loss of 40 cents in the last quarter, according to FactSet.

The company said the loss stemmed partly from a $7.1 million one-time expense for employee compensation in stock that was tied to an acquisition.

For the year, Zillow lifted its revenue outlook to between $186 million and $188 million, from a previous guidance of $178 million to $182 million. Analysts had expected $183 million.

—The Associated Press contributed to this report.

— By CNBC's Paul Toscano. Follow him on Twitter and get the latest stories from "Squawk on the Street" @ToscanoPaul