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Zillow Falls Despite Earnings Beat, Guidance Raise (Update 1)

Updated from 5:02 P.M. to include comments from the conference call in the fifth and sixth paragraphs.

NEW YORK (TheStreet) -- Zillow (Z) shares fell 3.05% to $61.02 despite the online real estate company posting results that beat Wall Street expectations and raised its revenue guidance for the full year.

Seattle-based Zillow reported a first-quarter loss of 11 cents a share on $39 million in revenue, up 71% year over year. That beat the expectations of analysts, who were expecting a loss of 13 cents a share on $37.39 million in revenue, according to analysts surveyed. Analysts polled by Estimize were looking for a profit of 2 cents a share on $37.16 million in sales.

"We're super excited about the quarter," said CEO Spencer Rascoff in a phone conversation with TheStreet prior to earnings. "The business is firing on all cylinders."

The company raised its revenue forecast for the 2013 fiscal year to between $178 million and $182 million, up from the range of $165 million to $170 million provided in February. "We're stepping on the gas in terms of advertising," Rascoff said. "We believe advertising is working for us and our Premier Agent pricing migration is working well."

On the earnings call, Zillow noted it's ramping up its advertising expense, which will hurt Adjusted EBIDTA (Earnings Before Income, Depreciation, Taxes, and Amortization). For the first-quarter, Adjusted EBIDTA was $5.1 million, a decrease from $5.4 million in the year-ago quarter. For the full year, Zillow is raising its advertising expenses by $10 million to $15 million this year, lowering EBITDA in short-term.

In the second quarter, Zillow said it expects revenue to be between $43.5 million and $44.5 million, up 58% year-over-year. Analysts polled by Thomson Reuters are looking for $41.98 million in revenue. Adjusted EBITDA will be between $0.75 million and $1.25 million.

Zillow had 50 million unique users in the quarter, up 55% year over year, and April traffic is getting stronger, with 63% year over year growth, hitting 52 million unique users. "A part of that is advertising, part of it is virality, and part is macro housing," Rascoff said. "The [Zillow] brand is a lot bigger than it was a year ago, and it's getting bigger everyday."

Shares of Zillow rose during the regular session, gaining 3.17% to $62.94.

--Written by Chris Ciaccia in New York

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