NEW YORK (TheStreet) -- Zillow (Z) is moving on up to the east side, the west side and everywhere else in New York City, as the Seattle-based online real estate company is acquiring StreetEasy for $50 million in cash.
"Zillow has always coveted StreetEasy," CEO Spencer Rascoff said in an interview with TheStreet. "I've jealously watched them attack and conquer. Zillow has had on-again-off-again conversations with StreetEasy, and the timing finally aligned."
By doing this acquisition, Zillow expands its presence in New York City, as StreetEasy has nearly 1.2 million monthly unique users, with most of them in the New York region. On Zillow's second-quarter earnings call, it noted it had 61 million monthly unique visitors using Zillow via mobile devices and desktops, a year-over-year gain of 66%, helping it generate a non-GAAP profit of a penny a share on $46.9 million in revenue for the second quarter, as Marketplace revenue rose 86% year-over-year to $36.5 million. Display revenue increased 29% during the same time frame to $10.5 million from $8.1 million.
"It gives Zillow immediate relevance in New York City," Rascoff went on to say. "StreetEasy gives us overnight market leadership, and a local network effect." StreetEasy, which is EBITDA profitable, will not change Zillow's previous revenue guidance forecast for 2013.StreetEasy allows Zillow to continue expanding its offerings by offering not only listings, but information about condos, co-ops, new developments and luxury real estate as well. Zillow, which has been highly acquisitive this year, is turning its focus away from so-called B2B acquisitions and looking more toward a consumer focus. "HotPads (a previous acquisition) and StreetEasy have consumer brands, so it's a different take at M&A then in the past," Rascoff noted. "We're in audience growth mode. We're a media company, and we believe those that have the largest audience will win, and that's where the money will go." Following the purchase, Zillow will have approximately $150 million in cash on its balance sheet. Separately, Zillow also filed a proposed secondary offering, selling 2.5 million shares of Class A stock by the company itself. The proceeds will be used for general corporate purposes. An additional 2,523,486 shares of Zillow's Class A common stock will be sold in the offering by existing shareholders.
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