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Zillow Shares Knocked Down on Earnings Miss

NEW YORK (TheStreet) –– Zillow (Z) shares fell an additional 2.6% in afterhours trading, as the company missed earnings estimates despite it continuing to experience strength in the online real estate market, as the company continues to invest for the long haul.

Seattle-based Zillow reported a loss of an adjusted 5 cents a share on $78.7 million in revenue, up 68% year over year. The company's Marketplace segment, which includes real estate and mortgages, saw a 72% jump year over year to $62.6 million. Display revenue increased 53% to a record $16.1 million from $10.5 million in the second quarter.

On a GAAP basis, Zillow lost 26 cents a share. The company added 3,850 Premier Agent advertisers during the quarter, bringing the total to 56,818, as average revenue per agent (ARPA) reached $320, up from $266 in the year ago quarter.

Analysts surveyed by Thomson Reuters were expecting an adjusted loss of 4 cents on $76.52 million in revenue.

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"We had our strongest quarter yet with record consumer traffic and record revenue and bookings by Premier Agent advertisers," said CEO Spencer Rascoff said in a press release. "Our deliberate focus on highperforming agents and their teams drove the significant increase in orders, and has prompted us to increase our full-year outlook. Advertisers are clearly following audience, and we're continuing to reinvest in the business to get the flywheel to spin even faster."

The company noted that adjusted EBITDA came in at $6.2 million, up from $5.3 million in the year ago quarter. Shares were moving lower in after-hours trading, falling 1.5% to trade at $139.00.

"It's a continuation of the story where advertisers are following audience," Rascoff said in a phone interview with TheStreet. Rascoff noted that this is the "15th consecutive quarter of revenue growth of more than 50%, so the hyper revenue growth continues."

Zillow saw nearly 89 million unique visitors on its mobile and web properties in July 2014, as the housing market continues to rebound, and buyers are searching for home on Zillow properties.

Zillow said it expects third-quarter revenue to be between $87 million and $88 million, with adjusted EBITDA to be between $14 million and to $15 million, with a 17% margin at the midpoint, excluding the impact of its pending Trulia (TRLA) acquisition.

The company also boosted its full year revenue and adjusted EBITDA outlooks. It now expects full year revenue to be between $321 million and $323 million, with adjusted EBITDA between $52 million and $54 million, with margins at "roughly 16%."

Rascoff-led Zillow also is boosting its advertising spend for the year, as it continues to grow its brand. Last year, the company did $35 million in advertising, and now expects to spend $75 million on advertising, up from a previously announced $65 million.

The company is holding a conference call at 5 p.m. EST to discuss the results.

Zillow shares finished the regular session down 2.6% to close at $141.06.

--Written by Chris Ciaccia in New York

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