Zillow Plunges as Earnings Fall on Compensation (Update 2)

Updated from 5:47 p.m. EST to clarify earnings announcement.

NEW YORK ( TheStreet) -- Zillow ( Z) shares are plunging 9.6% to $82.35 in after-hours trading after the online real estate advertising company posted earnings that beat Wall Street estimates, though compensation expenses rose in the quarter.

Seattle-based Zillow reported a GAAP loss of 30 cents a share on $46.9 million in revenue as Marketplace Revenue rose 86% year-over-year to $36.5 million. Display Revenue increased 29% to $10.5 million from $8.1 million in the second quarter of 2012.

Hindered by $7.1 million in stock-based compensation during the quarter, the company's GAAP net loss was $10.2 million compared to net income of $1.3 million in the second quarter of 2012. The charge was one time item related to an acquisition. Excluding the charge, the company earned 1 cent a share, beating estimates.

Analysts polled by Thomson Reuters were expecting Zillow to report a second-quarter loss of 11 cents a share on $44.41 million in revenue.

The company noted that 61 million monthly unique visitors went on Zillow via mobile devices and desktops, a gain of 66% year over year.

CEO Spencer Rascoff, in a phone interview with The Street, was defiant, choosing to concentrate on the quarter's revenue while discounting the profit loss. Concerning a possible new equity offering, Rascoff said the company had nothing to announce.

"It was a tremendous quarter," Rascoff said. "We crushed revenue, we had record traffic, the highest ever net adds. It's being driven by mobile, where we had 120 homes viewed per second, up from 63 homes a year ago. Now, we're just starting to monetize rental in the past few weeks. We're firing on all cylinders."

Adjusted EBITDA was $5.3 million for the quarter, 11% of revenue, compared to $5.3 million in the year-ago quarter.

In addition to reporting earnings, Zillow is hosting a 30-minute event during which President Obama will answer housing-related questions. Rascoff will moderate the discussion using questions sourced from social media, including Facebook, Twitter, Vine, Instagram and other sites using the hashtag, #AskObamaHousing.

Rascoff said the key themes of the discussion will be reforming the government sponsored entities (GSEs) Fannie Mae and Freddie Mac as well as the impact of rising interest rates and values on home buyers and affordability rates. "There are a lot of questions on local housing dynamics, including negative equity, people being underwater, items like that. The common theme is more of a micro focus, as opposed to macro theme."

During the conference call, CEO Rascoff updated the company's revenue guidance. Zillow now projects 2013 revues to be between $186 million and $188 million, up from a prior outlook between $178 million and 182 million . Full-year EBITDA guidance is staying at $20 million. For the third quarter, Zillow expects revenue to be between $49.5 million and $50.5 million, with EBITDA between $1.5 million and $2 million.

Shares of Zillow closed the regular session higher, gaining 0.73% to close at $90.71.

-- Written by Chris Ciaccia in New York

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