Zillow Group, Inc. (NASDAQ:Z) Q1 2019 Earnings Conference Call Transcript
May 09, 2019 • 05:00 pm ET
We will now begin the question-and-answer session. (Operator Instructions) Our first question comes from Tom Champion with Cowen. Please go ahead.
Hi. Good afternoon. Congrats on the nice results. My questions are on the Home segment. So, maybe best for Jeremy. So 1Q transactions in revenues beat our expectations and came in above the high end of the range. I'm hoping you could maybe unpack that outperformance and what were maybe the one or two or three key drivers. And then 2Q guide implies another very healthy step up. Any context here on how to think about what is driving that growth and maybe how to think about the balance of the year for modeling purposes? Any comments on that would be really helpful. Thank you.
Yes. Hey Tom, this is Jeremy. On the guide, I mean, it's still so early. We're going a quarter at a time here and so we'll try and give you visibility as we go. You can kind of look at our market entry pace that we hit now and draw some lines from that as we try and continue to open markets there. In terms of what's driving the beat, it's really consumer demand, both on the acquisition side in terms of people wanting to service and then us just finding our footing on the market and bringing those homes back to our large audience on Zillow. We continue to just be very strong consumer demand. I think we crossed 100,000 requests since we've launched now. We're seeing one every two minutes and that's just in the nine markets that we're in to-date.
The next question comes from Justin Patterson with Raymond James. Please go ahead.
Great, thank you. And Rich, thanks for leading off with an A-Team quote. I think, we all need that this afternoon, this spring season. This one is for Allen, just really wanted to talk about the difference on EBITDA this quarter versus your guidance. And then it looks like you updated the full year outlook, would love to understand what's better driving those changes around EBITDA? Thank you.
Yes. Thanks, Justin. This is Allen. Why don't I start with Q1? So we did perform better by about $25 million versus the high end of our outlook on EBITDA, and I describe it in three categories. About 50% of the beat came from what I'll call non-recurring. There was a legal settlement of favorable ruling related to pending legal settlements that allowed us to adjust our accrual. We had an accrual for this matter of about $4.1 million at 12/31 and based on the latest status and the ruling, we were able to take that accrual down to an immaterial amount.
And the second piece of those non-recurring was related to as we reviewed our processes around the new hire process, we've made it explicit that some -- certain payments that are made early are actually earned over a period of time of initial employments. And based on that change,