Two pieces of big news today for online real-estate juggernaut Zillow. The company is announcing another acquisition, New York listings site StreetEasy, for $50 million in cash. And it has also applied for a follow-on offering of another 2.5 million shares of Class A common stock, equivalent to around $228 million based on Friday’s closing share price of $91.22.
StreetEasy currently has 1.2 million monthly visitors, according to Zillow — and extensive property listings inventory focusing on New York City, one of the country’s most concentrated and biggest real estate markets. It’s not clear how much of an overlap the two have in terms of audience in New York, but will give Zillow a local foothold to grow that business regardless.
“This acquisition gives StreetEasy the resources to further invest in product development and grow its audience, while offering Zillow clear market leadership in the country’s largest and most important real estate market,” the company notes in a statement. This makes it sound like StreetEasy will remain a standalone property, rather than merge its branding with that of its new parent.
“StreetEasy is an excellent strategic fit with Zillow, as we share a common goal: To help consumers become smarter about real estate by communicating comprehensive, unbiased information about apartments and homes,” said Zillow CEO Spencer Rascoff in the statement. “StreetEasy is an incredibly strong and recognized brand in New York City, and complements Zillow’s dominant and growing national brand. We’re delighted to welcome the enormously talented and knowledgeable StreetEasy team on board.”
Meanwhile, the follow-on offering, Zillow says, will be for growing the company more, including possibly more acquisitions. “Zillow may also use a portion of the net proceeds for the acquisition of, or investment in, technologies, solutions or businesses that complement its business,” the company notes.
Earlier this month Zillow reported quarterly revenue of $46.9 million, up 69% over last year as well as record traffic with 61 million users in July, as well as more growth in its mobile business, with more than 321 million homes were viewed via mobile with 60% of Zillow’s traffic comes via mobile devices. However, it’s currently operating at a net loss, with loss per share widening to $0.30 (still, $0.10 better than analyst estimates).
One large reason for that is because Zillow is spending heavy to beat off competition from others like Trulia. Today’s moves indicate that there is more of this to come.
In New York in particular, there are a number of startups that are looking to disrupt the real estate market, such as Urban Compass — co-founded by ex-Twitter, ex-Google successful entrepreneur Ori Allon and backed with an $8 million seed round from (yes) high-profile investors. Trulia itself in March of this year applied for its own follow-on offering of $150 million to be used for acquisitions and investing in helping the company grow.
It doesn’t appear that StreetEasy, which has been in operation since 2006, ever disclosed any significant funding from known investors, although a spokesperson for Zillow tells me in fact that it had raised $2.9M from FA Technology Ventures. It’s another example of how it’s not always those on the high-profile VC track that go the furthest.