Zillow forecasts weak revenue on losing advertiser
(Reuters) - Real estate website Zillow Inc (Z.O) forecast fourth-quarter revenue below analysts' estimates after it lost one of its larger advertisers, Foreclosure.com, sending the company's shares down 25 percent in after-market trading.
Loss of Foreclosure.com would affect display revenue in the near term, Zillow Chief Executive Spencer Rascoff told Reuters.
"We no longer receive this revenue now that we have launched (a) competitive product," Rascoff said.
The company had an advertising relationship with Foreclosure.com prior to the launch.
Zillow also said it expects seasonal weakness to affect its display advertising business in the current quarter.
"Fewer people buy homes in the fourth quarter. Therefore, there are fewer display advertising dollars spent," Rascoff, who has worked with Microsoft Corp's (MSFT.O) spin-off, Expedia Inc (EXPE.O), said.
Display business contributed 26 percent to total revenue in the quarter ended September 30.
Zillow expects total revenue of $30 million to $31 million in the fourth quarter. Analysts were expecting $32.5 million, according to Thomson Reuters I/B/E/S.
The company reported net income of $2.3 million, or 7 cents per share, in the third quarter, compared with a loss of $570,000, or 2 cents per share, a year earlier.
Revenue jumped 67 percent to $31.9 million.
Display revenue rose 15 percent to $8.3 million.
Analysts had expected a profit of 7 cents per share, on revenue of $31.7 million.
The company said on Monday it would buy mortgage technology company Mortech Inc for $12 million in cash.
Zillow shares were down 22 percent at $26.74 in extended trading. The stock closed at $34.37 on the Nasdaq.
The company is known for its "Zestimates", a starting point in determining a home's value.
Seattle-based Zillow, which went public July last year, is one of the few technology companies whose shares have managed to trade near their listing price. The stock has gained 61 percent this year.
(Reporting by Chandni Doulatramani in Bangalore; Editing by Sriraj Kalluvila, Maju Samuel)