No-Moat Zillow Reports Strong Top-Line Results; iBuying Segment Warrants Caution

No-moat-rated Zillow Group reported better-than-expected results that beat S&P Capital IQ consensus estimates from a top-line perspective. This was buoyed by a strong performance in the housing market in spite of broad economic uncertainty due to the COVID-19 pandemic. Revenue increased 28% year over year, with homes revenue up 82% year over year since the company resumed its home-buying operations. Adjusted EBITDA came in at $15.8 million, far surpassing management expectations of a loss of approximately $60.5 million on a consolidated basis. This measure outperformed expectations on a segment basis as well, as the IMT segment (particularly Premier Agent) delivered stronger results than our and management's expectations. The company purchased 86 homes and sold 1,437 homes over the quarter. However, the purchases are not reflective of commitments made to buy homes later in the year.