Zillow files for IPO, hopes to raise $51.8 million

AP News
Posted: Apr 18, 2011 6:48 PM
Zillow files for IPO, hopes to raise $51.8 million

Real estate listing and information service Zillow Inc. has filed preliminary documents with securities regulators for an initial public offering.

The company is looking to raise around $51.8 million and plans to use the funds for general corporate purposes, including a possible acquisition, according to documents filed with the Securities and Exchange Commission on Monday.

In addition, the company plans to sell $5 million of shares in a private placement to funds affiliated with Technology Crossover Ventures, a private equity and venture capital firm that has previously invested in Zillow. PAR Investment Partners LP also will buy $500,000 in shares.

Zillow did not immediately set a target price for the shares, nor did it say when the offering will take place.

An IPO by the Seattle-based company has been widely anticipated, but a still-weak housing recovery makes for potentially bad timing, experts say.

"There had been a lot of people who were hoping that Zillow, at some point, would go public," said Scott Sweet, senior managing partner of IPOBoutique.com. "It is not a particularly good time right now."

Home sales perked up last spring thanks to a temporary federal tax credit aimed at homebuyers. But demand slowed in the second half of 2010 and has remained lackluster so far this year and going into the spring home-selling season.

Sweet said that the housing downturn hurt the recent IPO for another real estate-related company, Ellie Mae Inc., which provides software to streamline the mortgage origination process.

The Pleasanton, Calif.-based company priced its shares at $6 each, well below its $9-to-$11 filing range.

Zillow was founded in 2004 and launched its website in 2006. It has since also rolled out applications for accessing its content through mobile devices.

The company boasts data on more than 100 million U.S. homes and provides listings for homes for sale and rent. It also features a mortgage marketplace where users can solicit mortgage quotes.

But the portal is best known for its "Zestimate," a proprietary home-valuation model it uses to provide an estimate for property values on more than 70 million U.S. homes.

Zillow makes money from real estate and mortgage brokers' subscription fees and advertising.

In February, it reached a deal with Yahoo Inc. that calls for Zillow to oversee a network that will place home listings and ads from local real estate brokers on Yahoo as well as on its own website. Last month, it acquired the operating assets of Postlets LLC, a real estate agent and rental property manager marketing service.

The company had an average of 12.7 million monthly unique users in the three months ended Dec. 31, up 66 percent from the prior-year period, according to the filing.

Zillow said it lost $6.8 million on revenue of $30.5 million in 2010, although revenue jumped 74 percent versus 2009's total.

In September, the company elevated Spencer Rascoff from chief operating officer to CEO.

Rascoff, 35, co-founded the online travel service Hotwire.com, which was sold to IAC/InterActiveCorp in 2003 for $675 million. He moved over to Expedia.com, another Internet travel agency owned by IAC, before joining Zillow in 2005.