The long-anticipated merger between the two largest U.S. real estate search portals has finally closed after a six-month review by the Federal Trade Commission. Announced last July, the merger of Zillow and Trulia begins the next chapter of a fierce competitive battle with News Corp. and its Move and realtor.com properties.
The $ 2.5 billion all-stock deal gives the merged entities new market clout in the real estate lead generation, advertising and software business, combining two deep technology teams with significant revenue and a lead against its closest competitor, realtor.com.
The deal dragged on for months because of the FTC review. During that time, the competitive landscape changed with News Corp.’s entry into the online real estate market.
In conjunction with absorbing Trulia, Zillow has created a new company, Zillow Group, which serves as an umbrella organization for its suite of consumer-facing divisions Zillow, Trulia, StreetEasy and HotPads, and its business divisions ActiveRain, Diverse Solutions, Market Leader, Mortech, Postlets and Retsly.
Zillow Group’s descriptions of Zillow and Trulia provides a window into how the two brands may be presented distinclty to consumers.
Zillow.com apparently will focus more on providing information specifically relating to homes to consumers while Trulia will specialize in helping consumers get a feel for where to live with information on schools, crime and neighborhoods.
The newly merged Zillow and Trulia faces many challenges but remains the definitive leader in consumer traffic and continues to expand its industry footprint with 62,000 subscribers to its advertising offer and hundreds of partnerships with brokers and MLS organizations.
Zillow grew its full-year revenue to $ 325.9 million in 2014, a 65 percent increase over 2013’s revenue total and nearly three times its 2012 revenue of $ 116.9 million. The company posted a net loss of $ 43.6 million for the year, but it attributed $ 21.5 million of that to costs related to its acquisition of Trulia.
The real estate agents who paid the company to promote themselves on the site during the fourth quarter spent an average of $ 359 each during the three months ending Dec. 30, up from $ 271 during the same period a year ago.
Trulia brought in nearly $ 144 million in 2013 — more than double the cash it generated the year before — and was on track to see more than $ 250 million in revenue in 2014.
Zillow and Trulia both get more traffic than the third-biggest national portal, realtor.com, but capture only a fraction of the more than $ 10 billion real estate brokers and agents are thought to spend to market their services online. So the upside for growth is significant.
Zillow is also expected to reap millions in cost savings, largely through spending cuts that will be achieved by cutting workers in areas where the two companies have redundancies, such as general administration, sales and marketing, and research and development.
The merger was announced in July and approved by shareholders Dec. 18. The FTC made second requests for information from the companies in early September, and Zillow had agreed to hold off on closing the deal until Feb. 15, unless regulators wrapped up their review before then.