Despite the blood-in-the-streets rhetoric surrounding the latest class of tech IPOs, not all companies in the sector are feeling the pain. A year after its July 2011 IPO, real estate information marketplace Zillow’s stock is up to $42 from its offering price of $20 and today filed a prospectus to raise in the neighborhood of $120 million through a secondary offering. The company is selling 3,175,000 shares of Class A common stock, and existing shareholders will sell up to 325,000 shares.
The company wasn’t specific about its plans for the proceeds, using the catch-all of “general corporate purposes,” while teasing the possibility of future acquisitions or investments. Most interestingly, the move comes a day after public sector whipping boy Facebook cancelled its planned secondary offering.
Public equity investors are not fundamentally opposed to tech companies. They are, it’s becoming apparent, opposed to companies whose valuations are built on years of private market hype cycles without any grounding in real world financial results.
Zillow has never played this game. Its IPO was extremely modest by Silicon Valley standards, raising only $70 million. On the day of its IPO, the company’s stock closed up 79 percent at $35.77 after rising as high as $44. All this, despite the fact that the housing sector was in a rocky period and the company was operating at loss to the tune of $3.5 million annually.
Facebook, Zynga, and Groupon may eventually figure out how to appease the public markets (well, maybe Groupon is screwed). Zillow, on the other hand, has seen its stock rise 110 percent since its IPO and management continues to deliver record quarters — who knew that this was the key to rising share prices?
Zillow’s offering will be made on the back of a better-than-expected quarter by the company. Zillow reported $27.8 million in Q2 revenue on August 7, representing an increase of 75 percent year-over-year. The company generated net income of $1.3 million and adjusted EBITDA of $5.3 million. That’s on top of acquiring RentJuice for $40 million in cash and stock during the period.
All other indicators for the company are pointing in the right direction as well. The big Z reported 33.5 million average monthly unique users during the last quarter, up 61 percent year over year. The following month (July) set another traffic record with 37 million unique users. One of the most positive signs for the company is its tremendous success in transitioning to mobile. Last quarter, more homes were viewed on a mobile device than on a desktop, with mobile views totaling 168 million homes occurring at 63 homes per second.