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Zillow Falls After Saying SEC Questioned Financial Report

October 02, 2012

Zillow Inc. (Z:US), operator of the largest real estate information website, fell after disclosing that the U.S. Securities and Exchange Commission asked the company to respond to questions about how it reported revenue.

The shares of Seattle-based Zillow declined 4.2 percent to $39.11 at the close in New York. The stock (Z:US) has gained 74 percent this year.

The SEC asked in a letter (Z:US) dated Aug. 30 why the company didn’t report the percentage increase in the average price paid for so-called Premier Agent subscriptions in its most recent financial report, according to a regulatory filing. Zillow said it would revise disclosures in its next quarterly report, the filing showed.

“The additional datapoints requested by the SEC were similar to those provided by Trulia in its recent IPO documents, and we expect Zillow will likely expand its disclosures in response to the SEC’s requests,” Mark May, an analyst at Barclays Capital, wrote in a research report today.

Trulia Inc. (TRLA:US) is a competing real estate website. None of the issues raised by regulators require Zillow to restate earnings, May said.

Zillow makes much of its money from subscriptions to its premium service, which lets real estate agents advertise listings and offers tools meant to help them run their businesses.

Revenue Growth

The SEC also asked why total marketplace revenue growth appears to be slowing while Premier Agent subscription revenues look to be increasing. The Premier Agent revenue is reported as part of marketplace revenue. In response, Zillow said in the filing that it would start disclosing the average monthly Premier Agent revenue per subscriber.

“This letter was in response to an early 2012 10-K filing submitted by Zillow, and we have since responded to the SEC’s satisfaction,” Katie Curnutte, a Zillow spokeswoman, said in an e-mailed statement.

Separately, the SEC also asked Zillow to disclose the number of unique users by domain name for different websites the company operates, including and, according to a second letter released in a regulatory filing.

Trulia, operator of a residential-property listings website, sold shares at $17 apiece in an initial public offering last month.

To contact the reporter on this story: Ryan Faughnder in New York at

To contact the editor responsible for this story: Tom Giles at

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