{ "docId": "019dd923-622c-750b-8b99-74af5c9e9edb", "docSlug": "de028a1085e6", "documentTitle": "Zillow Group, Inc. (Z)", "authorId": "54_Spruce_Point_Capital", "authorName": "Spruce Point Capital Management", "documentKindSlug": "activist-deck", "documentKindLabel": "Activist deck", "sourceTypeSlug": "short_seller", "sourceTypeLabel": "Short seller", "presentationDate": "2024-03-05 00:00:00", "orientation": "landscape", "aspectRatio": 1.3333334, "pageNumber": 74, "pageCount": 103, "prevPage": 73, "nextPage": 75, "slideType": "ceo_quote", "function": "expose_contradiction", "density": "overcrowded", "nDataPoints": 6, "notes": "The slide uses color-coded text (yellow highlights) to emphasize specific negative claims about Zillow and the industry landscape.", "elementsJson": [ "headline_text", "paragraph", "quote_block", "footnote" ], "metadataConfidence": 1, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b99-74af5c9e9edb/74", "deckHref": "/decks/019dd923-622c-750b-8b99-74af5c9e9edb", "deckJsonHref": "/decks/019dd923-622c-750b-8b99-74af5c9e9edb.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b99-74af5c9e9edb#slide-74", "components": [ { "bbox": null, "kind": "callout", "text": "Most of Zillow's clients feel that Zillow will become less important to their lead generation efforts in the next 1 to 2 years.", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd953-3f42-76f3-adcb-ece3bbd3d112", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.9, "x": 0.05, "y": 0.15 }, "kind": "paragraph", "text": "Spruce Point also wants to highlight some of the comments that CoStar's CEO made during its Q3'23 earnings call and press release. The comments around Zillow's Premier Agent surveys and views on the lawsuits are very alarming.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "d90ba79a-f31b-4dd8-8820-afcbd7f886d6", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.25, "w": 0.9, "x": 0.05, "y": 0.44 }, "kind": "quote", "text": "Most of Zillow's clients feel that Zillow will become less important to their lead generation efforts in the next 1 to 2 years. 60% of Zillow's Premier Agent client surveys stated that the value of the product is declining, and 5% said it's improving. So 60% said the value was decline and 5% said it was improving. 94% of Zillow's Premier Agent customers said that they're very open or somewhat open to alternative sources for lead generation. Sounds good to me. Even before we begin selling premium services, we're creating real value for agents. As a result of our traffic growth and superior your listing your lead business model, I believe we are already generating millions of leads for agents that are converting to commissions for them. I'm encouraged by the feedback with one agent saying that 85% of their total sales come from being able to build their brand and collaborate with sellers and buyers on the Homes.com network. From these leads, we estimate that Homes.com is helping agents generate billions and billions of dollars in annual commissions already while saving them billions in referral fees.", "attrs": null, "subkind": "pull-quote", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "1d6fd250-17c2-4ed2-b1dd-025a1ece945d", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.12, "w": 0.9, "x": 0.05, "y": 0.84 }, "kind": "quote", "text": "The first generation real estate portals leverage this threatened buyer broker commission rule to divert listing leads from all the agents in the market to a small handful of agents who are then required to split their commissions with the portal. Often, that's the model. Many agents and brokers strongly resent that model. Now that Homes.com is one of the most heavily trafficked portals, there is a strong and viable alternative for lead generation available to agents that does not require various commission splits. Unlike the first-generation portals, Homes.com business model is not negatively impacted by the potential end of the buyer broker commission rule.", "attrs": null, "subkind": "pull-quote", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "7b3d7bdc-573a-4cb0-8218-c10d12b75361", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.15, "w": 0.9, "x": 0.05, "y": 0.29 }, "kind": "quote", "text": "William Blair recently published a paper on October 20, titled Competition Intensifying Among Home Search Portals. There are some interesting call-outs from their survey of residential agents that are worth noting. Combined spend and potential efficiency gained from agents marketing their properties and services is $15 billion to $20 billion in the United States. Most of the agent's marketing spend today is not on our competing portals. It's like print. Most patients do not spend marketing dollars with Zillow. Most agents do not spend marketing dollars with realtor.com.", "attrs": null, "subkind": "pull-quote", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "cd462630-3ac8-4507-b1d5-69029ba370e5", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.15, "w": 0.9, "x": 0.05, "y": 0.69 }, "kind": "quote", "text": "Last week, Sitzer/Burnett versus NAR lawsuit went to trial. We could be seeing the biggest change to the residential real estate industry in recent or even intermediate history or long-term history. Sitzer/Burnett and other class action lawsuits are challenging the legality of the buyer broker commission rule, which requires the home seller to pay the homebuyers agent fees. Plaintiffs are seeking damages of more than $40 billion, implying the nationwide damages of more than $400 billion. Several defendants have already agreed to collectively pay $138 million in settlements and to changes to the rule.", "attrs": null, "subkind": "pull-quote", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "f985bd71-415a-431b-a6ad-d725b0435e2d", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "quote", "text": "\"Most of Zillow's clients feel that Zillow will become less important to their lead generation efforts in the next 1 to 2 years. 60% of Zillow's Premier Agent client surveys stated that the value of the product is declining, and 5% said it's improving.\" — CoStar CEO, Q3'23 Earnings Call", "attrs": null, "subkind": null, "toolName": "Authority citation", "toolSlug": "authority-citation", "confidence": null, "componentId": "019dd953-3f42-76f3-adcb-f2dc8de8d575", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.02, "w": 0.3, "x": 0.05, "y": 0.97 }, "kind": "source-note", "text": "Source: CoStar Earnings Call, CoStar press release", "attrs": null, "subkind": null, "toolName": null, "toolSlug": null, "confidence": null, "componentId": "184fb1a9-9cc3-4e46-895e-2ca95c255818", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.04, "w": 0.35, "x": 0.33, "y": 0.05 }, "kind": "title", "text": "CoStar's Q3'23 Earnings Call Comments", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "e3c3b854-4d7a-45ee-95d3-c08b8d6eba27", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.04, "w": 0.9, "x": 0.05, "y": 0.24 }, "kind": "title", "text": "CEO Comments From CoStar's Q3'23 Earnings Call (October 24, 2023)", "attrs": null, "subkind": "subtitle", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "433cede3-e211-48d2-ac04-b16e063bfdeb", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [], "arcBeats": [], "loops": [], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }