Mobile Consumers, Paid Subscribers Will Determine Zillow vs. Trulia

What’s at stake in the online real estate race? The subscription accounts of up to 2.8 million American real estate professionals, a database of more than 110 million homes and up to $24 billion in annual marketing revenue. Right now, Zillow’s got the lead.

First to IPO, Zillow has built profits, stock price and a greater revenue stream off just as many paying subscribers as Trulia and just as many unique monthly clicks. It is winning the race to mobile, and, unlike Trulia, is profitable.

How evenly matched are these two startups? Depends where you look. Zillow reported 33.7 million unique hits in the month of May; in Trulia’s S-1, it stated average monthly uniques for the three months ending June 30 of 33.47 million. The similarities do not end there. Zillow also maintains a razor-thin margin of ‘premium agent subscribers’ (22,696) over Trulia’s ‘paying subscribers’ (21,544), yet it has nearly double Trulia’s revenue according to the last six months’ figures. That is one difference retail investors will notice.

For the six months ended June 30, 2012, Zillow’s revenue was about $50.6 million, a year over year increase of 87 percent. The company is now profitable. Since the beginning of 2012, Zillow shares have nearly doubled in value, closing Friday at $37.23. For Trulia, over the same timeframe, the company’s revenue grew 78% to $28.99 million, according to the S-1. Tracking statistics from 2009, 2010, 2011 and the six months ended June 30, 2012, Trulia racked up losses of $7 million, $3.8 million, $6.2 million and $7.6 million, according to the filing. Zillow’s expenses for the six months ending June 30 were around $47.6 million; Trulia’s expenses were about $35.8 million–accounting for why one is profitable, and the other is not.

Zillow also has the all-important lead in mobile. Just like social networking, real estate sales are heading to the handset. Without highlighting specifics in its most recent quarterly report, Zillow said most homes were viewed via mobile device as of the first quarter of this year, and that it had 168 million homes viewed in July. Trulia’s S-1 shows that while its mobile traffic is growing, it is already behind Zillow’s pace. Failure to match Zillow’s strength with handsets could widen the currently tiny subscriber gap between the two companies—which both credit as a primary revenue source.

The future of each company hinges on their ability to satisfy the mobile user base—although, the online real estate industry is far from settled. Trulia’s IPO documents stated that half its users didn’t even use Zillow—so there could even be room for another entrant to the nascent industry that, according to Trulia’s S-1, could be worth $24 billion annually. Trulia and Zillow have both made acquisitions, and could continue to snap up startups for scale.

Trulia, in its S-1, stated the intent to establish an overseas presence, as well as to do more hiring. First, it ought to determine what Zillow is doing right that it is doing wrong. It isn’t yet clear who selling stockholders in Trulia’s offering will be, but VCs with shares include Fayez Sarofim Investment Partnership, Accel IX and Sequoia Capital XII. If Trulia can’t catch up to Zillow’s pace of mobile usage, and its profitability, it won’t be clear where its next buying shareholders are, either.

Image Credit: Trulia