Zillow Acquires Real Estate Marketing Company, Registers Loss on HQ Move

11/2/11Follow @curtwoodward

Online real estate company Zillow, which announced a small quarterly loss related to its recent headquarters move, is acquiring Diverse Solutions, a company that provides online marketing tools for real estate agents. The stock-and-cash transaction is worth $7.8 million, Zillow (NASDAQ: Z) said Wednesday.

Zillow said its net loss for the third quarter was $750,000, including a $1.7 million charge related to the company’s headquarters move. Without the charge, Zillow said it would have earned $1.1 million for the quarter, compared to a loss of $1.5 million a year ago. Revenues for the quarter were $19.1 million, more than double the figure from a year earlier, Zillow said.

This is Zillow’s second quarterly earnings report since it debuted on the public markets earlier this year.

The Diverse Solutions acquisition is an attempt to further beef up Zillow’s “marketplace” revenues, which have driven the company’s revenue growth in recent years.

That income category includes subscription fees for real estate agents and advertising sold to mortgage lenders, along with charges for lenders to participate in the company’s Mortgage Marketplace.

Third-quarter revenue growth illustrated that trend even further: The “marketplace” segment more than tripled year-over-year to $11.8 million, while display advertising revenue grew by 57 percent to $7.2 million, the company said.

Curt Woodward is a senior editor for Xconomy based in Boston. Email: cwoodward@xconomy.com Follow @curtwoodward

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