Zillow Falls After Saying SEC Questioned Financial Report

Zillow Falls After Saying SEC Questioned Financial Report

(Bloomberg) -- Zillow, a real estate website, fell the most in more than 10 months 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 percent to $39.18 at 12:23 p.m. in New York, and earlier touched $36.66 for the biggest decrease since Nov. 21. Through yesterday, the stock had gained 82 percent this year.

The SEC asked in a letter 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, according to the filing.

“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) is a competing real estate website. None of the issues raised by regulators require Zillow to restate earnings, he said.

The SEC also asked why total marketplace revenue growth appears to be slowing while Premier Agent subscription revenues look to be increasing. 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 Zillow.com and RentJuice.com, according to a second letter released in a regulatory filing.

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