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Zillow’s transition from classified company to home-flipping giant is quickly taking shape. Homes sales made up more than 40% of the company’s second-quarter revenue.

Zillow posted revenues of $599.6 million with the homes segment accounting for $249 million. Burgeoning home sales are largely responsible for total revenue increasing 80 percent from Q2 2018. 

Zillow home sales as of June 30, 2019

During the second quarter, Zillow Offers — the firm’s home-flipping arm — expanded into seven new metro markets: Dallas-Fort Worth; Minneapolis; Orlando; Portland, Ore.; Nashville, Tenn.; and Colorado Springs and Fort Collins, Colo. Zillow now buys and sells homes in 15 metro markets. The company said it would open in four more — Cincinnati, Tucson, Ariz.; Oklahoma City, and Jacksonville, Fla.— by the middle of next year.

Although the homes segment accounts for most of Zillow’s new revenue, it’s also the biggest money loser. For the quarter, homes had a net loss of $71.1 million — less than a  million shy of what the company lost as a whole.

Zillow sold 786 homes in Q2 — an increase from 414 last quarter. The company is still lagging behind Opendoor, the top U.S. online home flipper (or IBuyer in industry parlance).  Last year, Opendoor sold 7,200 homes (averaging 1,800 per quarter), according to estimates by Mike DelPrete. But Zillow looks on track to eclipse No. 2 IBuyer Offerpad, which sold 3,500 homes in 2018.

Most of the $241 million costs for Zillow’s home segment are attributed to buying and renovating properties. The next biggest expense, sales and marketing, cost $37 million.

The company’s old stand-by, its Premier Agent advertising product, brought in revenue of $323.7 million — a 6% year-over-year increase. Of Zillow’s three business segments, advertising was the sole net gainer, with a $13.2 million bottom-line contribution.

Another emerging business, mortgages, brought in revenue of $30 million — a 34% year-on-year increase. This segment also had substantial sales and marketing costs ($14.6 million), and together with administration, technical support, and other expenses, it was a net loser: $10.4 million.

Zillow CEO Richard Burton said the Q2 numbers “reflect the momentum we are seeing across our businesses.”  “We are uniquely advantaged by our brand awareness, audience size, technology, data science, industry partnerships, and operational know-how and are well on our way to rewire real estate.”

Wall Street was skeptical, sending Zillow shares into an overnight tailspin. The shares recovered slightly during Wednesday’s trading but were still off 15 percent from before the report went out.

Zillow’s Q2 2019 earnings report is available here.