Summary of Zillow Group, Inc. Conference Call Company Overview - **Company**: Zillow Group, Inc. (NASDAQ:Z) - **Participants**: Jeremy Wacksman (CEO), Jeremy Hofmann (CFO) - **Conference Date**: November 19, 2024 Key Points Financial Performance - **Q3 Revenue Growth**: Revenue increased by 70% year-over-year, with growth across residential, rentals, and mortgages [8][47] - **Integrated Transaction Strategy**: The strategy is driving results and growth in enhanced markets, contributing to overall performance [8][9] Enhanced Market Strategy - **Definition**: Enhanced markets involve a bundled approach that includes real-time touring experiences, Zillow Home Loans, and partnerships with top agents [11][12] - **Real-Time Tours**: Currently, 25% of all customer connections are real-time tours, up from 10% at the beginning of the year [28][24] - **Conversion Drivers**: Customer satisfaction, agent responsiveness, and the use of Zillow Home Loans are key factors influencing conversion rates [16][17] Future Growth and Market Position - **Transaction Share Target**: Aiming for a 6% transaction share by 2025, with current audience share between 60% and 70% [40][42] - **Market Conditions**: The company plans to grow regardless of macroeconomic conditions, focusing on internal growth strategies [47][49] Rentals Business - **Market Strategy**: Zillow aims to solve the lack of a national database for rentals, focusing on amassing inventory, particularly in single-family and smaller units [53][54] - **Multifamily Growth**: The number of multifamily buildings listed on Zillow increased from 40,000 to 47,000 in 2024, indicating strong growth in this segment [57] Financial Management - **Cost Structure**: 70% of costs are fixed, with a focus on controlling fixed costs while allowing variable costs to adjust based on opportunities [70][72] - **Stock-Based Compensation**: The company is committed to reducing stock-based compensation from 2023 to 2024, aiming for better profitability [78] AI and Technology - **AI Investment**: Zillow has been investing in AI since 2006, focusing on personalization and enhancing customer experiences [84][85] - **Generative AI**: The company views generative AI as a tool to improve existing capabilities rather than a new department or initiative [85][86] Regulatory Environment - **Buyer Commissions**: Commissions have remained stable among top producers, indicating that the anticipated changes may not significantly impact the market [88] Additional Insights - **Long-Term Vision**: The goal is to create a "super app" that allows consumers to manage all aspects of real estate transactions within the Zillow platform [36][39] - **Marketing Strategy**: Marketing is seen as a tool to support the overarching strategy rather than the primary driver of growth [66][67] This summary encapsulates the key insights and strategic directions discussed during the conference call, highlighting Zillow's robust growth, innovative strategies, and commitment to enhancing customer experiences in the real estate market.

The combination of investors' excitement over Donald Trump's reelection plus a generally strong Q3 earnings season has lifted stocks to all-time highs, with the S&P 500 clinching an all-time high above 6,000 after rallying ~25% year to date. And in particular, many earlierWith combined experience of covering technology companies on Wall Street and working in Silicon Valley, and serving as an outside adviser to several seed-round startups, Gary Alexander has exposure to many of the themes shaping the industr ...

Zillow's solid third-quarter results impressed investors.Shares of Zillow Group (Z 1.67%) (ZG 1.70%), the online real estate platform, rose sharply this week after the company reported better-than-expected third-quarter results (which ended Sept. 30).Zillow's share price was up by 23%, as of this writing, adding to the company's phenomenal gains of 94% over the past 12 months.Solid quarter, despite a difficult housing market The housing market has been stymied recently thanks to high mortgage rates and risi ...

The online real estate platform posted strong third-quarter results.Shares of Zillow (Z 23.77%) (ZG 24.98%) were surging today after the online real estate platform delivered strong results and showed growth across several verticals.The stock closed up 23.8% on the news. Zillow looks strong across the boardOverall revenue at Zillow rose 17% to $581 million, beating the midpoint of the company's guidance at $553 million and the consensus at $554.7 million.Growth was broad based as residential revenue was up ...

Zillow Group, Inc. Z shares are trading higher. The company reported earnings and investors positively reacted. Estimates for the earnings were 29 cents and came in at 35 cents. Revenue was $581 million versus estimates of $555 million.Our team of technical analysts made Zillow our Stock of the Day because it illustrates a common dynamic in the market that savvy traders use to profit.As you can see on the chart, in February and early March levels around $58.50 were resistance for the stock. In September thi ...

Financial Data and Key Metrics Changes - Total revenue for Q3 2024 was $581 million, representing a 17% year-over-year increase, exceeding revenue outlook by $28 million [15][33] - Residential revenue grew 12% year-over-year to $405 million, outperforming the broader residential real estate industry by approximately 1,500 basis points [33][34] - EBITDA for Q3 was $127 million, resulting in a 22% EBITDA margin, with a net loss of $20 million, representing 3% of revenue [34][39] Business Line Data and Key Metrics Changes - Rentals revenue increased by 24% year-over-year to $123 million, driven by a 38% growth in multifamily rentals revenue [36][30] - Mortgages revenue accelerated to $39 million, up 63% year-over-year, with purchase loan origination volume growing 80% year-over-year to $812 million [37][39] - The number of multifamily properties on Zillow's platform reached 47,000, up from 44,000 at the end of Q2, marking a 34% year-over-year increase [36] Market Data and Key Metrics Changes - Zillow reported 233 million average monthly unique users across its ecosystem of apps and sites, with 116 million average monthly unique visitors according to Comscore [16] - Enhanced markets have expanded to 43, surpassing the goal of 40 by the end of the year, with expectations to deepen penetration and expand into more markets [18][20] Company Strategy and Development Direction - The company aims to capture a more meaningful share of the $30 billion total addressable market in residential real estate while continuing to deliver value to customers and shareholders [32][51] - Zillow is focused on integrating services and enhancing its partner network to increase customer transaction share to 6% by the end of 2025 [17][22] - The company is investing in technology solutions to create a seamless experience for movers, agents, and loan officers, positioning itself as a housing super app [14][31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strategy and ability to deliver sustainable, profitable growth despite challenges in the housing market [7][34] - The outlook for Q4 includes expected total company revenue between $525 million and $540 million, with residential revenue projected to be between $364 million and $374 million [43][44] - Management noted that while there is pent-up demand to move, affordability remains a challenge, impacting the housing market [43] Other Important Information - The company ended Q3 with $2.2 billion in cash and investments, down from $2.6 billion at the end of Q2, primarily due to the maturity and settlement of convertible debt [39][41] - Zillow has repurchased approximately $2 billion of stock since the end of 2021, with a focus on driving share price appreciation [42] Q&A Session Summary Question: Insights on real-time touring and agent transitions - Management noted that real-time touring converts to transactions at about three times the rate of other types of connections, with over 25% of connections expected to come from real-time touring by year-end [54][55] Question: Impact of regulatory changes on conversion rates - Management indicated that the buyer's agreement is seen as a helpful educational tool for buyers, with no concrete data yet on its impact on market share [60][61] Question: Drivers of residential revenue outperformance - Key drivers include continued conversion improvements, growth from Zillow Showcase, and strong performance from the new construction marketplace [64][66] Question: Stock-based compensation management - Management plans to leverage stock-based compensation as fixed costs remain stable, which will contribute to greater GAAP profitability over time [72] Question: Demand and pricing for Zillow Showcase - Early results show Zillow Showcase capturing nearly 1.5% of new listings, with a medium-term target of 5% to 10% of total active listings [76][77] Question: Market share growth in enhanced markets - Revenue per total transaction value in the oldest enhanced markets has doubled since the beginning of 2023, providing confidence for continued expansion [80]

Zillow (Z) came out with quarterly earnings of $0.35 per share, beating the Zacks Consensus Estimate of $0.32 per share. This compares to earnings of $0.33 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 9.38%. A quarter ago, it was expected that this real estate website operator would post earnings of $0.31 per share when it actually produced earnings of $0.39, delivering a surprise of 25.81%.Over the last four quarters, the ...

Financial Performance - Revenue for the three months ended September 30, 2024, was $581 million, an increase of 17.1% compared to $496 million for the same period in 2023[16]. - Gross profit for the three months ended September 30, 2024, was $441 million, up 14.3% from $386 million in the prior year[16]. - Total operating expenses for the three months ended September 30, 2024, were $486 million, a rise of 10.7% from $439 million in the same quarter of 2023[16]. - Net loss for the three months ended September 30, 2024, was $20 million, compared to a net loss of $28 million for the same period in 2023, reflecting a 28.6% improvement[16]. - Comprehensive loss for the nine months ended September 30, 2024, was $51 million, compared to a loss of $91 million for the same period in 2023[18]. - Adjusted EBITDA for the three months ended September 30, 2024, was $127 million, a 19% increase from $107 million in the same period of 2023[149]. - Net loss for the nine months ended September 30, 2024, was $(60) million, compared to $(85) million for the same period in 2023, reflecting a 29% improvement[149]. Cash and Assets - Cash and cash equivalents decreased to $1,072 million as of September 30, 2024, from $1,492 million at the end of 2023, a decline of 28.1%[15]. - Total assets as of September 30, 2024, were $6,159 million, down from $6,652 million at the end of 2023, representing a decrease of 7.4%[15]. - Total liabilities decreased to $1,503 million as of September 30, 2024, from $2,126 million at the end of 2023, a reduction of 29.3%[15]. - Total shareholders' equity increased to $4,656 million as of September 30, 2024, up from $4,529 million at the end of September 2023[21]. - Cash, cash equivalents, and restricted cash at the end of the period were $1,075 million, down from $1,849 million at the end of the previous year[27]. - As of September 30, 2024, total assets measured at fair value amounted to $2,172 million, a decrease from $2,818 million in December 2023[52]. Debt and Financing - As of September 30, 2024, total debt for Zillow Group was $1,063 million, down from $1,700 million on December 31, 2023, representing a decrease of approximately 37.4%[71]. - The carrying value of convertible senior notes decreased from $1,607 million on December 31, 2023, to $915 million as of September 30, 2024, indicating a reduction of approximately 43%[71]. - The company repurchased $88 million in aggregate principal amount of the 2025 Notes for $89 million in cash during the nine months ended September 30, 2024, resulting in a loss on extinguishment of debt of $1 million[80]. - The company has authorized the repurchase of up to $2.5 billion of Class A common stock and Class C capital stock, with $381 million remaining available for future repurchases as of September 30, 2024[85][86]. - The company expects to redeem the remaining $499 million in aggregate principal amount of the 2026 Notes on December 18, 2024[81]. Revenue Breakdown - Residential revenue increased by $43 million, or 12%, to $405 million, driven by higher residential revenue per visit and an increase in the number of visits[122]. - Rentals revenue increased by $24 million, or 24%, to $123 million, driven by a 20% increase in average monthly rentals unique visitors to 36 million[143]. - Mortgages revenue increased by $15 million, or 63%, to $39 million, attributed to an increase in mortgage originations revenue[143]. - Total loan origination volume increased by 79% to $819 million for the three months ended September 30, 2024, compared to $457 million in the same period in 2023[138]. Operational Highlights - The company continues to focus on innovation and market expansion, aiming to enhance customer engagement and partnerships in the real estate sector[8]. - Zillow Group's mortgage origination business, Zillow Home Loans, is a key focus for growth and requires sufficient financing to operate effectively[32]. - The company is committed to enhancing its marketing software and technology solutions for the real estate industry[31]. - The health of the housing market is influenced by low inventory, mortgage interest rate volatility, and inflationary conditions[114]. Employee and Market Metrics - Zillow Group had 6,835 employees as of September 30, 2024, compared to 6,263 employees as of December 31, 2023[113]. - Average monthly unique users increased by 1% to 233 million for the three months ended September 30, 2024, from 230 million in the same period in 2023[136]. - The number of visits to mobile applications and websites increased by 3% to 2,440 million for the three months ended September 30, 2024, from 2,366 million in the same period in 2023[130]. Acquisitions - Zillow Group acquired Follow Up Boss for $399 million in cash, with contingent consideration of up to $100 million based on performance metrics[43]. - The total preliminary purchase price for Follow Up Boss was allocated as follows: $4 million in cash, $402 million in goodwill, and $86 million in intangible assets[59]. - The total preliminary purchase price for the acquisition of Aryeo was $35 million, including cash and stock[63]. Legal and Regulatory Matters - The company is involved in ongoing legal proceedings, including a patent infringement case filed by IBM, with no material accruals recorded as of September 30, 2024[96]. - The company is subject to various risks, including economic conditions, interest rates, and regulatory changes, which may impact future performance[32].

Exhibit 99.2 Reported Consolidated Results | --- | --- | --- | --- | --- | |--------------------------------------------------------------|-------|----------------------|-------|---------------------| | Assets | | September 30, 2024 | | December 31, 2023 | | Current assets: | | | | | | Cash and cash equivalents | $ | 1,072 | $ | 1,492 | | Short-term investments | | 1,101 | | 1,318 | | Accounts receivable, net | | 117 | | 96 | | Mortgage loans held for sale | | 164 | | 100 | | Prepaid expenses and other curr ...

Shares of real estate stocks seem to be on thin ice right now, but there are signs of a potential recovery coming first to those at the top of the value chain. While real estate investment trusts (REITs) see their prices underperform the S&P 500, investors will be surprised to see that they will be among the last to see a recovery. Zillow Group TodayZZillow Group$59.68 +1.36 (+2.33%) 52-Week Range$33.80▼$68.73Price Target$70.33Add to WatchlistThis is because the real estate services names could be first in ...