Zillow Group (NasdaqGS:Z) FY Conference February 26, 2026 12:00 PM ET Company ParticipantsJeremy Hofmann - CFOConference Call ParticipantsNikhil Devnani - Senior Analyst of US Emerging InternetNikhil Devnani.....Bernstein's TMT Conference.Jeremy HofmannThanks for having me.Nikhil DevnaniAbsolutely.Jeremy HofmannYeah.Nikhil DevnaniI'm sure many of you in the room already know Zillow. It is one of the leading online portals to search, discover, and now increasingly transact when you're in the home buying proc ...

Core Insights - Zillow Group reported strong Q4 2025 results with total revenue increasing by 18% year over year, contributing to a full-year revenue growth of 16% [8][20] - The company achieved full-year profitability with a GAAP net income of $23 million and expanded EBITDA margins by nearly 200 basis points [9][20] - Strategic initiatives include expanding the enhanced market strategy, integrating AI into their ecosystem, and rolling out Zillow Pro to support agents [10][19] Financial Performance - Q4 revenue reached $654 million, up 18% year over year, with EBITDA of $149 million and a margin of 23%, which is 260 basis points higher than the previous year [20] - For sale revenue grew 11% year over year in Q4 to $475 million, with residential revenue up 8% and mortgages revenue increasing by 39% [20] - Rentals revenue grew 45% year over year in Q4, driven by a 63% increase in multifamily revenue, reaching $168 million [20] Strategic Initiatives - The company is focusing on enhancing its market strategy, which includes integrating technology to improve the real estate transaction process for consumers and professionals [19][20] - Zillow Home Loans has seen double-digit adoption rates, contributing to strong growth in purchase originations [19][20] - The rollout of Zillow Pro is expected to help agents manage their clients more effectively and improve lead conversion [19][30] Market Position and Growth - Zillow's rental segment showed significant growth, with a 45% increase in Q4 revenue, and the company estimates its share of rental listings increased to 63% [11][20] - The company is optimistic about its long-term strategy, aiming for mid-teens revenue growth in 2026 and continued EBITDA margin expansion [13][20] - Zillow's unique position in the market is supported by a trusted brand and a large, engaged consumer audience, with 80% of traffic coming directly to the platform [19]

Financial Data and Key Metrics Changes - In Q4 2025, total revenue increased by 18% year-over-year to $654 million, near the top end of the outlook range [24] - Full-year 2025 total revenue grew by 16%, consistent with the mid-teens growth outlook [30] - EBITDA for Q4 was $149 million, with a margin of 23%, up 260 basis points year-over-year [24] - Full-year 2025 EBITDA grew by 25% year-over-year, with a net income margin expansion of 990 basis points [30][32] Business Line Data and Key Metrics Changes - For Sale revenue grew by 11% year-over-year in Q4 to $475 million, with residential revenue up 8% and mortgages revenue up 39% [25][27] - Rentals revenue in Q4 was $168 million, accelerating to 45% year-over-year growth, driven by a 63% increase in multifamily revenue [28][29] - For Sale revenue for the full year reached $1.9 billion, up 9% from 2024, while Rentals revenue totaled $630 million, up 39% from 2024 [10][30] Market Data and Key Metrics Changes - Zillow's share of rental listings increased to 63% in 2025, up from 54% in 2024 [21] - Average monthly unique visitors for Zillow Rentals reached 31 million in Q4 [20] - The housing market grew by 3% in 2025, while Zillow's revenue outperformed the market by 1,300 basis points [30] Company Strategy and Development Direction - The company is focused on integrating and digitizing the real estate transaction process to improve consumer experiences and professional productivity [6][11] - Zillow Pro, a new offering, aims to help agents manage their entire business and improve lead conversion [71] - The strategy emphasizes building a comprehensive marketplace for rentals and modernizing the rental transaction process [17][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strategy and does not expect legal challenges to materially impact financial performance [22][66] - The company anticipates continued growth in 2026, with mid-teens revenue growth expected and a focus on enhancing the rental business [36][38] - Management highlighted improvements in affordability in the housing market, which could drive broader recovery over time [39] Other Important Information - The company reported $23 million of GAAP net income for the full year, achieving full-year profitability [10] - Share-based compensation expense decreased by 13% year-over-year, contributing to net income growth [32][42] - The company repurchased $670 million of shares throughout 2025, returning $1.1 billion to shareholders [34][35] Q&A Session Summary Question: Can you elaborate on rental trends and opportunities? - Management indicated that the growth in rentals is due to a unique strategy focused on organizing various types of supply, including long-tail listings, which drives audience engagement and revenue growth [46][47] Question: How do you view the impact of recent industry consolidation? - Management does not expect any risk or impact from industry consolidation, as the majority of sellers and agents prefer broad exposure for their listings [55][56] Question: Is there any change in approach due to legal challenges? - Management confirmed that there are no expected changes to the business strategy due to ongoing legal challenges, maintaining confidence in their long-term approach [66][67] Question: What is the status of Zillow Pro and its impact on lead conversion? - Zillow Pro is currently in beta testing, with plans for nationwide expansion in the second half of the year, aimed at improving agent efficiency and conversion rates [71][72]

Financial Data and Key Metrics Changes - In Q4 2025, total revenue increased by 18% year-over-year, reaching $654 million, near the top end of the outlook range [24][35] - Full-year 2025 total revenue grew by 16%, consistent with the mid-teens growth outlook [30] - EBITDA for Q4 was $149 million, with a margin of 23%, up 260 basis points year-over-year [24][30] - The company reported $23 million of GAAP net income for the full year, achieving full-year profitability [10][24] Business Line Data and Key Metrics Changes - For Sale revenue grew by 11% year-over-year in Q4 to $475 million, with residential revenue up 8% and mortgages revenue up 39% [10][25] - Rentals revenue in Q4 was $168 million, up 45% year-over-year, driven by a 63% increase in multifamily revenue [10][27] - For Sale revenue for the full year reached $1.9 billion, up 9% from 2024 [10][11] Market Data and Key Metrics Changes - Zillow Rentals had an average of 2.5 million monthly active rental listings in Q4, with a market share increase to 63% from 54% in 2024 [19][20] - The company attracted 31 million average monthly unique visitors in Q4, reinforcing its position as the preferred platform for renters [20] Company Strategy and Development Direction - Zillow is focused on integrating and digitizing the real estate transaction process, enhancing customer experiences and improving productivity for real estate professionals [6][11] - The company aims to achieve a $1 billion incremental revenue target in For Sale, supported by continuous improvements in customer experiences and growth in Enhanced Markets [12][21] - Zillow Pro, a new offering for agents, is expected to enhance lead conversion and agent adoption of CRM tools [16][67] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strategy and does not expect legal challenges to materially impact financial positions or long-term strategies [22][62] - The company anticipates continued growth across its business, with mid-teens revenue growth expected for 2026 and approximately 30% growth in rentals [35][37] - Management highlighted improvements in housing affordability as a positive indicator for future market recovery [38] Other Important Information - The company repurchased $670 million of shares throughout 2025, returning a total of $1.1 billion to shareholders [33][34] - Legal expenses were noted as a factor impacting EBITDA margins, with expectations of elevated legal costs in 2026 [36][70] Q&A Session Summary Question: Can you elaborate on rental trends and opportunities? - Management indicated that the growth in rentals is driven by a unique strategy focused on organizing various types of supply, leading to increased audience engagement and revenue growth [45][46] Question: How do you view the impact of recent industry consolidation? - Management does not expect any significant risk or impact from industry consolidation, as the majority of sellers and agents prefer broad exposure for listings [52][53] Question: Will legal challenges affect Zillow's business strategy? - Management confirmed that no meaningful changes to the business strategy are expected due to legal challenges, maintaining confidence in their approach [62][63] Question: What is the status of Zillow Pro and its impact on lead conversion? - Zillow Pro is currently in beta testing, with plans for nationwide expansion in the second half of the year, expected to enhance agent efficiency and conversion rates [66][67]

Financial Data and Key Metrics Changes - In Q4 2025, total revenue increased by 18% year-over-year to $654 million, near the top end of the outlook range [25] - Full-year 2025 total revenue grew by 16%, consistent with the mid-teens growth outlook [31] - EBITDA for Q4 was $149 million, with a margin of 23%, up 260 basis points year-over-year [25] - Full-year 2025 EBITDA grew by 25% year-over-year, with net income margin expanding by 990 basis points [31][33] Business Line Data and Key Metrics Changes - For Sale revenue grew by 11% year-over-year in Q4 to $475 million, with residential revenue up 8% and mortgages revenue up 39% [26][10] - Rentals revenue in Q4 was $168 million, growing 45% year-over-year, driven by a 63% increase in multifamily revenue [27][10] - For Sale revenue for the full year reached $1.9 billion, up 9% from 2024, while Rentals revenue for the full year was $630 million, up 39% [10][31] Market Data and Key Metrics Changes - Zillow's share of rental listings increased to 63% in 2025, up from 54% in 2024 [18] - Zillow Rentals attracted 31 million average monthly unique visitors in Q4, indicating strong audience engagement [19] - The housing market grew by 3% in 2025, with Zillow outperforming the market by 1,300 basis points [31] Company Strategy and Development Direction - The company is focused on integrating and digitizing the real estate transaction process, enhancing customer experiences and improving productivity for real estate professionals [7][9] - Zillow Pro, a new offering, aims to help agents manage their entire business and improve lead conversion [72] - The strategy emphasizes building a comprehensive marketplace for rentals and modernizing the rental transaction process [18][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strategy and does not expect legal challenges to materially impact financial performance [22][66] - The company anticipates continued revenue growth in 2026, with mid-teens growth expected across the business [38] - Management noted improvements in housing affordability, which could lead to a broader market recovery over time [39] Other Important Information - The company reported $23 million of GAAP net income for the full year, achieving full-year profitability [10] - Share-based compensation expense decreased by 13% year-over-year, contributing to net income growth [33] - The company ended 2025 with $1.3 billion in cash and investments, and secured a $500 million revolving credit facility [35] Q&A Session Summary Question: Can you elaborate on rental trends and opportunities in multifamily? - Management indicated that the growth in rentals is due to their unique strategy of organizing various types of supply, which drives audience engagement and revenue growth [45][46] Question: How do you view the impact of recent industry consolidation on your business? - Management does not expect any risk or impact from industry consolidation, as the majority of sellers and agents prefer broad exposure [55][56] Question: Is there any change in approach to Zillow's business strategy due to legal challenges? - Management confirmed that there are no expected changes to the business strategy and remains confident in their positions [66] Question: What is the status of Zillow Pro and its impact on lead conversion? - Zillow Pro is currently in beta testing, with plans for nationwide expansion in the second half of the year, aimed at improving agent efficiency and conversion [71][72]

Core Insights - Zillow Group reported strong financial results for Q4 and full-year 2025, achieving all full-year financial targets, including positive net income, while gaining market share in both For Sale and Rentals [1] - The company’s Q4 revenue increased by 18% year-over-year to $654 million, and full-year 2025 revenue rose by 16% to $2.6 billion, outperforming the residential real estate industry by significant margins [1][2] - Zillow's CEO highlighted the company's unique position to drive growth through innovative technology and a deeply engaged audience, celebrating 20 years of operation [1] Financial Performance - Q4 2025 For Sale revenue was $475 million, an 11% increase year-over-year, while Mortgages revenue surged by 39% to $57 million due to a 67% rise in purchase loan origination volume to $1.5 billion [1] - Residential revenue for Q4 2025 reached $418 million, up 8% year-over-year, benefiting from growth in agent and software offerings [1] - Adjusted EBITDA for Q4 was $149 million, representing a 33% increase from $112 million in Q4 2024, with an Adjusted EBITDA margin of 23% [1][3] Market Position - The residential real estate industry grew by 3% in Q4 and for the full year 2025, indicating Zillow outperformed the industry by 1,500 basis points in Q4 and 1,300 basis points for the full year [1] - Zillow's traffic to its apps and sites increased by 8% year-over-year to 221 million average monthly unique users, with visits up 2% to 2.1 billion [3] Non-GAAP Financial Measures - Adjusted net income for Q4 was $98 million, compared to $68 million in Q4 2024, with diluted adjusted net income per share rising to $0.39 from $0.27 [3] - Adjusted free cash flow for Q4 was $125 million, up from $78 million in Q4 2024, indicating strong cash generation capabilities [3][5]

Group 1 - Zillow Group, Inc. will present at the Barclays 23rd Annual Global Technology Conference in San Francisco on December 11, 2025, with CEO Jeremy Wacksman participating in a fireside chat [1] - The company is focused on transforming the real estate market by providing digital solutions for buying, selling, renting, and financing homes [2][4] - Zillow Group is the most visited real estate app and website in the United States, connecting users with real estate professionals and enhancing their home buying experience [2] Group 2 - Zillow Group's affiliates include various brands such as Zillow®, Trulia®, and Zillow Home Loans, which collectively aim to simplify the real estate process for consumers [2] - A recent analysis indicates that the hidden costs of homeownership have reached approximately $15,979 per year nationwide, highlighting the financial burdens faced by homeowners [5]

Zillow Group Conference Call Summary Company Overview - **Company**: Zillow Group (NasdaqGS: Z) - **Industry**: Real Estate Technology Key Points and Arguments Business Model and Strategy - Zillow has evolved from a brand-building focus in its first 15 years to a more integrated transaction model over the last five years, aiming to simplify renting, buying, selling, and financing for consumers [4][5] - The company is positioning itself as a "Housing Super App" to leverage its brand and audience for sustainable and profitable growth [3][7] Financial Performance - In Q3, Zillow reported a **16% year-over-year revenue growth**, despite a challenging housing market [5][6] - For-sale revenue, which includes residential and mortgage segments, grew by **10%**, while rental revenue surged by **41%** [5][14] - The company expanded its margins by **200 basis points** in the quarter [6] Market Dynamics - Zillow is navigating a housing market with the lowest turnover in over 40 years, with around **4 million homes sold annually** [13] - The company anticipates continued growth in its rentals business, projecting **40%+ growth for all of 2025** [14] Product Development - Zillow Pro, a new product aimed at enhancing agent experiences, was announced recently and is currently in alpha testing [7][9] - The integration of Follow Up Boss, a CRM acquired by Zillow, is central to enhancing agent productivity and customer engagement [20][21] Enhanced Markets - As of Q3, **34% of all connections** were through enhanced markets, with a target of **75%** in the midterm [16][17] - The company is focused on building strong relationships between agents and Zillow Home Loans to enhance the mortgage experience [17] AI and Technology Integration - Zillow is actively integrating AI capabilities into its operations, particularly through Follow Up Boss, to improve agent efficiency and customer interactions [20][22] - The collaboration with OpenAI for ChatGPT integration is seen as an opportunity to enhance customer engagement and streamline operations [34][35] Future Outlook - Zillow expects to maintain mid-teens revenue growth and margin expansion in 2026, driven by continued enhancements in its for-sale and rentals businesses [27][28] - The company aims to keep its fixed cost base flat while growing revenue, which will allow for faster profit growth [29] Capital Allocation - Zillow has eliminated its convertible debt and is focused on offsetting stock-based compensation through share repurchases, totaling **$438 million** year-to-date [47][48] - The company aims to maintain a net cash position of over **$1 billion** for growth opportunities and contingencies [48] Conclusion - Zillow's strategy is centered on leveraging its brand and technology to drive growth in a challenging housing market, with a focus on enhancing customer and agent experiences through innovative products and AI integration [49]

Core Insights - Zillow is the leading real estate portal in the U.S. with approximately 250 million unique monthly visitors and offers detailed information on around 165 million homes [1][2] Business Model - Zillow generates revenue by providing leads to real estate agents, taking up to 40% of the commission if the lead results in a sale [3] - In 2024, Zillow reported annual revenues of $2.2 billion, with residential real estate activities accounting for 71% of its revenues [5] Product Offerings - The company features the "Zestimate," a machine learning algorithm that estimates home values, with a median error rate of 2% for active listings and 7.1% for off-market homes [2] - Research indicates that Zestimates can increase seller profits by 4.16% by allowing sellers to set higher prices and wait for buyers who value the property [2] Market Position and Competition - Zillow's strong market position has drawn criticism from competitors, including a lawsuit from Compass challenging Zillow's listing standards [6][7] - The Federal Trade Commission has filed an antitrust lawsuit against Zillow and Redfin over a partnership that could lead to market consolidation in rental listings [8][9] Legal Challenges - Zillow and Compass are set to meet in court regarding the preliminary injunction related to listing requirements [8] - State attorneys general have also filed lawsuits alleging that Zillow's partnership with Redfin could result in higher prices for apartment owners, which may be passed on to renters [9][10]

Financial Data and Key Metrics Changes - Total revenue increased 16% year over year to $676 million in Q3, exceeding the high end of the outlook range [5][26] - EBITDA of $165 million was reported, above the high end of the outlook range, with an EBITDA margin of 24%, expanding more than 200 basis points year over year [6][26] - GAAP net income of $10 million was achieved in Q3, reflecting effective cost management alongside revenue growth [6][27] Business Line Data and Key Metrics Changes - For-sale revenue grew 10% year over year to $488 million, outperforming the broader housing market [27][28] - Residential revenue within for-sale increased 7% to $435 million, with mortgage revenue growing 36% year over year to $53 million [28][29] - Rentals revenue surged 41% year over year to $174 million, driven primarily by a 62% increase in multifamily revenue [19][30] Market Data and Key Metrics Changes - Zillow's apps and sites had 250 million average monthly unique users in Q3, with agents using Zillow products responsible for an estimated 80% of U.S. residential real estate transactions [7][8] - The number of multifamily properties listed on Zillow reached 69,000, nearly double the 35,000 from two years ago [19][30] - Zillow Rentals had 2.5 million average monthly active rental listings, the most in the category [30] Company Strategy and Development Direction - The company is focused on delivering a seamless digital end-to-end experience for consumers and real estate professionals, emphasizing innovation and consumer-first strategies [5][24] - Zillow is expanding its integrated transaction experience, with 34% of connections now going through enhanced markets, aiming for at least 75% [15][36] - The launch of Zillow Pro is expected to enhance agent capabilities and expand the serviceable market [17][37] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in executing through external challenges, with a focus on building a transparent, consumer-first marketplace [23][24] - The company anticipates continued revenue growth acceleration in Q4, with rentals revenue expected to increase more than 45% year over year [34][35] - For 2026, management expects similar growth and EBITDA margin expansion as in previous years, planning for a macro housing environment that remains flat [36][63] Other Important Information - The company generated $295 million of free cash flow in the first nine months of 2025, a 28% increase compared to the same period a year ago [32] - Cash and investments at the end of Q3 totaled $1.4 billion, up from $1.2 billion at the end of Q2 [32] - The company has repurchased $2.4 billion in shares at a weighted average price of $48 [32] Q&A Session Summary Question: On the integration of the Zillow app with ChatGPT and its implications - Management views the integration as a significant opportunity, enhancing brand visibility and user experience while leveraging existing traffic [39][40][41] Question: Impact of the FTC suit and potential disruptions from Compass's acquisition of Anywhere - Management believes the syndication of multifamily listings is beneficial for consumers and property managers, and they do not foresee significant disruption from the proposed merger [44][45][46] Question: Performance of the residential business and market dynamics - The residential business outperformed the market, with growth driven by enhanced markets and Zillow Home Loans [48][49] Question: Value unlocks from Zillow Pro and monetization strategy - Zillow Pro is designed to bundle software tools for agents, enhancing their business operations and providing a pathway to Zillow Preferred [50][51] Question: Long-term opportunity with Zillow Preferred and market share - The expansion of Zillow Preferred is expected to drive continued outperformance in both residential and for-sale categories [52][53] Question: Sales strategy for rentals in light of market conditions - Management plans to continue business as usual, confident in the growth trajectory and value proposition for property managers [54][55]