Summary of Zillow Group FY Conference Call Company Overview - **Company**: Zillow Group (NasdaqGS: Z) - **Industry**: Real Estate Technology Key Points and Arguments Business Strategy - Zillow has transitioned from being primarily an advertising marketplace to developing a "Housing Super App" aimed at facilitating transactions for buyers, renters, and sellers [4][6][28] - The goal is to convert more users from browsing to utilizing Zillow's services, which currently has a transaction share in single digits despite high brand recognition [6][30] Revenue Growth - Zillow expects mid-teens revenue growth and margin expansion for the upcoming year, driven by strong performance in rentals and mortgages [28][158] - The company has outperformed the broader real estate market, achieving a 20% growth over the last two years despite a flat market [30][32] - Zillow's site received approximately 2.5 billion visits in Q3, indicating strong brand engagement [35] Rentals Segment - Zillow is the largest rentals marketplace with over 2.5 million rental listings, which is a key driver of audience engagement and revenue growth [137][138] - The partnership with Redfin is expected to further accelerate growth in the rentals segment [145][147] Technology and Innovation - Zillow has integrated AI capabilities, including partnerships with OpenAI, to enhance user experience and improve operational efficiency [90][105] - New features like Smart Messages for agents are designed to streamline communication and improve customer engagement [112][120] Market Dynamics - The company acknowledges ongoing lawsuits but emphasizes that these do not distract from its growth strategy [128][130] - Zillow's growth is expected to continue even in a challenging macroeconomic environment, with a focus on organic growth strategies [183][191] Future Outlook - Zillow aims to increase its market share by expanding its preferred agent program and enhancing its software offerings [165][171] - The company has set ambitious mid-cycle targets of $5 billion in revenue and a 45% EBITDA margin, with a significant portion of growth expected from its own initiatives rather than solely relying on market recovery [162][167] Capital Allocation - Zillow maintains a strategic approach to capital allocation, balancing between operational flexibility and opportunistic investments [188] Conclusion - Zillow is optimistic about its growth trajectory for 2026, focusing on expanding its customer base and enhancing its service offerings, regardless of macroeconomic conditions [191][192]

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]

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]