Z — Zillow Group, Inc. Class C

Zillow Group Q1 2026 Earnings Call Summary

1. Key Financial Results and Metrics

• Total Revenue: $708 million, up 18% year-over-year, near the high end of the outlook range.
• EBITDA: $182 million, exceeding expectations with a margin of 26% (flat year-over-year). Adjusted EBITDA would have been $193 million (27% margin) excluding $11 million in legal costs.
• Net Income: $46 million, with a net income margin of 6%, up over 500 basis points year-over-year.
• Free Cash Flow: $127 million, a 44% increase year-over-year.
• For Sale Revenue: Grew 12% year-over-year to $514 million; residential revenue up 8% and mortgage revenue up 56%.
• Rentals Revenue: Increased 42% year-over-year to $183 million, driven by 57% growth in multifamily revenue.

2. Strategic Updates and Business Highlights

• Zillow's strategy focuses on integrating the entire housing journey, enhancing user experience for buyers, sellers, and renters.
• The company is leveraging AI to improve its platform, with a new consumer-facing AI mode currently available to 5% of users, showing promising engagement metrics.
• Zillow Preview, a new feature for pre-market listings, has gained rapid adoption among brokers, with over 60 partnerships established shortly after launch.
• The company continues to expand its offerings in both For Sale and Rentals, with significant growth in multifamily properties and enhanced marketing tools for agents.

3. Forward Guidance and Outlook

• Q2 2026 Revenue Guidance: Expected between $750 million and $765 million, implying approximately 16% year-over-year growth.
• Full Year 2026 Outlook: Anticipates mid-teens total revenue growth, approximately 30% growth in rentals revenue, and continued EBITDA margin expansion.
• The company expects to maintain its growth trajectory despite a flat housing market, with confidence in its diversified business model.

4. Bad News, Challenges, or Points of Concern

• The housing market remains flat, impacting sentiment and transaction volumes, leading to expectations of mid-single-digit growth in residential revenue for the second quarter.
• Legal costs are anticipated to rise by $20 million year-over-year, impacting EBITDA margins in the near term.
• The company is cautious about macroeconomic conditions, including interest rates and weather impacts, which could affect consumer behavior and transaction activity.

5. Notable Q&A Insights

• Zillow Preview: Early feedback indicates strong demand from sellers and agents, as public visibility of listings is preferred over private marketing.
• Residential Revenue Outlook: The company is not expecting a recovery in the housing market and is planning for continued flat conditions, which could limit growth in residential revenue.
• Mortgage Business: While growing, the mortgage segment is still not at scale, and margins are lower than desired. The company aims to improve productivity and reduce customer acquisition costs over time.
• Rentals Growth: Zillow is confident in reaching its $1 billion annual revenue target for rentals, with expectations for continued strong growth despite tougher comps in the second half of the year.

Overall, Zillow Group demonstrated solid performance in Q1 2026, with a strong focus on integrating technology and enhancing user experience, while navigating challenges in the broader housing market.