Zillow Group Q2 2026 Earnings Call Summary

1Key Financial Results and Metrics

Total Revenue: $772 million, up 18% year-over-year, exceeding expectations.

Adjusted Net Income: $118 million; diluted adjusted net income per share was $0.52, compared to $0.40 in Q2 2025.

EBITDA: $176 million, with an EBITDA margin of 23%.

Free Cash Flow: $223 million year-to-date, a 19% increase from the previous year.

For Sale Revenue: Grew 14% year-over-year to $549 million; residential revenue increased by 7% to $465 million, while mortgage revenue surged 75% to $84 million.

Rentals Revenue: Increased by 31% year-over-year to $209 million, driven by a 42% growth in multifamily revenue.

2Strategic Updates and Business Highlights

Zillow continues to position itself as the "operating system for modern real estate," leveraging AI to enhance user engagement and improve the home-buying experience.

The launch of "AI Mode" has shown promising results, with users engaging significantly more with the platform.

The company is expanding its integrated transaction model, with over 61% of connections now going to preferred partners, aiming for 75% by year-end.

Zillow Home Loans is now a top-25 purchase lender, with strong adoption rates and improved profitability.

The company introduced new products like Zillow Preview to enhance seller engagement and listing visibility.

3Forward Guidance and Outlook

Q3 2026 Revenue Guidance: Expected to be between $745 million and $760 million, implying approximately 11% year-over-year growth.

For Sale Revenue Growth: Projected between 5% and 7%, with residential revenue expected to be flat year-over-year.

Full Year 2026 Guidance: Anticipating mid-teens total revenue growth, with rentals revenue expected to grow around 30%.

EBITDA Margin: Expected to expand, with full-year EBITDA projected between $730 million and $760 million.

4Bad News, Challenges, or Points of Concern

The company announced a restructuring that will eliminate approximately 7% of its workforce to improve efficiency and reduce costs, which may impact morale.

There is a significant shift in revenue recognition from residential to mortgage categories, creating a headwind of 600 to 800 basis points in residential revenue growth due to the transition to preferred partners.

The broader purchase mortgage market is expected to decline by low to mid-single digits, impacting Zillow's residential revenue.

Competitive pressures from Google’s local service advertising product have not yet affected Zillow's metrics, but ongoing vigilance is necessary.

5Notable Q&A Insights

Leadership changes, including Jeremy Hofmann taking on dual roles as COO and CFO, are aimed at strengthening the team without altering the overall strategy.

The restructuring is intended to enhance operational efficiency without hindering growth initiatives.

The transition to preferred monetization is expected to yield higher revenue per connection, but it comes with complexities in revenue timing and recognition.

The company remains confident in its ability to navigate external challenges, including legal issues and competitive pressures, by focusing on consumer needs and enhancing its product offerings. Overall, Zillow Group reported strong financial results and is well-positioned for future growth, despite facing some challenges related to market conditions and internal restructuring.