Zillow Group (ZG) Q2 2026 Earnings Call Summary

1Key Financial Results and Metrics

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

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

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

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, with residential revenue up 7% and mortgage revenue up 75%.

Rentals Revenue: Increased 31% year-over-year to $209 million, driven by a 42% increase 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 experience.

AI Mode: Launched for 20% of signed-in users, showing significant engagement improvements (3x longer usage, 2x more homes viewed).

Zillow Home Loans: Now a top-25 lender, with a strong value proposition leading to double-digit adoption rates.

Zillow Preview: A new product for sellers to gauge demand before listing, with over 100 brokerage partnerships.

Restructuring: Approximately 7% of roles were eliminated to improve efficiency and reduce costs, expected to generate $75 million in annualized EBITDA savings.

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: Anticipated between 5% and 7%, with residential revenue expected to be flat year-over-year.

Full Year 2026 Revenue Guidance: Projected mid-teens growth, with total revenue between $2.92 billion and $2.96 billion.

Rentals Revenue Growth: Expected to continue in the high 20% range year-over-year.

4Bad News, Challenges, or Points of Concern

Market Conditions: The purchase mortgage market is now expected to decline low to mid-single digits, impacting residential revenue.

Revenue Shift: A significant portion of revenue is shifting from residential to mortgage categories due to the preferred monetization model, creating a temporary headwind.

Seasonality: Anticipated 200-300 basis points headwind to year-over-year for sale revenue growth in Q4 due to seasonal trends.

Legal Challenges: Ongoing litigation and regulatory scrutiny, although management believes these will not impact business performance.

5Notable Q&A Insights

Leadership Changes: The appointment of Jeremy Hofmann as COO and CFO is aimed at strengthening leadership without altering the strategic direction.

Impact of Google: Management reported no significant impact from Google's local service advertising expansion, attributing strong brand loyalty and direct traffic.

Revenue Recognition: The transition to the preferred model has led to a lag in revenue recognition, affecting short-term revenue visibility.

Product Velocity: The company is shipping new features rapidly, particularly in AI, while managing costs effectively to ensure profitability. Overall, Zillow Group reported strong financial performance in Q2 2026, with significant growth in revenue and strategic initiatives aimed at enhancing its position in the real estate market, despite facing challenges from market conditions and ongoing transitions in its business model.