Zillow Group, Inc. Class A

Q2 revenue was $772 million, up 18% year over year. EBITDA was $176 million, implying a 23% EBITDA margin, and adjusted net income was $118 million; diluted adjusted net income per share was $0.52 versus $0.40 in Q2 a year ago. Reported net loss was $4 million. For sale revenue grew 14% to $549 million, including residential revenue of $465 million, up 7%, and mortgages revenue of $84 million, up 75%; rentals revenue rose 31% to $209 million, with multifamily revenue up 42%. Year to date, free cash flow was $223 million, up 19%. The company ended Q2 with $682 million of cash and investments, repurchased $200 million of stock in the quarter, and had about $1.1 billion remaining under buyback authorization. For Q3 2026, Zillow guided to total revenue of $745 million to $760 million, for sale revenue growth of 5% to 7%, residential revenue flat year over year, mortgages revenue growth of over 50%, rentals revenue growth in the high 20% range, EBITDA expenses of $560 million to $565 million, and EBITDA of $180 million to $200 million. For full-year 2026, it reiterated total revenue of $2.92 billion to $2.96 billion, approximately 30% rentals revenue growth, EBITDA of $730 million to $760 million, and more than 15% decline in full-year stock-based compensation expense.

Jeremy Wacksman framed the quarter as evidence that Zillow’s strategy is working and said the company is becoming the “operating system for modern real estate.” He emphasized the strength of direct consumer engagement, AI Mode, integrated buying and renting experiences, and products like Zillow Home Loans, Showcase, and Preview. He also said there is no change in strategy from the leadership reshuffle and that the organizational changes are meant to help the company move faster and more efficiently.

Jeremy Hofmann focused on the financial benefits and near-term accounting effects of the preferred transition. He said preferred delivered 23% higher revenue per connection in 2025, is expected to reach 35% higher in 2026, and that Zillow Home Loans has positive unit economics across fixed and variable costs today. He also outlined the transition’s revenue mechanics: a shift from residential to mortgages revenue, about a 200-basis-point timing headwind from loan recognition, and a 200 to 300-basis-point Q4 seasonality headwind as the company accelerates to more than 75% preferred connections. On capital allocation, he cited $682 million of cash and investments, $500 million of undrawn credit, $1.2 billion of total liquidity, $200 million of Q2 share repurchases, and $826 million repurchased year to date.

Analysts pressed management on the new leadership structure, the employee reduction, and whether Google’s expansion in local services ads or ongoing legal cases were affecting the business. Management said the leadership change does not signal a strategy shift, the restructuring is about moving faster and improving cost discipline, and they are not seeing any impact from Google or the legal noise. Questions also focused on rentals growth, the economics of moving from lead-gen to preferred monetization, and how much of the current growth is driven by Zillow Home Loans versus legacy mortgage co-marketing; management said the preferred model expands the addressable market, improves revenue per connection, and that Zillow Home Loans is now profitable at the unit level.