Zillow (ZG) Q1 2026 Earnings Call Transcript

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Date

Wednesday, May 6, 2026 at 5 p.m. ET

Call participants

• Chief Executive Officer — Jeremy Wacksman
• Chief Financial Officer — Jeremy Hofmann
• Head of Investor Relations — Bradley Berning

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Takeaways

• Total Revenue -- $748 million, up 18% year over year and near the high end of guidance range.
• EBITDA -- $182 million, above guidance with an EBITDA margin of 26%, flat year over year; excluding $11 million in incremental legal costs, EBITDA margin would have been 27% (a 160 basis point increase).
• Net Income -- $46 million, resulting in a net income margin of 6%, which increased more than 500 basis points year over year.
• Diluted Net Income Per Share -- $0.19 compared to $0.03 in the same period a year ago.
• Free Cash Flow -- $127 million, representing a 44% year-over-year increase.
• For Sale Revenue -- $514 million, growing 12% year over year; includes residential revenue of $450 million, up 8%, and mortgage revenue of $64 million, up 56%.
• Purchase Loan Origination Volume -- $1.5 billion, up 96% year over year; Zillow Home Loans has reached top-25 national lender status.
• Enhanced Markets Connections -- Accounted for 49% of total connections, up from 44% in the prior quarter, with a target of at least 75% longer-term.
• Showcase Adoption -- 4.3% of new listings used Showcase in the quarter, up from 3.7% in Q4, supported by enterprise agreements with large brokers and franchisors.
• Agent Software Engagement -- Follow Up Boss monthly active users increased over 70% since acquisition in late 2023, now chosen by more than 80% of highest-volume real estate teams.
• Rentals Revenue -- $183 million, up 42% year over year; multifamily revenue rose 57%, and platform properties rose 38% to 76,000 year over year.
• Average Monthly Rental Listings -- 2.7 million, the highest in category; average monthly unique visitors reached 36 million.
• Product Innovation -- AI Mode is live for 5% of users, already generating more meaningful engagement and actionable user activity than traditional search.
• Cash and Investments -- $788 million at quarter end, down from $1.3 billion at the end of 2025, after $626 million of share repurchases, leaving 240 million diluted shares outstanding versus 256 million a year ago.
• Liquidity -- Combined liquidity of approximately $1.3 billion, including a $500 million undrawn revolving credit facility.
• Q2 Revenue Outlook -- Anticipated total revenue of $750–$765 million (16% growth at midpoint), with rentals revenue expected to increase 30%, and for sale revenue to grow at a similar pace to Q1.
• EBITDA Expense Outlook for Q2 -- Forecasted at $610 million; includes $20 million in higher legal costs, and $16 million incremental advertising versus prior year.
• Full-Year 2026 Guidance -- Management expects mid-teens total revenue growth, approximately 30% rentals revenue growth, and continued EBITDA margin expansion.
• Share-Based Compensation Outlook -- Now expected to be down more than 15% year over year for 2026, compared to prior guidance of down more than 10%.

Summary

Zillow Group (NASDAQ:ZG) reported results near or above guidance across all key metrics and highlighted continued outperformance relative to housing industry benchmarks. Management introduced Zillow Preview to rapidly scale premarket exposure, onboarding over 60 brokerages in two months, and announced a collaboration with realtor.com to expand listing visibility. The company emphasized its expanding suite of integrated tools, including growth in enhanced markets and the rollout of AI Mode to millions of users, resulting in deeper user engagement and greater context for conversion. Management reiterated confidence in reaching its $1 billion annual rentals revenue target, noting sustained high adoption across both multifamily and long-tail rental segments, and ongoing demand for agent and property management solutions.

• Zillow purchased back $626 million in stock during the quarter, reducing diluted shares outstanding by 16 million from the prior year, and retained $1.3 billion in authorized buyback capacity.
• Legal and advertising expenses are expected to be temporary headwinds in the first half, but should become less material by year end, supporting margin expansion.
• "public is better than private." was cited by Wacksman to explain strong agent and seller adoption of Zillow Preview, emphasizing the strategic differentiation over competitors in listing transparency.
• Management expects advertising spend in 2026 to be modestly higher year over year and weighted more toward the second quarter due to timed product launches.
• Hofmann stated, "we are planning for the housing market to," clarifying that the revenue outlook does not depend on market improvement, but on the continued execution of Zillow's integration and growth strategy.
• Operational efficiency, driven by adoption of AI both in consumer products and internally, resulted in engineers delivering 40% more code per person at consistent or higher quality, according to management claims.
• The rental platform's compounded growth since 2022 was cited at an average of 32% annually, significantly outpacing the rental advertising market according to company-supplied figures.

Industry glossary

• Enhanced Markets: Zillow-defined geographies where the company delivers a deeply integrated buyer experience, combining Zillow Home Loans, agent tools, and transaction workflow for higher conversion rates.
• Zillow Preview: A premarket listing product that provides public exposure to homes before they are officially listed, now expanded in collaboration with realtor.com.
• Showcase: Zillow's immersive listing tool suite, including features such as 3D tours, interactive floor plans, and virtual staging, used to enhance new listings' impact and engagement.
• Follow Up Boss: Customer relationship management software for agents and teams, centrally integrated into Zillow's professional offering for lead and client workflow management.
• AI Mode: Zillow's newly launched conversational AI user interface, designed to facilitate more in-depth interactions and drive user engagement across the real estate journey.
• Market-Based Pricing (MVP): Legacy agent revenue stream tied to the purchase of buyer leads in a spot market fashion, now declining as operations transition to preferred agent models.

Full Conference Call Transcript

Bradley Berning: Good afternoon, and welcome to Zillow Group, Inc. Class A's quarterly earnings call. Joining me today to discuss our results are Zillow Group, Inc. Class A's CEO, Jeremy Wacksman, and CFO, Jeremy Hofmann. During today's call, we will make forward-looking statements about our future performance and operating plans based on current expectations and assumptions. These statements are subject to risks and uncertainties, and we encourage you to consider the risk factors described in our SEC filings for additional information. We undertake no obligation to update these statements as a result of new information or future events, except as required by law.

Please review the cautionary statement and additional information in our earnings release, which can be found on our Investor Relations website. This call is being broadcast on the Internet, and is available on our Investor Relations website. A recording of the call will be available later today. During the call, we will discuss GAAP and non-GAAP measures, including adjusted EBITDA, which we refer to as EBITDA, and adjusted free cash flow, which we refer to as free cash flow. We encourage you to read our shareholder letter and earnings release which can be found on our Investor Relations website. They contain important information about our GAAP and non-GAAP results, including reconciliations of historical non-GAAP financial measures.

We will open the call with remarks followed by live Q&A. And with that, I will now turn the call over to Jeremy Wacksman.

Jeremy Wacksman: Good afternoon, everyone, and thank you for joining us. Q1 was another quarter of consistent execution and continued momentum across our business. We delivered revenue near the high end of our outlook range, and EBITDA above our outlook, putting us on track toward achieving our full year goals. That consistency reflects a winning strategy, and a platform that is built to grow. Our strategy is straightforward: make moving easier by connecting the entire housing journey into one integrated experience, supporting both consumers and the professionals who serve them. In for sale, that encompasses shopping, touring, financing, agent collaboration, and closing for consumers, as well as a suite of agent software tools to make them more efficient at serving clients.

And in rentals, it spans search, tours, applications, leases, and payments. This integration is what drives better outcomes for everyone involved and fuels our growth. Roughly 80% of our traffic comes directly to us, and we have more than twice the daily active app users of our next closest competitor. Buyers, sellers, renters, and professionals choose Zillow Group, Inc. Class A because we build experiences that they trust and come back to. Our Q1 results reflect continued execution and progress across the business. Total revenue increased 18% year over year in the first quarter, near the high end of our outlook range.

We once again outperformed the broader housing market, which stayed essentially flat amid worse-than-expected weather and interest rate volatility. EBITDA exceeded our outlook, driven by lower costs than planned, and we reported $46 million of net income. We made further progress on margin expansion with net income margin up more than 500 basis points year over year. In for sale, revenue grew 12% year over year in Q1 to $514 million, with 8% growth in residential revenue and 56% growth in mortgages revenue. Our for sale performance outpaced industry transaction trends, which were roughly flat, and reflects our ability to convert more high-intent movers as we improve outcomes for consumers through a more integrated experience.

In rentals, Q1 revenue was up 42% year over year, driven by 57% growth in multifamily revenue. We are gaining wallet share for broad-based marketing spend from multifamily property managers, as they continue to see strong ROI we are providing to their businesses. Our results this quarter reflect our ability to innovate and grow the business while delivering sustainable profitability regardless of macro conditions. Before I give more detailed updates on what is driving our results in both for sale and rentals, I want to spend a moment on our company strategy and on how we are using AI to accelerate it.

We laid out our thinking on this at our AI investor summit in March and I will reiterate it here. We have been building advanced technology in residential real estate for 20 years, from the Zestimate to the mobile revolution to computer vision and beyond. We are now in the next chapter of that arc, and we believe Zillow Group, Inc. Class A is uniquely positioned to lead real estate in this chapter as well, thanks to three advantages: content, context, and integration. These advantages are difficult to replicate and differentiate us from horizontal LLMs and from other real estate companies. First, content.

We have the most comprehensive and increasingly rich housing inventory in the country across existing for-sale homes, new construction homes, and rentals. Content that is elevated by proprietary rich media: Zillow 3D Home tours, interactive floor plans, virtual staging, and Sky Tour. More than 10% of new for-sale listings on Zillow Group, Inc. Class A today include Zillow 3D Home tours and interactive floor plans, and we expect rich media to become the standard that buyers and sellers demand for every listing. That substantial, growing coverage is already making the consumer experience better, and over time, it will help make our AI more capable. Our second advantage is context.

Seventy percent of everyone who buys or sells a home in America uses Zillow Group, Inc. Class A during the process, spending an average of two to three hours a week over five months. They are not just browsing. They are saving homes, booking tours, determining their buyability range, messaging with their agents and loan officers, and preparing to make offers. That activity spanning every point in the transaction is sustained deep intent that Zillow Group, Inc. Class A uniquely sees and understands. And it is the context that compounds into a unique-scale data advantage. Zillow Group, Inc. Class A does not just see the search or the first question.

We see the homes someone returns to every day, the affordability calculations, the conversations with loan officers, the deals closed. That full vantage is what allows us to do more than answer generic listing questions. We can answer personalized questions, anticipate what a consumer needs to do next, and actually help them take that action. This leads to our third advantage, integration. For buyers and sellers, we connect marketing, search, touring, financing, and closing into a single coherent experience interwoven with agent workflows. Tools that operate only at the top of the funnel can only answer surface-level questions—summarizing listings, providing market data, setting a search filter. But Zillow Group, Inc.

Class A operates at the core of the transaction, not around the edges of it. We handle the complexity, understand the full picture, and help consumers and professionals take action. That is what Zillow Group, Inc. Class A is delivering. A buyer can understand whether they can afford a home through Buyability, see available times and book a tour through ShowingTime, receive a preapproved loan scenario from Zillow Home Loans, and connect with a Zillow preferred agent who already knows their search history and preferences through our robust CRM system, Follow Up Boss—all within a single continuous experience.

These three advantages are built on something that matters just as much as the technology itself: two decades of operating in one of the most regulated and complex categories. Structural complexity in housing shapes what AI can do and what it takes to do it well. Transactions are high-dollar, high-stakes, highly personal, and for most people, they happen only a handful of times over their entire lifetime. There are hundreds of thousands of brokers working across several hundred MLSs powering 1.5 million real estate agents. We have spent 20 years navigating this landscape, putting in place the industry relationships and the infrastructure to provide products and services directly for the transaction, not just observe it from the outside.

Our long history of innovation and investment enables us to deliver value that only increases as AI capabilities grow. At our AI summit last month, we also debuted Zillow Group, Inc. Class A's new consumer-facing AI Mode experience. This new way of engaging throughout our site is live for about 5% of our audience so far, which equates to availability for millions of users, and we plan to expand access this year as we continue to test, learn, and refine the experience, consistent with how we approach all major product rollouts. Early signals are encouraging. Zillow Group, Inc.

Class A users in AI Mode are having deeper, more substantive conversations than they do in traditional search, and we are seeing more actionable engagement as a result. As just one of many examples of how users are engaging throughout the life cycle, a recent AI Mode user had 16 conversations across 10 days researching neighborhoods in Sonoma County, California, comparing areas, tracking sold properties, asking for shareable maps to discuss with a partner, and referencing their agent in Santa Rosa. They are now under contract to buy one of the homes they found through this robust experience. That is the arc Zillow Group, Inc. Class A covers, guiding the consumer from the very first question to keys in hand.

We are also empowering the professional at every step, embedding AI throughout the agent and loan officer experience to help them better serve customers and work more efficiently. This makes our platform increasingly indispensable to the professionals who drive the most volume in this industry. Consider what a high-performing agent's day looks like: juggling multiple active clients while simultaneously running a pipeline of hundreds, prospecting for new listings, negotiating offers, and having the key conversations that move deals forward.

Follow Up Boss, which top agents in the country rely on to manage their businesses, is becoming an AI-powered workflow engine that handles coordination, prioritization, and outreach so agents can stay focused on the judgment, advocacy, trust, and human relationships that get deals done. The result is that great agents become, in effect, super agents who can take on more transactions at higher quality without more hours, all enabled by Zillow Group, Inc. Class A. Just as AI is making our two-sided marketplace work smarter on both sides in for sale, the same is true in rentals.

For renters, it is powering more personalized search and helping surface the right next step, whether that is scheduling a tour, submitting an application, or understanding financial readiness for a future home purchase. For property managers using AI Assist, it is streamlining lead management, application screening, and lease coordination, reducing friction at every step of the transaction. Our commitment to AI-fueled efficiency does not stop at our consumer and professional products. It runs all the way through how Zillow Group, Inc. Class A itself operates. We are rapidly becoming an AI-native company, and internally, we are already seeing what that means in practice. Our engineers are shipping 40% more code per engineer at the same or higher quality.

Product and design teams are prototyping faster and taking features from concept to launch in a matter of days. And our employees are using AI to reinvent and streamline their workflows. We are investing to make AI a foundational capability for our employee base, channeling productivity gains directly back into building more and building faster, so the benefits compound over time. We have spent two decades building the content, the context, and the integration that differentiates Zillow Group, Inc. Class A from others in our category. Now we are powered by AI across every layer of our company—in our products, in our professional tools, in how we build. All that depth of capability positions Zillow Group, Inc.

Class A to lead real estate in the AI era. Now I will walk you through more details on how our strategy is coming to life in each area of our business, starting with for sale. Our thesis is straightforward: integration improves outcomes. When marketing, search, touring, financing, and agent collaboration work together, every participant in the transaction gets a better result. Buyers and sellers move forward with confidence, agents close more deals, and Zillow Group, Inc. Class A captures more of the opportunity already flowing through our funnel. Here is how that thesis continues to prove out for buyers, sellers, and their real estate agents. For buyers, the integrated experience begins the moment they start shopping.

Buyability, a tool from Zillow Home Loans that helps buyers understand what they can realistically afford before they tour or make an offer, has enrolled 4.3 million users as of Q1, up from 3.6 million at the end of 2025. Buyers see real value in Zillow Home Loans affordability tools, competitive rates, free appraisals for eligible buyers, and fast loan officer response times. Purchase loan origination volume grew by 96% year over year to a record $1.5 billion in Q1, and Zillow Home Loans is now a top-25 purchase lender. Zillow Home Loans averages double-digit adoption rates across our enhanced markets, where the integrated transaction experience is most fully realized as we help agents and loan officers better serve buyers.

Enhanced markets accounted for 49% of our connections in Q1, up from 44% in Q4 and well on our way to our target of at least 75%. Our new Shop with Preapproval feature, which is now available across our entire platform, takes the integration a step further. Buyers who have a Zillow Home Loans verified preapproval on hand now get a clear view of the monthly cost of ownership and whether a listing is within their preapproval budget.

It makes the shopping experience more grounded and actionable, signals to us and agents that a buyer is higher intent, and it is one of the clearest expressions yet of what our integrated platform can do to help a buyer shop with confidence. Shop with Preapproval is unique to Zillow Group, Inc. Class A, and it works in concert with our tool called MyAgent, which lets buyers designate the agent they are working with regardless of whether they are a Zillow preferred agent, and shop alongside them, making a buyer's whole team present and accessible as they use Zillow Group, Inc. Class A.

Messaging on the Zillow app then threads it all together by letting a buyer, agent, and loan officer communicate in one place. We are also bringing co-shoppers into a cohesive integrated experience because a significant portion of buyers are not going it alone. On Zillow Group, Inc. Class A, buyers can search and collaborate with a co-shopper in real time. This capability became available earlier this year and is already driving better buyer engagement because it brings a naturally collaborative part of the home buying journey into Zillow Group, Inc. Class A's integrated ecosystem where those discussions can be acted on.

For sellers, we continue to expand our suite of products designed to provide differentiated ways to market homes and achieve stronger results. Zillow Preview gives pre-market listings broad, public exposure on the most visited real estate platform in America. Unlike premarketing in a private listing network, Preview puts listings in front of the buying public from day one. With Preview, sellers can build interest and get real-time signals—views, saves, tour scheduling requests—from Zillow Group, Inc. Class A's massive audience of deeply engaged users, which is pricing intelligence they can actually use. And Preview listings surface right in a buyer's regular Zillow search and recommendations—no insider access required.

Yesterday, we announced a new Preview collaboration with realtor.com, extending the visibility of Preview listings across the two most visited real estate platforms in the country. This wide exposure benefits sellers, buyers, and agents with unrestricted access to the inventory in more places. New Harris Poll survey data backs up why this matters. Nearly nine in 10 Americans would be interested in viewing pre-listed homes online if they were buying a home, and 85% of soon-to-be sellers said they would be more likely to hire an agent who can premarket their home to the broadest online audience. So it is no wonder agent adoption of Zillow Preview has moved so quickly.

We announced Preview just seven weeks ago with five initial brokerage partners, and we have since added more than 60 brokerages. We are currently onboarding agents to use Preview, and we are excited about the significant agent demand as we launch and scale it. After Zillow Preview builds initial momentum and the listing goes active, sellers and agents can choose Zillow Showcase to maximize impact. Showcase listings provide an immersive, high-impact listing experience that includes interactive floor plans, 3D tours, virtual staging, and Sky Tour, and they drive more engagement and sell faster and for more money than non-Showcase listings. 4.3% of new listings in Q1 used Showcase, up from 3.7% in Q4.

Agents using Showcase on the majority of their listings win more new listings than peers who do not, which is why adoption continues to grow, including through recent enterprise-level agreements with some of the country's largest brokers and franchisors. Together, Preview and Showcase give sellers and their agents a marketing toolkit for the listing life cycle. For professionals, the tools and infrastructure Zillow Group, Inc. Class A provides on both sides of the transaction can increasingly function as an operating system for modern real estate.

Follow Up Boss is the customer relationship management system of choice for more than 80% of the highest-volume real estate teams in the country, and it has seen more than 70% growth in monthly active users since Zillow Group, Inc. Class A acquired it at the end of 2023. ShowingTime enables tours on 90% of all homes for sale in the country—40 million tours were booked through the platform last year—and dotloop facilitates closings on nearly half of all transactions nationwide. Each of these is a significant product in its own right. Connected, they power the transaction from the first signal that a consumer is shopping to the final closing document.

Zillow Pro brings it all together, giving agents a single connected system to manage all of their clients, including those who originated outside the Zillow ecosystem. Zillow Pro is in beta and already drawing meaningful interest, with more than 12 thousand agents using the product so far. It is on track for a broader nationwide rollout in the second half of this year. Over time, we expect Zillow Pro to reinforce our role as a long-term partner for real estate professionals across their entire business. All of our for sale solutions point to the same conclusion: the more integrated the experience, the better the outcome—for buyers, for sellers, for agents, loan officers, and for Zillow Group, Inc. Class A.

We are executing against our $1 billion incremental mid-cycle revenue target in for sale, and the momentum we are building gives us conviction about the path ahead. In rentals, we are building something that has not previously existed in the category: a true comprehensive two-sided marketplace that brings together the most and the widest variety of listings, high-intent demand, and modern transaction tools. Our strategy is twofold. First, we are building a trusted destination for renters to find every type of property, from single-family homes to large apartment communities. Second, we are modernizing the rental transaction itself, streamlining how renters and property managers connect and manage applications, leases, and payments.

We reached an all-time high of 76 thousand multifamily properties as of Q1, up from 55 thousand properties a year ago. Combining this with our industry-leading inventory of long-tail rentals—the smaller buildings and single-family homes—Zillow Group, Inc. Class A had 2.7 million average monthly active rental listings in Q1, the most in the category, and 36 million average monthly unique visitors in Q1. Because of our relentless focus on the consumer experience, renters rate Zillow Group, Inc. Class A as their number one preferred platform. High-quality audience engagement translates to strong outcomes for our partners. Property managers tell us Zillow Group, Inc.

Class A delivers the highest return on marketing investment in our category, compared with not just other rental platforms, but other digital marketing options available to them, including search and social. They keep renewing and upgrading their presence on Zillow Group, Inc. Class A as a result of the ROI we provide, and we see a significant opportunity to keep growing wallet share from here and capture more of the marketing dollars currently being spent on other advertising platforms. Multifamily was the engine behind our 42% year-over-year increase in rentals revenue in Q1. Our continued growth in rentals is a reflection of what happens when you build real value and improve the transaction experience on both sides of the marketplace.

And we are not stopping there. For example, the Total Monthly Price feature we launched recently lets property managers display the all-in cost of a rental. That gives renters a clearer picture and property managers a differentiated way to present their inventory. And in April, we launched two new tools for multifamily property managers: a live analytics dashboard that gives partners a single place to track portfolio performance, benchmark against market trends, and make smarter leasing and advertising decisions, and a paid social product that puts their listings in front of renters on Instagram, Facebook, and TikTok, fully built and managed by Zillow Group, Inc. Class A.

The two are designed to work together—identify which units need more traffic in the dashboard, then dial up social reach instantly. It is all part of the growing list of ways Zillow Group, Inc. Class A's rental platform is leveling up for our partners and making it easier for them to fill units faster. The same principles driving our for sale strategy apply in rentals. Transparency builds trust, integration drives efficiency, and a better experience on both sides of the marketplace compounds over time. Rentals revenue has grown at an average of 32% annually since 2022, significantly outpacing the broader rental advertising market.

And because nearly every buyer starts as a renter, our progress in rentals continues to expand the top of Zillow Group, Inc. Class A's funnel overall, and contribute to durable growth across the business. With a clear path toward our incremental mid-cycle target of $1 billion or more in annual revenue, rentals is one of our most compelling growth opportunities. Before I turn it over to our CFO, Jeremy Hofmann, I want to step back and put this quarter in context. We delivered 18% revenue growth, net income of $46 million, net income margin expansion, and continued growth in both for sale and rentals, all against a housing market that was essentially flat.

Our revenue has consistently outperformed industry total transaction value for more than three years now. That kind of performance in this kind of environment does not happen by accident. It reflects the durability of a multiyear strategy that is designed to perform across market cycles, and a platform that operates across the entire housing transaction, that consumers trust and return to throughout a months-long journey and that professionals rely on every day to run their businesses. Underpinning all of it is a strong brand millions of people come to when making one of the biggest financial decisions of their lives.

We earn the trust of consumers and professionals by consistently showing up for them at every stage of the housing journey. It is why roughly 80% of our traffic comes directly to us. It is why Zillow Group, Inc. Class A is searched more often than the term “real estate.” It is why we have more than twice the daily active app users of our next closest competitor. And it is why Zillow Group, Inc. Class A is the only large company in our category that has increased the amount of real estate audience we reach over the past six quarters, according to Comscore. When people are ready to move, Zillow Group, Inc.

Class A is where they start, and increasingly where they stay to take the next step and the next. We are focused on helping more people move with confidence, delivering real value to the professionals who serve them, and creating long-term value for shareholders. We are on track toward achieving our full year goals and we are in control of our own path. With that, I will turn the call over to Jeremy.

Jeremy Hofmann: Thanks, Jeremy, and good afternoon, everyone. We delivered excellent results in Q1, and are well positioned to continue delivering strong performance as we execute on our strategy in 2026 and beyond. In Q1, we generated revenue of $748 million, up 18% year over year and near the high end of our outlook range. EBITDA of $182 million was above the high end of our outlook range, resulting in an EBITDA margin of 26%, which was flat year over year. Excluding $11 million of incremental year-over-year legal costs, EBITDA would have been $193 million in Q1, representing a 27% margin and 160 basis points of margin expansion.

We reported net income of $46 million with a net income margin of 6%, up more than 500 basis points year over year. Share-based compensation expense was down 16% year over year. Diluted net income per share was $0.19 compared to $0.03 a year ago. We generated $127 million of free cash flow in the quarter, a 44% increase compared with the same period a year ago. Now let me take you through the details of the quarter. Our for sale revenue grew 12% year over year to $514 million. Within the for sale revenue category, residential revenue of $450 million was up 8% year over year and in line with our growth outlook.

The majority of the increase in residential revenue was due to growth in Zillow Preferred, primarily driven by the expansion of connections alongside our enhanced markets growth and strong conversion for our preferred partners. Zillow Showcase, our suite of agent software tools, and New Construction were also contributors to residential revenue growth. Market-based pricing revenue continues to decline as we transition the majority of our agent-related activity to our preferred partners. Within the for sale revenue category, mortgages revenue increased 56% year over year to $64 million, above our outlook for 40% growth as we saw better-than-expected conversion rates from customers in our pipeline.

Purchase loan origination volume growth accelerated to 96% year over year, which was the main driver of our mortgages revenue growth. Our results continue to demonstrate that Zillow Home Loans has an attractive value proposition for buyers. Note that as Zillow Home Loans continues to scale, the gap between loan origination volume growth and mortgages revenue growth will continue to narrow over time. Rentals continues to be one of our most exciting growth stories. Q1 revenue of $183 million grew 42% year over year, with multifamily revenue up 57%. We reached 76 thousand total properties on the platform, up 38% from a year ago, a milestone that reflects the strength of our value proposition with property managers.

The growth algorithm here is straightforward and working: add more properties, deliver best-in-class ROI, and capture more wallet share. We see a clear path to $1 billion or more in annual rentals revenue, and Q1 is another data point confirming we are on track. We produced strong growth in the quarter despite tougher-than-expected macro conditions, with winter weather and higher interest rates impacting for-sale shopping activity. As a result, the real estate industry grew 2% as reported by NAR, and we estimate purchase mortgage origination volume declined 1% year over year. Q1 EBITDA expenses of $526 million were below our outlook of $535 million to $540 million as we benefited from lower people-related and legal costs than we anticipated.

We ended the quarter with cash and investments of $788 million, down from $1.3 billion at the end of 2025. We repurchased $626 million of our stock during the quarter, a meaningful level of activity that reflects our conviction in the long-term value of the business and our commitment to returning capital when the opportunity is compelling. This resulted in our diluted shares outstanding declining from 256 million shares a year ago to 240 million shares at quarter end. As of March, we have approximately $1.3 billion remaining under our existing authorizations. Combining our $788 million of cash and investments with our $500 million undrawn revolving credit facility, we have total liquidity of approximately $1.3 billion.

This strong liquidity position gives us flexibility on our financial priorities to invest in growth, maintain an adequate risk-based capital reserve, support flexibility for potential M&A, and continue to be opportunistic with share buybacks. Turning to our Q2 outlook, we expect total revenue of $750 to $765 million, implying year-over-year growth of approximately 16% at the midpoint of our outlook range. We expect for sale revenue growth to be similar to Q1. Within for sale, we expect residential revenue growth of mid-single digits year over year. For mortgages, we continue to see a strong pipeline, which we expect puts us on track for growth at similar levels to Q1.

For rentals, we expect revenue growth of approximately 30% year over year for the quarter. In Q2, we expect EBITDA expenses of $610 million and EBITDA of $150 million to $165 million. Our expectations include approximately $20 million of incremental legal expenses and approximately $16 million of incremental advertising spend compared to a year ago. Excluding the $20 million of anticipated incremental legal expenses year over year, we expect EBITDA would be approximately $171 to $185 million in Q2, implying relatively flat year-over-year EBITDA margins. We are planning for approximately $80 million in total advertising spend in Q2, up from $64 million last year.

The incremental year-over-year advertising growth is due to timing of planned product launches that were already included in our original full year outlook. Taken together, our Q1 results and Q2 outlook have us squarely on track for the full year, and importantly, the structural drivers that we expect to accelerate margins in 2026 are already in motion. Turning to our full year outlook for 2026, we continue to expect to deliver mid-teens total revenue growth, approximately 30% growth in rentals revenue, and continued EBITDA margin expansion. We are updating our outlook for full year share-based compensation expense, which we now expect to be down more than 15% year over year, versus our previous guide of down more than 10%.

We expect our fixed cost base of approximately $1.1 billion to grow with inflation and believe it is the right investment level as we execute our growth strategy. For variable costs, we are continuing to invest in rentals and loan officers in Zillow Home Loans during 2026. We expect a slower pace of rentals investment in the second half of the year. This will drive variable cost growth to trend toward in line with revenue growth by year end. We have consistently said we will be disciplined with our advertising spend, dialing it up or down depending on where we see opportunities across the business.

In 2026, we plan to accelerate consumer awareness of our expanding offerings, with modest growth in our advertising spend year over year. Our full year outlook implies margins will expand meaningfully in the back half of the year, and there are a number of drivers I will walk you through. From a revenue perspective, we continue to see a strong growth opportunity in 2026 and beyond. In for sale, more consumers are receiving the integrated housing super app experience, which results in conversion improving for our preferred agents, Zillow Home Loans continuing to grow at a rapid pace, and our software suite getting into the hands of more agents.

When coupled with the continued growth in Zillow Showcase and New Construction, our for sale category growth prospects are solid. And of course, our rentals revenue is on a clear path to $1 billion plus in annual revenue. Our rental growth algorithm is clear: add more properties to our apps and sites, and deliver best-in-class ROI to increase wallet share. The combination of our for sale and rentals offerings are durable and growing, setting us up to succeed in any market environment. From a cost perspective, there are four key drivers to margin expansion in the second half of the year. First, we expect to continue to leverage fixed costs, which is within our control.

Second, variable expense growth will decelerate as we move through the year. In 2026, we expect variable costs to be a headwind of more than 400 basis points to EBITDA margins. By year end, we expect that headwind to be close to neutral, a meaningful swing that flows directly to the bottom line. Third, we expect that legal expenses will be an approximately 200 basis point headwind to EBITDA margins in 2026. We expect that legal expenses will be less of a headwind to margins in the second half of the year as we get through the FTC trial. Finally, our advertising spend is more heavily weighted in Q2 this year than in prior years due to planned product launches.

In the back half of the year, we expect advertising to follow a more typical seasonal pattern, meaning less year-over-year pressure on margins than we are seeing now. To close, we are pleased with our results in Q1 and confident in our ability to deliver against our 2026 and mid-cycle financial targets. We are successfully executing on our strategy and we have the right investments in place to support further revenue growth while expanding EBITDA margins, accelerating net income growth, and continuing to build the platform that we believe will define how people move into their next home. And with that, operator, we will open the line for questions.

Operator: Thank you. At this time, if you would like to ask a question, please click on the Raise Hand button which can be found on the black bar at the bottom of your screen. When it is your turn you will receive a message on your screen from the host allowing you to talk, and then you will hear your name called. Please then accept, unmute your audio, and ask your question. We will wait one moment to assemble the queue. Our first question today comes from Ryan McKeveny from Zelman Associates. Ryan, you may now unmute your line and ask your question. Thank you.

Ryan McKeveny: Great. Thank you for taking the questions. First, I wanted to dig in on Preview. Obviously, it is early days, but you have quickly ramped up broker partners, so curious if you can talk about what you are learning thus far—what you are seeing in terms of reception or uptake across the landscape of brokers, agents, as well as home sellers. And then secondarily, on the relationship with realtor.com, should we think about the strategy or the opportunity of working with them versus Zillow Group, Inc. Class A standalone? Thank you.

Jeremy Wacksman: Thanks, Ryan. I will take that. On Preview early learnings, the response really has been more than we expected. We announced it just two months ago with five partners, and as I said, now more than 60 have been announced. We are really heads down on onboarding agents and franchisees and getting it into the hands of those folks. We have been really pleased with the results, and I think that dovetails into your second question on the collaboration with realtor.com. It is really just a win-win for both Zillow Group, Inc. Class A and our agent partners as well as realtor.com.

It extends the visibility of this premarket inventory to now two of the most visited real estate platforms in the country, and we think that further increases the value and the demand for Preview listings, which was already very strong. As a reminder, Zillow Preview brings pre-market listings in front of the public from day one. It is better for buyers—buyers can see listings; that is the way to get homes sold fastest and for the most money. It is better for sellers—sellers can build interest, and they can get those real-time signals before they are ready to actively list the property from now not just Zillow Group, Inc.

Class A's massive audience of deeply engaged users, but realtor.com's audience as well. Still very early days; hard to believe we have made this much progress in just the first two months. We are excited to continue.

Ryan McKeveny: Great. Thanks for that. And then on the EBITDA guidance, both in the context of Q2 but also the full year, can you dig a bit more into how much of cost is within your control to get the expected margin ramp? I am curious both from a fixed cost and variable cost perspective, the visibility you have into the business to have confidence in the margin ramp in the back half.

Bradley Berning: Thank you.

Jeremy Hofmann: Yep. Thanks, Ryan. I will take that one. For Q2, two things are going on from a cost perspective. One is legal costs are up $20 million year over year. If you adjust for that, you would see an EBITDA guide of $170 to $185 million, which is more in line with margins from last year. The other is we are increasing advertising dollars by about $16 million in Q2. Those are the two factors. As we get into the back half of the year, we are confident in the full year guide, and there are a variety of reasons for why.

The first half of the year in aggregate, we are right on plan, so that is a good start. As we move into the second half of the year, the structural revenue drivers we have are well intact across for sale and rentals, and that growth algorithm is durable regardless of macro environment because the business is scaling and diversifying so much. With respect to costs, a lot is in our control. First is fixed costs—that is well within our control; we expect to leverage those. Second is variable costs, which were a 400 basis point headwind in the first half of the year. A lot of that is in our control.

Our rentals investment pace slows down in the back half of the year, and we expect variable expenses to be closer to neutral to EBITDA margins by year end. Legal costs were a headwind in the first half of the year; we expect they will be less of a headwind in the second half as we move past the trial. That is on an accelerated timeline, and as a result, the costs are on an accelerated timeline as well, but we are eager to get through that. And then the last one, also in our control, is advertising spend.

That is more heavily weighted in Q2 this year than in years prior due to planned product launches, but in the back half of the year, we expect advertising to follow a more typical seasonal pattern. So EBITDA is on track for margins to expand this year, and we feel good about it.

Operator: Thank you. Our next question comes from Ronald Josey at Citi. Ron, you may now unmute your line and ask your question. Thank you.

Ronald Josey: Great. Thanks for taking the question. Jeremy, I want to ask a little bit more on rentals here given the strength that we are seeing across multifamily in both properties and revenue growth. We are lapping the Redfin partnership in the back half of the year. Talk about the outlook and thoughts on the broader competitive environment of rentals as we march towards that $1 billion opportunity, but with tougher comps in the back half. And then as a separate question, on AI Mode—live for 5% of the audience today—talk about lessons learned thus far and thoughts about rolling this out more broadly.

Bradley Berning: Thank you.

Jeremy Hofmann: Yep. Thanks, Ron. I will take the first one then hand it to Jeremy on AI Mode. On rentals, we expect continued strong growth and execution in the second half of the year. Our full year guide of 30% implies second-half rentals revenue growth of upper 20s, even after lapping the Redfin-related revenue growth acceleration in the second half of last year. When we step back and look at the last few years of growth, in 2024 we grew rentals 27%. In 2025 we grew rentals revenue 39%. And we expect to grow another 30% this year—almost doubling the business over that period and growing the business faster in 2026 at nearly double the size.

We are obviously well on track for that $1 billion-plus annual revenue target. I will say the opportunity from here does still feel early because the strategy we have—to aggregate as much supply as possible across single-family homes for rent and apartments for rent—is really differentiated, and the value proposition we are bringing to consumers and advertisers is so compelling. You see that in the growth we have had, and we expect it to continue from here.

Jeremy Wacksman: To add, that is part of why we have that $1 billion annualized revenue target, but that is not the end state. We expect growth beyond that because, as Jeremy said, the strategy continues to be really unique, and we see it as more and more valuable. The rental audience growing to 36 million unique visitors and, as I mentioned, number one brand preference—that is what drives this ROI for advertisers. They want to fill their leases and they want a high-quality audience to do it. That is why we continue to see we are the best ROI advertising tool they have, again not just against apartment-focused sites, but against search and social platforms as well.

That is really the category of ad spend here—spending everywhere trying to find renters—and Zillow Group, Inc. Class A Rentals increasingly has the renters they want and has more of them. So we see green lights ahead for rentals growth. On AI Mode, it is early—it is live to 5% of audience, which is still millions of users—and we are getting a huge signal. We are seeing deeper, more substantive conversations than in traditional search. This can be a lot of incremental activity because you can ask and have conversations about things that you do not get to express in setting a search filter or in looking at a listing.

The example I gave is just one of many of people spending time going deeper. For the transaction, that is a higher-intent customer at the end of the day. It keeps that person on Zillow Group, Inc. Class A, that person is getting more value, and those folks find more of their needs on our platform. When they reach out to talk to a loan officer or an agent, they are ultimately going to be a higher-converting customer.

The structural advantage we have over the long term is to build the best AI Mode experience because of the content we have, the context of all those consumers and professionals using our platform, and the fact that we span the full gamut of the platform. Once you start in our category, triaging homes is the very top of the funnel. Ultimately you are trying to get your financing, go tour homes—virtually and in person—meet with your agent, message with your agent, make an offer, and ultimately close. That is what we are helping you do, and AI Mode is just the start of putting AI in the hands of consumers to help with that in an AI-native way.

Operator: Thank you. Our next question comes from Bradley Erickson at RBC Capital Markets. Brad, you may now unmute your line and ask your question. Thank you.

Bradley Erickson: Hi, guys. Can you hear me?

Jeremy Wacksman: Yes, we have you.

Bradley Erickson: Great. Thanks for taking the question. Resi started the year out a little softer; the question becomes what is instructing the back-half confidence that you are guiding to? Markets clearly weakened starting out the quarter. How much cushion is in there and what are your market assumptions embedded in your outlook for sale and Resi in particular? And then secondarily, as we think about mortgage really performing well here picking up the slack, the critique is around the lower margin profile. Can you speak to that and how investors should ascribe credit to that segment given the potential you see margin-wise over the longer term?

Jeremy Hofmann: Yep. Thanks, Brad. I will take those. In terms of what we are looking for in the back half of the year and how we thought about it, we are planning for the housing market to continue to be effectively flat. You are right it started off slower than folks anticipated; we are not planning for that to get any better. Against that backdrop, we are expecting mid-single-digit growth in residential. We are expecting for sale growth to be faster than residential given mortgages are outperforming our expectations thus far, and the enhanced markets playbook is clearly working regardless of housing market conditions. That gives us confidence on the for sale category overall regardless of what housing does.

Rentals continues to be a real bright spot and one of the most compelling growth opportunities we have. When we put that all together, revenue continues to be on track for mid-teens growth given the consistent diversification of the business, and all of those structural growth drivers are well intact. With respect to the mortgages margin question, we are making great progress on growing the mortgage business, but we are not yet at scale. Margins are improving. We are seeing better loan officer productivity and better processor productivity. Even last year, we improved loan officer productivity by 11% despite growing loan officer count by about 40%. That gives you a sense; it will take time.

When we look at the mortgage opportunity overall, we see a far bigger opportunity than being a top-25 lender. We are a top-25 lender in the country today; we are proud of that progress. But our goal is to be one of the biggest purchase mortgage originators in the country. As we build that scale, the margin dollars potential is really compelling because we do not spend the same amount of money on customer acquisition cost, and we think mortgage origination is purpose-built for AI applications over time too.

It is still a nascent business, but one that we see big revenue potential for and big margin dollars potential for, not to mention the consumer benefits we see when integrating mortgage with great real estate agents.

Bradley Erickson: Understood. Thank you.

Operator: Thank you. Our next question comes from Nicholas Jones of BNP Paribas. Nick, you may now unmute your line and ask your question. Thank you.

Nicholas Jones: Great, thank you. On rentals, as that business continues to grow nicely, is there a threshold where the product velocity and the rent-build side may start looking like what you have done in residential? It seems like you are seeing a lot of success there; some of the products you are rolling out are being well received. As you approach this $1 billion revenue threshold, might your posture on the segment start to change? Second, more broadly, as you build this end-to-end stack, are you getting more visibility into consumer behavior than you would have had historically—more views into their psychology, whether they are looking at preapprovals?

You gave a stat that 65% of renters also look at maybe buying a home. Are you getting better and better data as to how the macro environment is starting to look?

Jeremy Wacksman: On rentals, no, I do not think you should expect our posture to change. We are excited about the march we are making toward the $1 billion target we put out there, and as we have said for some time now, we do not think that is the end. The reason is our strategy and its penetration. We are in the mid-70 thousand buildings out of the roughly 100 thousand to 150 thousand buildings in multifamily, and we are a very high-ROI advertising source for them across all of their advertising sources. Our ability to see packages get upgraded as they bring more of their portfolios onto our higher-ROI offerings provides a long runway for multifamily rentals growth.

Remember, our strategy is twofold: it is multifamily plus single-family and long tail, which combined is 2.7 million rental listings, becoming a one-stop shop for all renters. Our property management tools for the semi-pro and long-tail professionals start to contribute more to the platform, provide more digital tools and services, and integrate those across the segments. We see tremendous growth coming from there as well. On your second question about seeing more of the context of the real estate transaction and for sale—yes. That has been our strategy for the last decade as we have gone down funnel and become a transaction platform.

When you are the software platform for a buyer not just to look for what listings are for sale but to actually get preapproved, book tours, virtually tour, hire your agent, message with your agent, bring your co-shopper into the messaging platform, start to write offers, and then close on the transaction, you are using Zillow Group, Inc. Class A tools. On the agent side, the context is not just on the consumer side—it is on the professional side.

Follow Up Boss, the CRM for top teams, is seeing all that data about those buyers and sellers to help those agents be more responsive, being the operating system for everything the agent does—from buyer management and coordination to tour management and scheduling to listing with Preview and Showcase. That platform provides really unparalleled context in the real estate category. That helps us build a better platform overall for this one-stop shop that we are increasingly delivering, and it also helps us build the most capable AI platform, so that as we all begin to expect AI-enabled services in our verticals, you will expect the Zillow Group, Inc.

Class A one to be the one that understands you the best, that helps supercharge the professionals the best, and that helps provide the most friction-free and delightful experience.

Jeremy Hofmann: To layer on top of that, Nick, Jeremy said it well, but you think about the consumer problem to solve. The consumer wants to see as much inventory as possible as a buyer or a renter—and they are often the same person. Having that inventory all in one place—for-sale homes, apartments, new homes, and existing homes—and the most of it is solving the consumer problem. It is giving us great context. And yes, we are building relationships with these consumers over multiple transactions. If we do a good job on the rentals front, why should we not earn the right for the for sale business if and when that person becomes a buyer?

That is all part of the strategy, but it starts with the fundamental: solve the consumer need, and we think we are doing that quite well.

Nicholas Jones: Thanks.

Operator: Thank you. Our next question comes from John Colantuoni at Jefferies. John, you may now unmute your line and ask your question. Thank you.

John Colantuoni: Can you hear me?

Jeremy Wacksman: Yep, we have you.

John Colantuoni: Great. Thanks for taking my questions. First, on residential revenue growth, can you help reconcile the slowdown you are looking for in the second quarter relative to your expectation for the housing market to bounce along the bottom again? Is there anything transitory there, and are you expecting a pickup in the second half? Second, talk about early responses from agents and sellers regarding the Zillow Preview product and why you think you have the right approach relative to some alternatives that have been launched. Thanks.

Jeremy Hofmann: Jeremy can take the second one. On your first, for Q2, the market started out slower than folks anticipated. Weather and rates throughout the first quarter were worse than anticipated, and that impacts sentiment. That impacts agent sentiment when there was some excitement around the real estate industry—albeit muted—heading into the year, and the transactions did not end up occurring. As a result, agent sentiment heading into the spring selling season impacts MVP, and we have seen this now a number of years in a row—MVP lags a bit because of that agent sentiment. You are seeing that play through in the numbers from Q1 to Q2.

We are not anticipating or planning for any recovery in transaction volume throughout the course of the year, so you are not seeing that come through in Preferred either. I would point to agent sentiment and how that impacts how they think about Market-Based Pricing and what they are willing to buy as the biggest factor. When we look at the enhanced market strategy, it is clearly working well. You can see that in the consistent revenue performance and in the mortgages growth as well. That is what we are most focused on versus quarterly fluctuations, and that structural driver feels well intact, but the on-the-margin move is really around MVP sentiment.

Jeremy Wacksman: On Preview, the response proves it is broadly desired by most of the market, and that is because public is better than private. The vast majority of sellers want to sell their home for the most money and sell it fastest, and using the public market and making it available to a broad pool of buyers is how you do that. We provided consumer sentiment stats: most sellers will use agents who can help them maximize price, and the only benefit of private is it benefits the brokerage that hides listings for their own gains.

It is not surprising you are seeing such strong support from brokers and agents even in just the first two months, and we are excited to continue to grow and expand.

John Colantuoni: Thank you.

Operator: Our final question today comes from Nikhil Devnani at Bernstein. You may now unmute your line and ask your question. Thank you.

Nikhil Devnani: Hey. Thanks for squeezing me in. I wanted to follow up on John's question around the revenue guidance. For 2026, is there an expectation that residential improves from mid-single digits in the back half, or is mid-teens total revenue growth achievable even if that becomes the run rate for residential for the rest of the year?

Jeremy Hofmann: I will take that one. Housing market has been effectively flat; we are not planning for that to get better. It may, but we are not planning for it. Against that backdrop, what informs the mid-teens guide is we expect mid-single-digit growth in residential. We expect for sale to grow faster than residential because the enhanced markets are working so well and mortgage is growing nicely. Then total revenue continues to be on track for mid-teens growth because you include rentals as well. They all layer on top of each other.

We are not planning for any macro changes versus what we saw in the first quarter, and despite that, we are well intact for mid-teens revenue growth for the year.

Operator: This completes the allotted time for questions. I will now turn the call back over to Jeremy Wacksman for closing remarks. Thank you.

Jeremy Wacksman: Great. Thanks, everyone, for joining us today and for staying a few minutes longer. We really appreciate your continued support. We are tremendously excited for what is ahead, and we look forward to speaking with you next quarter. Thanks all.

Operator: Thank you for joining Zillow Group, Inc. Class A's first quarter 2026 Financial Results Call. This concludes today's conference call. You may now disconnect.

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