Zillow Group Inc Q1 2025 Earnings Call Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Ronald Josey - Citi - Analyst : Great. Thanks for taking the question. And I've got a ton, but I wanted to focus, Jeremy, on the rentals business specifically. And the commentary about accelerating revenue growth to 40% for the full year. And I wanted to understand a little bit more about what's driving that. I mean clearly, multifamily units reaching 60,000 as of early May, talks about an acceleration at least growing units there at a faster cadence than we've seen normally. And so when you think about the accelerating growth or accelerating growth in rentals, multifamily units growing as fast as they are, just talk to us a little bit more about where these gains are coming from. Is it more of these multifamily units are willing to work with Zillow and therefore, you're winning greater market share or wallet share for that matter? And then once Redfin starts kicking in, how should we think about that? Thanks again for your help. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 07, 2025 / 9:00PM, Z.OQ - Q1 2025 Zillow Group Inc Earnings Call

Question: Ronald Josey - Citi - Analyst : Thank you, guys.

Question: Bradley Erickson - RBC Capital Markets - Analyst : Yeah, thanks. So a couple of questions. One, just on market share. NAR, I guess, showed 3% growth. You guys showed 6% growth, residential grew 6%. And I appreciate, Jeremy, the comments earlier on kind of the high-end, low-end nuance going on there. But just in general, with these two reported metrics being a little bit of far apart. How should we be looking at this and aiming to kind of assess your growth relative to the market? And then I've got a follow-up. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 07, 2025 / 9:00PM, Z.OQ - Q1 2025 Zillow Group Inc Earnings Call

Question: Bradley Erickson - RBC Capital Markets - Analyst : Got it. And then you've obviously got a growing portion of connections here coming from the enhanced markets, I guess, 24% this quarter, 35% expected by the end of the year. It would seem like that could really start to take growth rates kind of further above the market to your last point, so I guess, is that kind of the right way to think about it? Or maybe any other nuances you might want us to be aware of as we kind of contextualize that in the full-year guidance?

Question: Bradley Erickson - RBC Capital Markets - Analyst : Helpful. Thanks.

Question: John Colantuoni - Jefferies - Analyst : Great. Thanks for taking my questions. Looks like your full-year outlook calls for better growth in the rental segment, which kind of implies either the residential or the mortgage segment or maybe both are falling a bit short of prior expectations. Can you talk to the factors causing that shortfall relative to your expectations for either segment. And second question, based on sort of your hiring needs to service your current market footprint in your growth areas, how is that informing your pathway to get back to variable costs growing more consistent with revenue? Thanks.

Question: John Colantuoni - Jefferies - Analyst : Great. Thank you.

Question: Trevor Young - Barclays - Analyst : Great. Thanks. Just back to the questions on rentals and the multifamily ramp there. How much of the uptick in May to the 60,000 was from contracts that lapsed at Redfin that you were able to pick up. I think you said the partnership just launched last week. So clearly very early days. And also, can you just remind us kind of the mechanics of the partnership since it wasn't actually an acquisition. Redfin cancels their contracts, but can share a customer list with you and then your sales or can go try to sign up those properties? Is that more or less how it works?

Question: Trevor Young - Barclays - Analyst : Really helpful. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 07, 2025 / 9:00PM, Z.OQ - Q1 2025 Zillow Group Inc Earnings Call

Question: Thomas Champion - Piper Sandler - Analyst : Hi, good afternoon. Jeremy Wacksman, maybe for you, please. Could you talk a little bit about the listing access standards. This seems like an important industry development. And I'm wondering if you could just offer some comments on it and why it's important. And maybe for Jeremy Hofmann. I'm wondering if you could offer just a little more detail around Enhanced Markets growth and the plans through the balance of the year. I want to say you ended '24 with roughly 50, maybe that expanded to 90-ish in April. What inning are we in with the expansion of the Enhanced Markets. What does this look like over the next maybe couple of quarters into next year? Any thoughts on that would be really helpful. Thank you.

Question: Thomas Champion - Piper Sandler - Analyst : Thanks, guys.

Question: Mark Mahaney - Evercore ISI - Analyst : Okay. Two questions, please. First, your market transactions growth assumption behind your Q2 residential revenue outlook? Is it for flat, low-single digits? Is that what you're assuming in the market? And then I know it's a broad range or there's probably a couple of ranges, but can you talk about the monetization of per connection differential between the Enhanced Markets and the rest of the -- and the regular markets? Thanks.

Question: Mark Mahaney - Evercore ISI - Analyst : Okay. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 07, 2025 / 9:00PM, Z.OQ - Q1 2025 Zillow Group Inc Earnings Call

Question: Sergio Segura - KeyBanc Capital Markets - Analyst : Great. Thanks for taking the questions. I have two. Maybe going back to the listing standards. Just curious what the industry-wide reaction has been. For the brokerages that have been pushing these private listing networks, have you seen any signs of them maybe backing away from that strategy? And then for the EBITDA expense on 1Q was modestly below what you had in your outlook. So anything to call out there on cost savings? Or was that more just investment spend shifting into the second quarter? Thank you.

Question: Sergio Segura - KeyBanc Capital Markets - Analyst : Got it. Thanks, both.

Question: Curtis Nagle - BofA Global Research - Analyst : Great. Thanks for taking the question. I just want to go back to the point about the impact of high housing kind of driving a relative disparity in terms of your resi for-sale performance versus the market as a whole. I guess was that more outsized in 1Q relative to REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 07, 2025 / 9:00PM, Z.OQ - Q1 2025 Zillow Group Inc Earnings Call other quarters? I know high-end housing has been largely or I think for the most part, doing better than the market as a whole for let's say, the past several quarters. So yes, just curious on your thoughts on that. Thanks very much.

Question: Curtis Nagle - BofA Global Research - Analyst : Okay. And then maybe just a quick follow-up, Jeremy, on that point. Just I guess the philosophy behind not giving a market forecast this quarter, I think you have or at least, I don't know, past -- as far back as I can see, that's something you've done. So just why not do it for 2Q?

Question: Curtis Nagle - BofA Global Research - Analyst : Okay. Thank you.

Question: Benjamin Black - Deutsche Bank - Analyst : Great. Thanks for taking my question. One on the Listing Showcase. Just can you talk a little bit about the learnings there, your go-to-market strategy, what are some of the feedback that you're getting from your listing agents? And is there anything on the product side that you're working on that could potentially drive even greater adoption? And just longer term, when do you think we get to the place where not having listing Showcase is seen as sort of a real disadvantage and the sellers start to pressure agents to use it more? Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 07, 2025 / 9:00PM, Z.OQ - Q1 2025 Zillow Group Inc Earnings Call

Question: Benjamin Black - Deutsche Bank - Analyst : Thank you for that.

Question: Dae Lee - JPMorgan - Analyst : Great. can you hear me?

Question: Dae Lee - JPMorgan - Analyst : Thanks for taking the questions. I have two. Just a follow-up on the macro comments you made earlier. So I understand that housing remains challenged. But with that said, how is that translating into agent participation on your platform? I'm wondering if you're seeing any changes in how they're participating this year or that it's last year? And then secondly, you've been seeing acceleration in organic-user growth. Sort of curious what's driving that acceleration? And if you're seeing any changes to consumer behavior on your platform that could help us guide how to think about how '25 housing market should look like. Thank you.

Question: Dae Lee - JPMorgan - Analyst : Got it. Thank you.

Question: Maria Ripps - Canaccord Genuity - Analyst : Great. Thanks so much for taking my questions. Sorry about that. Just first, sort of a broad industry question. Would love to hear sort of your thoughts on what Rocket's announced acquisitions of Redfin and Mr. Cooper. So [what] the strategy there could mean for Zillow and the industry more broadly? And maybe relatedly, does the acquisition change sort of anything as it relates to any sort of key aspects of the Redfin partnership? And then I have a quick follow-up.

Question: Maria Ripps - Canaccord Genuity - Analyst : Got it. That's very helpful. And then can you maybe help us kind of understand sort of the magnitude of gross margin impact from the Redfin partnership that's sort of that's embedded in your guidance?

Question: Maria Ripps - Canaccord Genuity - Analyst : That's very helpful. Thank you very much.