Zillow Group Inc Q3 2024 Earnings Call Summary

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

Question: John Colantuoni - Jefferies - Analyst : Great. Thaks for taking my questions. A multi-parter on real-time touring. Can you give us some perspective on how lead conversion for Real-Time Touring is comparing to other types of connections. And I believe Real-Time Touring generally lends itself to agents transitioning to the Flex model. So I'm curious if you could detail how agents -- how many agents are transitioning to Flex in markets you rolled out Real Time Touring. And if that transition is providing additional tailwinds to revenue given you're now more directly monetizing the commission through a product that has a higher lead conversion.

Question: Bradley Erickson - RBC Capital Markets - Analyst : I guess two. First, on the regulatory changes and just curious, you guys have obviously rolled out a light version of the mandated buyers agreements for agents. Just curious if you're seeing any structural changes to conversion where particularly those markets where that's kind of a brand-new practice. I'm just curious if that's maybe at all affecting your market share on everything? And then second just on the Zillow Showcase, can you just remind us, you gave the overall share of new listings. I know in the prepared remarks and everything. But just remind us where you've kind of seen your market share of total listings or new listings go in some of the more mature markets like the individual markets, if you could? Thanks.

Question: Bradley Erickson - RBC Capital Markets - Analyst : Got it. That's great. Thanks. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 06, 2024 / 10:00PM, Z.OQ - Q3 2024 Zillow Group Inc Earnings Call

Question: Mark Mahaney - Evercore ISI - Analyst : Okay. Great, thanks. I want to ask two things. I want to follow up on Brad's question about these NAR settlement changes and you just talk about what you've seen in the market so far, I guess, for three or four months into this, from your perspective, is greater friction occurred in the market? Or has it been largely immaterial so far.

Question: Mark Mahaney - Evercore ISI - Analyst : Okay. Thank you.

Question: Nicholas Jones - JMP Securities - Analyst : Great. Thanks for taking he question. I guess a follow-up on the Showcase. As you roll this out, can you kind of speak to the demand you're seeing in market for the product? And I guess, what are you learning about how you're pricing it today? And potentially, where that can go against kind of the intermediate or longer-term targets you have for that business?

Question: Nicholas Jones - JMP Securities - Analyst : Great.

Question: Chris Kuntarich - UBS - Analyst : Great. Maybe just oneon the market share doubling within the four oldest Enhanced Markets. I think if I'm looking at the right chart from an investor deck a while back, that was closer to 3.5% in January of 2023. So that implies, I guess we're closer to 7% and above REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 06, 2024 / 10:00PM, Z.OQ - Q3 2024 Zillow Group Inc Earnings Call that average now. Can you maybe talk to us a bit about this oldest cohort of enhanced markets and how kind of the puts and takes we should be thinking about as it relates to using that as a case study for some of these newer cohorts of enhanced markets ramping?

Question: Chris Kuntarich - UBS - Analyst : Got it. And maybe just one on the virtual staging AI, the acquisition that you made in early October. Apologies if you touched on this earlier, but just could you maybe talk to us about how you're thinking about letting this value and integration into Zillow Showcase, like how you may let that value accrue to the seller agents versus potentially offering different tiers as Zillow showcase?

Question: Michael Ng - Goldman Sachs - Analyst : Hey, good afternoon. I just have two. I guess the first one is just on rentals. Really impressive rentals traffic growth, and it sounds like the marketing campaign that you're leaning into is working well. As we head into 2025, do you see opportunities to further expand that marketing campaign or other advertising levers that you could pull that you see as potential high returns. I'm just thinking about the OpEx outlook for next year? Thanks. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 06, 2024 / 10:00PM, Z.OQ - Q3 2024 Zillow Group Inc Earnings Call

Question: Michael Ng - Goldman Sachs - Analyst : Great. Thank you. That's all very helpful color. And my second question I was wondering if you could speak to any risks to changes in clear cooperation. I think you made some comments in your prepared remarks, but would just love your view on where we stand today and how you're thinking about any potential changes in the future? Thank you.

Question: Michael Ng - Goldman Sachs - Analyst : Thank you, Jeremy.

Question: John Campbell - Stephens - Analyst : Thanks, guys. Congrats on a great quarter. Just want to stick on the 4Q revenue guidance. You guys have obviously provided some direction for pretty sharp growth continuation of growth out of rentals and mortgage. So just isolating residential, it seems like you have a fairly large subscription mix there. So I'm thinking the swing factor is probably going to be Flex. But from just what you guys have given and if just kind of taking the back of the napkin here, I'm thinking going to have to assume that Premier Agent revenue is going to be down year over year. I know you guys don't report on that anymore, but maybe just directionally, if you could help us, does the guide imply a premier agent decline year over year?

Question: John Campbell - Stephens - Analyst : Okay. Makes sense. And then a quick follow-up, just on Follow Up Boss. It seems like the adoption uptick has been pretty sharp of late. I don't know how much of that is due to the enhanced market expansion. So maybe if you could touch on that. And then I saw that you raised the contingent consideration for Follow Up Boss. It seems like you're doing really well there. So maybe if you can talk about how you've been able to change to what extent you'll be able to change the Follow Up Boss growth trajectory? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 06, 2024 / 10:00PM, Z.OQ - Q3 2024 Zillow Group Inc Earnings Call

Question: Ryan McKeveny - Zelman & Associates - Analyst : Hey, thanks, guys. Congrats on the results. Just one for me related to how you're thinking about expense growth going forward. So Jeremy, you talked about the variable cost side and the investments outpacing revenue growth in '24. Obviously, still resulting in margin expansion with low fixed cost growth. I know it's early to give any 2025 guidance in terms of revenue or margin. But if we do assume mortgage rates stay high and we're in this kind of stuck slow housing market, should we generally expect that trend to continue in terms of variable costs relative to revenue cost growth? Or are you reaching a point where some of those initiatives have scaled to the point where maybe that will no longer be the case? Thank you.

Question: Ryan McKeveny - Zelman & Associates - Analyst : Sounds good. Thank you very much.