Zillow Group Inc Q4 2024 Earnings Call Summary

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

Question: Ronald Josey - Citi - Analyst : I guess a question for both, Jeremy. So the first one is just on Enhanced Markets. And I think, Jeremy, you talked about 35% of connections by the end of the year with Enhanced Markets on the way to 75%. Talk to us how you get there, the path to getting that 75%? And any early benefits and not so early, but what are the benefits that you're seeing thus far with the transition to Enhance Markets? And then with the Redfin deal, very clear on the opportunity with Rental that you laid out on the call. But I wanted to hear a little bit more just on the strategic rationale with the partnership, the benefits to it. And then Jeremy, if you can talk about the payments and the distribution, what it means for the balance sheet, I guess.

Question: Ryan McKeveny - Zelman - Analyst : I wanted to start on the 2025 outlook for positive GAAP net income for the full year and revisit some of that breakdown between fixed variable advertising and SBC. So the fixed cost sounds very straightforward. I guess on the variable side of things, in the investor deck, you've got the slide showing that was 25% of revenue in '24, up from 24% in '23. I guess is that 100 bps growth that we saw a decent guide post for -- 2025 on the variable cost? I guess that's part one. And then on the advertising piece, I know you described it as kind of opportunistic the step-up this year, I think, was largely attributed to the efforts on the Rental side. I guess I'm just curious where you sit today, how you're thinking about the advertising piece into '25 relative to that expense category in 2024?

Question: Ryan McKeveny - Zelman - Analyst : Got it. That's helpful. And I guess a follow-up, maybe somewhat related to cost structure over time. but maybe just the ways AI can benefit the business, whether it's the search experience or elsewhere. I guess maybe just curious if you could share some thoughts on how you're generally thinking about the influence of AI on the business over time?

Question: Bradley Erickson - RBC - Analyst : Can you guys hear me?

Question: Bradley Erickson - RBC - Analyst : Yes. So a couple of questions. First, can you just hit for Q4, the revenue growth was a little bit below the market that you reported just kind of why that was? And then in the guide for Q1, why does that apparently revert to share gains? That's question number one. Question number two, you're starting out this year with a lot more enhanced market, call it, horsepower than you did have last year at this time. And I guess, market share gain-wise, it seems like you're kind of roughly baking in maybe a similar amount year over year. So I guess there's kind of decent logic there as to why the market share delta should expand. Is that the right expectation? Or maybe if you could guide us a little bit more on that, that would be great.

Question: Mark Stephen Mahaney - Evercore ISI - Analyst : Okay. I just want to ask about the cost structure going forward. I know you made a couple of comments just maybe long term in the next two or three years when you think about your headcount levels and your overall, I guess, fixed expenses like your confidence in being able to keep headcount growth relatively modest and your confidence in a two- to three-year outlook and being able to keep these costs relatively close to the current fixed cost base? Just talk about that, please.

Question: Nicholas Jones - JMP Securities - Analyst : Two. One, on kind of 2025 outlook. Can you maybe speak to how are agents behaving today as you roll out all these new solutions? You've kind of outlined this kind of suite of products in the deck are agents being more discerning and if transaction volume were to maybe pick up, they potentially get more opportunistic in taking on new solutions? Or is it opposite, I guess, just what have you learned kind of talking to agents and their willingness to adopt all these new solutions as you roll them out nationally. And then kind of the follow-up is based on that dynamic, does that kind of make it easier to accelerate enhanced markets roll out over time? Or is the Loan business and hiring folks kind of a gating factor and as we think about it longer term?

Question: John Colantuoni - Jefferies - Analyst : So just starting with the full year outlook, just wanted -- it looks like you're expecting faster growth relative to the first quarter. Just maybe walk through the drivers of that improving outperformance relative to your expectation for the housing market as the year progresses? And second, in the Rental segment, it looks like your first quarter outlook implies an acceleration relative to the fourth quarter. I imagine Redfin has something to do with it, but maybe walk through the key drivers of the acceleration in the Rental segment.

Question: Thomas Champion - Piper Sandler - Analyst : Hopefully can hear me I guess the mortgage revenue, 86% accelerating again, it really stands out. Can you talk about what you've learned here? What are the innovations you figured out? How connected is that outperformance to enhance markets? Just any details on mortgage would be really helpful. And then I'd just be curious, your view of the market, we've been kind of at this 4 million home sale level for a long, long time. That would seem to be well below the long-term base rate. So do you think pent-up demand is building? Is the market at some point headed for a kind of step option change in a catch-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. FEBRUARY 11, 2025 / 10:00PM, Z.OQ - Q4 2024 Zillow Group Inc Earnings Call

Question: James McCanless - Wedbush - Analyst : The first one I had is on -- you talked about the Rentals and you're up to 50,000 properties now. I guess what was the level that you need to have to where this becomes more durable than maybe some of the benefit you received from multifamily starts and construction probably being the highest level we've seen in 40 years. I guess, what's the number of properties or listings that you'd have to make this a durable longer-term model? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 11, 2025 / 10:00PM, Z.OQ - Q4 2024 Zillow Group Inc Earnings Call