Zillow Group Inc at Goldman Sachs Communacopia & Technology Conference Transcript

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

Question: Michael Ng - Goldman Sachs - Analyst : Yeah, that's right. I guess to start out, coming off the back of earnings, in the last earnings call, Zillow reiterated its full-year outlook for double-digit revenue growth and modest EBITDA margin expansion. And it's been a really strong revenue growth to date. Zillow has grown revenue by double digits year over year each quarter with EBITDA margins of 23% to 24%. How does Zillow plan to navigate both sustaining that very strong top-line growth while achieving margin expansion in obviously what's a difficult US housing backdrop?

Question: Michael Ng - Goldman Sachs - Analyst : Right. It's been great to see Zillow really taking fate into its own hands, so to speak, against the backdrop. Maybe we can just shift gears and talk about the NAR settlement. There was a settlement of various class action lawsuits that effectively removed the requirement for buyer agent commissions and reaffirm the negotiability of those commissions. Given that Zillow primarily monetizes with Premier Agent and Premier Agent has historically been primarily driven by buyer agent advertising spend, could you just elaborate about how the outcomes of the settlement should impact Zillow's business if at all? And what are some of the changes that Zillow's implemented in response to the NAR settlement?

Question: Michael Ng - Goldman Sachs - Analyst : Yeah. And I'm certainly of the view as well that more of the market share is going to consolidate towards the best agents. And if those happen to be the Premier Agent advertisers, right, that's a good thing for you.

Question: Michael Ng - Goldman Sachs - Analyst : Maybe just on that first point around just traffic share. Zillow's Internet search position, I think you guys have disclosed in the past is 3 times that of the nearest competitor. The daily app users are similarly 3 times next -- 3 times larger than the next nearest competitor. Maybe you can share a little bit about the competitive landscape across the digital real estate platforms. How is Zillow able to differentiate themselves? We hear a lot about competition from Homes.com and others. So where is Zillow differentiated there?

Question: Michael Ng - Goldman Sachs - Analyst : Right. And the 80% figure that's, I guess, organic search, zillow.com directly and app users, is that right?

Question: Michael Ng - Goldman Sachs - Analyst : Okay. Great. Maybe just talking about guidance. For the upcoming quarter, 3Q '24, Zillow guided residential revenue growth in line with the housing market, which I believe Zillow was assuming up mid-single digits. After eight quarters of outperforming the housing market, could you talk about what's driving your residential revenue growth outlook? What are you seeing with Premier Agent advertising spend? How are you contemplating the decline in mortgage rates in your outlook? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 09, 2024 / 10:45PM, Z.OQ - Zillow Group Inc at Goldman Sachs Communacopia & Technology Conference

Question: Michael Ng - Goldman Sachs - Analyst : Yeah. One thing that's been fascinating to me is that the number of Zillow Premier Agents in terms of count of advertisers has declined, I think, about 60% since 2015. Normally, you would think fewer advertisers means fewer dollars for your share of industry revenue. But Zillow has actually done better and to your point, have outperformed quite a bit. Why is it that Zillow can continue to gain that share of overall wallet despite a declining number of Premier Agent advertisers? And what does that mean about the quality of service on the platform, too?

Question: Michael Ng - Goldman Sachs - Analyst : Right. And by improving the quality of the agent base, it also improves the experience that the person on the other side gets from interacting with Premier Agent partners.

Question: Michael Ng - Goldman Sachs - Analyst : Yeah. If you could just talk about the housing market at large, according to the MBA, existing home sales this year are going to be about $4.2 million, up slightly year over year. What's Zillow's outlook for US housing volumes and pricing this year? How does that compare with industry forecast? And how do you expect like Premier Agent advertising spend to react to the housing market rates?

Question: Michael Ng - Goldman Sachs - Analyst : Okay. Great. Double-digit revenue growth in a flat housing market, that's pretty good, right? And maybe it's a good segue to the next point, which is around enhanced markets. I think you just said we'll get to 43 --

Question: Michael Ng - Goldman Sachs - Analyst : Yeah, markets by the end of October. Could you just elaborate on how you're expanding these initiatives across markets? Like what does it actually mean to be an enhanced market? Obviously, what are some of the tangible benefits of that? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 09, 2024 / 10:45PM, Z.OQ - Zillow Group Inc at Goldman Sachs Communacopia & Technology Conference

Question: Michael Ng - Goldman Sachs - Analyst : Great. Let's talk about some of Zillow's, I call them ancillary businesses. Rentals is a place where we can start. There's been a tremendous amount of momentum, eight consecutive quarters of growth. I think on the Rentals platform, Zillow has 1.9 million listings as of June of this year. What's Zillow's long-term vision in rentals? How is it able to have grown so fast over the last few years? And maybe you can talk about some of the benefits of diversification when you think about rentals with the Premier Agent business.

Question: Michael Ng - Goldman Sachs - Analyst : Yeah. Could you just talk a little bit more about rentals and the strategy of getting more multifamily advertisers onto the rental platform? It feels to me like Zillow is in this unique competitive position where they get more traffic than anybody else. And with your unique position in single-family homes, you also have probably more single-family home rentals than anybody else. So does that make it an easier pitch to the multifamily advertiser, for lack of better words?

Question: Michael Ng - Goldman Sachs - Analyst : Great. Shifting over to mortgages. It certainly was an impressive quarter. The company saw nearly 30% revenue growth in that business despite the fact that the housing and mortgage market are not particularly strong for the industry. (technical difficulty) REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 09, 2024 / 10:45PM, Z.OQ - Zillow Group Inc at Goldman Sachs Communacopia & Technology Conference

Question: Michael Ng - Goldman Sachs - Analyst : Great. And on those synergies between the Zillow Home Loans and Premier Agent, I wanted to talk about like Premier Agent synergies with just other adjacent categories like that, whether that be Zillow Home Loans or like ShowingTime. Like my theory has always been, hey, to the extent that you're able to get prospective homebuyers through these checkpoints, right, whether that's the Zillow Home Loan application or to go through a virtual tour, there's probably like a greater likelihood to buy and there's a better ROI for the Premier Agent advertiser. Is there any credibility to that thought process or am I just -- yes.

Question: Michael Ng - Goldman Sachs - Analyst : Right. That makes sense. And we're bumping up on time, so I wanted to ask, I guess, a big picture question -- maybe two big picture questions. But where does the competition come from? Or where does the market share gains from Premier Agent advertising come from? Like are there obvious pockets within digital that Premier Agent can pick up in terms of share of wallet? Is there still a large offline component a Premier Agent can fund growth by?

Question: Michael Ng - Goldman Sachs - Analyst : Yeah. I've certainly been struck by that statistic that you guys gave in the past around how two-thirds of real estate transactions have typically like touched Zillow in some way, shape or form, yet the monetization is obviously significantly lower than that. Maybe just to close out the discussion, as you look out over the next five years, what are some of the things you're most excited about for Zillow as a company? What do you see as the key priorities and strategies that Zillow is pursuing over that time period?

Question: Michael Ng - Goldman Sachs - Analyst : It's a great way to end it. Jeremy, thank you so much for being here. It's been a privilege to share the stage with you.