Zillow Group (ZG) Q2 FY26 earnings call: guidance and Q&A

Zillow's AI mode is transforming consumer engagement, with users spending over 3x longer on the platform, viewing more than twice as many homes, and contacting agents at nearly 3x the rate. This personalized context, including financial situations and specific home needs, was previously inaccessible. AI mode is currently live for about 20% of signed-in users and is being scaled deliberately, with ongoing development to add more skills and evaluations for buyers, sellers, renters, and homeowners.

The integration of Zillow Home Loans with pre-approval directly into home search provides buyers with real-time budget verification, accounting for taxes, HOA fees, and interest rates. This has led to double-digit adoption rates and positioned Zillow Home Loans as a top 25 purchase lender nationally. The average loan officer originates approximately twice the industry average of purchase loans per month, benefiting from lower customer acquisition costs due to Zillow's existing user base.

Zillow Preview, a new pre-market exposure product, helps sellers build demand before a home goes active, offering real-time demand signals to agents and public access to pre-market inventory for buyers. Over 100 brokerage partnerships are enabling Preview, with syndication to Realtor.com expected later this summer. Zillow Showcase, designed to maximize impact for active listings, is now on about 5% of new listings, with agents using it winning 35% more listings than peers. Rich media, including 3D home tours, is on 11% of new listings, and instant floor plans from smartphones are expected later this year.

Zillow Pro, a premium membership, offers agents a connected system to manage all clients, including those outside the Zillow ecosystem. The 'My Agent' feature allows agents to collaborate with clients on Zillow, providing real-time visibility into client activity. Buyers with a My Agent relationship are 80% more likely to meet their agent face-to-face and 50% more likely to progress through home search stages. The 'Likely to List' feature uses predictive AI to flag contacts showing pre-listing activity, turning the CRM into an active opportunity engine for agents.

The Rentals segment achieved 31% year-over-year revenue growth in Q2, with multifamily revenue up 42%. Zillow's strategy focuses on providing a streamlined operating system with the largest and most varied inventory, from single-family homes to 79,000 multifamily properties. Property managers report Zillow delivers the highest return on marketing investment, leading to increased wallet share. Zillow Rentals also expanded its reach by becoming the only real estate platform in Google's Gemini connected apps ecosystem, powering real-time availability and tour scheduling.

Zillow Group undertook a restructuring, eliminating approximately 7% of employees to enhance speed and efficiency, expecting $75 million in annualized EBITDA cost savings from Q2 run rates. Jeremy Hofmann was appointed to an expanded role as Chief Operating Officer and Chief Financial Officer, consolidating strategy and operations. Sandi Knight joined as Chief Legal and Policy Officer, reflecting continued investment in leadership for future growth.

Zillow is accelerating its transition to the Preferred monetization model, aiming for over 75% of connections by year-end 2026, up from 61% currently. This model drives 23% higher revenue per connection compared to the legacy advertising model in 2025, projected to reach 35% higher by end of 2026. The acceleration causes a shift in revenue from residential to mortgages, a 6-12 month lag in Zillow Home Loans revenue recognition, and a different seasonal pattern, creating near-term headwind^📎s but promising greater long-term growth and profitability.