Zillow Group Q2 2025 Earnings Call Transcript

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Provided by Quartr
August 6, 2025

Key Takeaways

  • Positive Sentiment: Q2 revenue rose 15% year-over-year to $655 million, driven by strong segment growth and yielding EBITDA of $155 million at the high end of guidance and positive GAAP net income.
  • Positive Sentiment: For sale revenue grew 9% to $482 million, mortgages revenue jumped 41% to $48 million, and rentals revenue accelerated 36% to $159 million, all outpacing industry trends.
  • Positive Sentiment: Zillow Rentals reached 2.4 million active listings, with multifamily properties up 45% to 64,000 and new distribution partnerships with Redfin and realtor.com expanding reach and advertiser ROI.
  • Positive Sentiment: Enhanced markets now drive 27% of consumer connections, with 96% handled via Follow-up Boss and double-digit Zillow Home Loans adoption, targeting 35% by year-end and 75% long-term.
  • Positive Sentiment: Zillow raised its full-year outlook, now expecting mid-teens revenue growth at the higher end of prior guidance, ~40% rentals revenue growth, and continued EBITDA margin expansion and GAAP profitability.
AI Generated. May Contain Errors.
Earnings Conference Call
Zillow Group Q2 2025
00:00 / 00:00

Transcript Sections

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Operator

Hello, and welcome to Zillow Group's Second Quarter Financial Results Call. We ask that you please hold all questions until the completion of the formal remarks, at which time you'll be given instructions for the question and answer session. Also, as a reminder, this conference is being recorded today. If you have any objections, please disconnect at this time. Brad, you may begin.

Bradley Berning
VP - Strategic Affairs & IR at Zillow

Thank you. Good afternoon, and welcome to Zillow Group's quarterly earnings call. Joining me today to discuss our results are Zillow Group's CEO, Jeremy Waxman and CFO, Jeremy Hoffman. During today's call, we will make forward looking statements about our future performance and operating plans based on current expectations and assumptions. These statements are subject to risks and uncertainties, and we encourage you to consider the risk factors described in our SEC filings for additional information.

Bradley Berning
VP - Strategic Affairs & IR at Zillow

We undertake no obligation to update these statements as a result of new information or future events, except as required by law. This call is being broadcast on the Internet and is accessible on our Investor Relations website. A recording of the call will be available later today. During the call, we will discuss GAAP and non GAAP measures, including adjusted EBITDA, which we refer to as EBITDA. We encourage you to read our shareholder letter and earnings release, both of which can be found on our Investor Relations website as they contain important information about our GAAP and non GAAP results, including reconciliations of historical non GAAP financial measures.

Bradley Berning
VP - Strategic Affairs & IR at Zillow

We will open the call with remarks followed by live Q and A. And with that, I will now turn the call over to Jeremy Waxman.

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

Thank you, Brad, and good afternoon, everyone. Thank you for joining us. I'm pleased to share our strong q two results today, including continued double digit revenue growth and positive net income. We're gaining share in for sale and rentals, and we're doing it while maintaining cost discipline to deliver on our 2025 targets for continued EBITDA margin expansion and GAAP net income. As we work to streamline residential real estate transactions with our housing super app, everything we build is designed to offer a benefit for both consumers and the industry.

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

People want and deserve a better experience than the antiquated and analog one they've become used to in real estate. Consumers and professionals experience a digital, streamlined, automated, and delightful process in almost every other part of their lives, from rides and restaurant reservations to flights and lodging. And it's reasonable we'd expect the same in real estate. That's where Zillow comes in. We are building that truly integrated, digitized, end to end transaction experience.

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

That relentless focus on creating great products and experiences is why we're growing share in both for sale and rentals and why Zillow is a beloved brand. People instinctively turn to Zillow when they think about home. Whether a mover is looking to buy, sell, or rent, they're likely visiting us along the way. Zillow maintains the number one position in both for sale and rental traffic. In q two, we had 243,000,000 average monthly unique users across our apps and sites and about four times the app engagement of the next company in our category.

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

This deep connection with our audience has been part of our foundation from the start. Just in the past month, season two of Zillow Gone Wild premiered on HGTV, and Zillow debuted a Marvel sized collaboration with an immersive custom listing of the Baxter Building in New York from the new Fantastic Four movie, in addition to a steady drumbeat of organic mentions across the cultural zeitgeist. We've built that brand equity because Zillow is part of how people imagine their future and how they're able to turn those dreams into reality. Consumer affinity for Zillow continues to fuel our success. We're demonstrating consistently strong growth and are positioned for more.

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

In q two, total revenue was up 15% year over year, exceeding our expectations. For sale revenue increased 9% year over year against a broader housing and mortgage market that remained essentially flat. Residential revenue was up 6%, and mortgages revenue was up 41%. Rentals revenue growth accelerated in q two to 36% year over year. These strong results, combined with continued cost discipline, helped us deliver a 155,000,000 of EBITDA in q two at the high end of our outlook range.

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

We have a strong position, a sound strategy, and we are executing well, all of which will help us keep driving growth across both for sale and rentals. Looking ahead to the rest of 2025, we are on track toward the full year goals we outlined earlier this year. This includes now expecting mid teens revenue growth for the full year at the higher end of our previous 2025 outlook for low to mid teens revenue growth. Jeremy Hoffman will take you through more detail later in the call. We are successfully executing on our for sale strategy to deliver an easier, streamlined, tech enabled, and integrated transaction experience across Zillow with innovative products and services that solve problems for everyone involved in the move.

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

We know our strategy is working because consumers and real estate professionals like what we have to offer and because our ForeSee revenue growth continues to outpace industry growth. This effective strategy comes to life in our enhanced markets, where we're connecting high intent movers with high performing professionals and delivering a more integrated transaction. In Q2, 27% of connections came through the enhanced market experience, on our way to a long term goal of at least 75% of connections. And now 96% of enhanced market connections are handled through Follow-up Boss, our customer relationship management platform purpose built for agents and teams. We're seeing strong traction in existing enhanced markets as buyers are engaging and agents who work with us are gaining share.

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

And in q two, Zillow Home Loans continued to have double digit adoption rates across our enhanced markets, a clear sign of progress for our integrated approach. As part of our enhanced market playbook, we continue methodically expanding the experience to more customers and partners and to more places. We're excited about the potential to unlock a billion dollar incremental revenue opportunity just without rollout, even in a flat macro housing environment. Just as important, we're focused on innovating to make the transaction smoother and more delightful. That continuous innovation is what fuels our long term growth, so today, I'll walk you through some of the latest examples of what the team's been working on.

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

Firstly, we're improving how we identify high intent buyers, whether they start by viewing a property, connecting with an agent, or exploring their financing options, so we can match them with the right support at the right moment in their journey. That's where products like Buyability play a key role. Buyability is a powerful tool from Zillow Home Loans that helps buyers shop based on what they can afford, instantly estimating the loan amount they may qualify for, and suggesting a price cap based on their budget. It quickly adapts to market changes, interest rates, and the buyer's own financial situation, helping them stay focused, confident, and well informed as they shop on the Zillow app. More than 2,000,000 people have enrolled in viability since it launched, and recent enhancements now let buyers shop by both their target monthly payment and their overall maximum buying power.

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

These buyers are then even more knowledgeable and ready to act when they connect with an agent through Zillow. We're building these tools to empower decision making throughout the journey for consumers and the professionals who serve them. As another example, for sale listings on Zillow now display offer insights, showing buyers and their agents how different offer prices are likely to perform based on real time market data, and setting the stage for a productive, informed conversation about how to approach an offer. This is a huge benefit for agents. The call to action on Offer Insights is to connect with an agent, and the buyers it surfaces are likely higher intent and move ready as they are exploring viable paths to making an offer with an agent.

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

Helping movers understand what they can afford and what kind of offer they can make is especially important in a housing market like this one. To that same end, we continue to expand the Zillow Home Loans product suite. As of last week, we've broadened our down payment assistance program and enhanced our FHA loan offerings in select geographies in an effort to responsibly serve more qualified buyers. These updates are part of our ongoing work to improve access to financing and scale our mortgage operations over time. Complementing Zillow's consumer oriented features is an increasingly powerful set of tools that boost agent productivity because we cannot deliver a truly integrated transaction without equipping the professionals who movers rely on with the software and support they need to make it possible.

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

Follow-up Boss is a prime example of how we're innovating and delivering real value to agents. We're making Follow-up Boss even more indispensable by layering on a growing set of AI features that help agents work smarter, respond faster, and ultimately close more deals. For example, AI powered Smart Messages provide ready to send text and email suggestions personalized to a client's recent activity and conversation history. Since Smart Messages launched for Follow-up Boss customers in early June, agents using it have collectively exchanged about 2,000,000 Smart Messages with their clients. Team leads can now use Follow-up Boss reporting tools to help optimize work flows and coach their agents based on lead performance, follow-up speed, and conversion rates.

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

And agents using Follow-up Boss can access organized client insights on buyers they connect with through Zillow, such as which homes they were most interested in. By easily seeing what matters most to their clients, agents can serve them better and engage more effectively as they move deals forward. They can chat directly with movers and ZHL loan officers inside the Zillow ecosystem and even get AI powered call summaries and action items after a conversation. It is all designed to help them focus their time and energy where it matters most. Zillow in app messaging, our proprietary feature that's closely integrated with Follow-up Boss, builds on that workflow.

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

Buyers in select geographies can now use it to communicate directly and securely with agents and ZHL loan officers to share listings, schedule tours, and ask questions, all within the Zillow app. For agents and loan officers, we expect centralizing communication with this feature will help streamline customer engagement, improve response times, deliver better service, and ultimately boost conversion rates. Our most recent product launches continue the momentum of for sale by enhancing the shopping experience itself. Zillow's new tour itineraries let buyers and their agents coordinate within the Zillow app to create custom shared tour plans with homes, dates, and times. And virtual touring on Zillow also just got a big upgrade.

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

A few weeks ago, we launched Sky Tour, a dynamic interactive video experience as the newest feature on Zillow showcase listings. Sky Tour elevates the home shopping experience by using drone footage, rendering technology, and machine learning to create a smooth, realistic three d model of a home's exterior. This enables buyers to zoom around and explore from different heights and angles, giving them a better sense of the place before they ever step foot on the property. It's a powerful way for sellers and agents to highlight a home's curb appeal and outdoor features, make their showcase listings stand out, and get serious buyers in the door. Showcase is now on about 2.5% of new listings, up from 2% at the end of last quarter and just over 1% a year ago.

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

We are continually evolving and improving showcase, and our go to market motion to support scaled adoption, and that is helping us gain share. I encourage you to watch the video linked in our shareholder letter that highlights the great feedback we're hearing from agents about how Zillow's suite of product offerings is supercharging their businesses. All of these tools and features across for sale work together to deliver a better experience for movers and better performance for professionals. That's what Zillow's housing super app is built to do. Now diving into rentals.

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

As a reminder, our strategy here is twofold. First, to build the most comprehensive two sided marketplace of homes for rent, and second, to modernize the transaction experience for renters and property managers alike. The opportunity in rentals is significant with a large total addressable market. More homes turn over each year in the rental market than in the for sale market. In fact, about three times as many movers are looking to rent versus looking to buy, and almost every buyer starts out as a renter.

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

Yet historically, there hasn't been a single platform where they can see all available homes for rent. Zillow Rentals is changing that. We are executing well on our strategy and scaling rapidly. Zillow Rentals is seeing strong property count growth and accelerating revenue, built on the back of a sound strategy and a compelling product. Our marketplace includes a full spectrum of rental inventory, from single family homes to large multifamily buildings, because we know renters aren't looking for just one type of property.

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

They want to see everything in one place. In q two, Zillow rentals had 2,400,000 active rental listings, the most in the category. Multifamily properties are leading our rentals growth, with multifamily revenue up 56% year over year and property count up 45% year over year to 64,000 at the end of q two. We're also gaining wallet share with large property managers who are choosing to upgrade their advertising subscription spend with us as they recognize the value of connecting with the largest consumer rentals audience, including an increasing share of apartment seekers. Zillow Rentals is number one in partner satisfaction in our category for return on marketing investment as we deliver high intent, qualified renters and add real value for our multifamily partners.

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

Importantly, our reach now extends far beyond Zillow owned channels. Zillow Rental's partnerships to distribute multifamily rental listings with the Redfin Rental Network and with realtor.com are helping us provide a more comprehensive rental marketplace for consumers. Multifamily property managers who advertise with us can now reach renters not only across Zillow, Trulia, and HotPads, and StreetEasy in New York, but also through realtor.com, Redfin, rent.com, and apartment guide. This is a major value add for renters and property managers, and it's helping to drive more traffic, more inventory, and more revenue for Zillow rentals. But having the most active rental listings is just the start.

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

We're applying the same product expertise and relentless consumer focus we've shown in the for sale experience to building a more unified rental experience. Today on Zillow, renters can shop, compare costs, tour, apply, and in many cases, sign a lease, pay rent securely, and even build or improve their credit history by having their on time rent payments reported to major credit bureaus. For property managers, Zillow Rentals provides one easy digital platform to list, book tours, screen applicants, create and sign leases, and collect rent payments. New tools like the AI assist feature we announced in June, powered by an exclusive integration with Elise AI, simplify communication between renters and property managers, speeding up leasing. Additionally, rental listings on Zillow now support display of a full breakdown of upfront and monthly costs, as well as optional add ons, and a custom calculator that lets renters toggle fees on and off and see a personalized total.

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

This tackles a top frustration for renters, hidden fees and surprise charges, especially important for cost burdened renters trying to plan accurately. In turn, property managers get more qualified serious applicants. Building a better experience for renters and property managers has earned us the number one position in rentals traffic with 36,000,000 average monthly rental unique visitors in q two, and our lead continues to widen. We expect quarterly year over year rentals revenue growth to keep accelerating throughout 2025 with a clear path toward the billion dollar plus revenue opportunity in front of us. We're well positioned to keep capitalizing on the momentum we've built, scaling our marketplace, and growing our share.

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

This call marks one year since I stepped into the CEO role. It's an honor to be leading this company. I am incredibly proud of how our teams are delivering to get more people home while also helping our partners grow their businesses so they too can serve our shared customers. We are moving fast, we're staying focused, and we're building real momentum. Our q two performance reflects the strength of our position, strategy, and execution.

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

We're delivering growth, managing costs, and leading industry innovation to provide a seamless, tech enabled experience that helps movers and real estate professionals with nearly every step of their journey. We are on track toward the full year 2025 targets we've laid out, and we are confident in our ability to keep executing in q three and beyond. With that, I'll turn the call over to our CFO, Jeremy Hoffman.

Jeremy Hofmann
Jeremy Hofmann
CFO at Zillow

Thanks, Jeremy, and good afternoon, everyone. As you just heard, we delivered strong results in q two and are well positioned to continue doing so as we execute on our strategy. Q two twenty twenty five revenue exceeded our expectations, up 15% year over year to $655,000,000, which was above our outlook range. Our better than expected revenue performance combined with effective cost management delivered EBITDA of a $155,000,000 at the high end of our outlook range. Q two EBITDA margin was 24% with our trailing twelve month EBITDA growing 26% year over year as we continue to scale revenue and control costs.

Jeremy Hofmann
Jeremy Hofmann
CFO at Zillow

As a result of these efforts, in q two, we reported our second consecutive quarter of positive GAAP net income. For sale revenue grew 9% year over year in q two to $482,000,000, 700 to 800 basis points above residential real estate industry growth of 2% according to data tracked by Zillow and growth of 1% reported by NAR. Of note, we estimate purchase mortgage origination volume grew 1% in q two as well. As a reminder, mortgage industry growth is relevant because a majority of Zillow buyers purchased their home with a mortgage. Additionally, the relative headwinds we saw in q one from the luxury market normalized during q two.

Jeremy Hofmann
Jeremy Hofmann
CFO at Zillow

Within the for sale category, residential revenue grew 6% year over year to $434,000,000 in q two, in line with our outlook. We saw contributions to this growth broadly across our agent and software offerings and within our other marketplaces. Agent offerings include Premier Agent and Zillow Showcase. Software offerings primarily include ShowingTime, Dotloop, and Follow-up Boss, which has continued to grow from both our enhanced market expansion and from broader industry adoption of the software. Our new construction marketplace also contributed to the growth in residential revenue.

Jeremy Hofmann
Jeremy Hofmann
CFO at Zillow

Within the for sale category, mortgages revenue was up 41% year over year in q two to $48,000,000, ahead of our outlook. Our mortgages strategy is leading more buyers to choose financing through Zillow Home Loans, which is the main growth driver of our overall mortgage's revenue. Purchase loan origination volume grew 48% year over year to $1,100,000,000 in the quarter. Rentals revenue in q two was a $159,000,000 with growth accelerating to 36% year over year. This growth was driven primarily by our multifamily revenue, which grew 56% in q two, up from 47% year over year growth in q one.

Jeremy Hofmann
Jeremy Hofmann
CFO at Zillow

We increased the number of multifamily properties on our apps and sites by 45% year over year, reaching an all time high of 64,000 multifamily properties as of the end of q two. As a reminder, we measure our multifamily property count as 25 plus unit buildings. When you include our industry leading long tail properties, Zillow rentals had 2,400,000 active rentals listings, the most in the category. We also continue to grow our leading rentals audience this quarter with 36,000,000 average monthly rentals unique visitors in q two according to Comscore. The ROI and lead quality on that Zillow Rentals provides continues to resonate in the market.

Jeremy Hofmann
Jeremy Hofmann
CFO at Zillow

Additionally, our Redfin partnership went live in April, which expanded our distribution to Redfin, rent.com, and Apartment Guide. This expansion is resulting in more and more multifamily property managers choosing to partner with Zillow Rentals. Our offering is providing value to customers and multifamily operators of all sizes as evidenced by the growth of both our property count and our share of wallet, which gives us confidence in the billion dollar plus revenue opportunity ahead of us. Q two EBITDA expenses totaled $500,000,000, slightly above our outlook of $495,000,000, driven by slightly higher than expected benefits costs and payroll taxes. The lead generation costs from our Redfin rentals partnership, which are included in cost of revenue, were within our expectations.

Jeremy Hofmann
Jeremy Hofmann
CFO at Zillow

As a reminder, these leads put us in a position to further grow our rentals revenue. Excluding the leads costs associated with our Redfin Rentals partnership, total EBITDA expenses grew 10% year over year, in line with our q one year over year growth. Total operating expenses and cost of revenue combined grew 9% year over year as compared with total revenue growth of 15% in q two. We drove leverage on total fixed costs, which grew 3%. This includes share based compensation expense, which was down more than 12% year over year in q two.

Jeremy Hofmann
Jeremy Hofmann
CFO at Zillow

We ended q two with $1,200,000,000 of cash and investments, down from $1,600,000,000 at the end of q one. This was primarily driven by our May 2025 settlement of the $419,000,000 of convertible notes, share repurchases of a $150,000,000 in q two at a weighted average price of 65, and partially offset by $87,000,000 in net cash provided by operating activities. We are now convertible debt free and have $981,000,000 remaining on our share repurchase authorization as of the end of q two. Our year to date share repurchases of $400,000,000 are expected to offset stock based compensation expenses for 2025. When looking at our share repurchase program since inception, we have repurchased 2,400,000,000 of shares at an average price of $48, buying back 49,000,000 shares as a result.

Jeremy Hofmann
Jeremy Hofmann
CFO at Zillow

For the rest of 2025, we expect to be more selective in our share repurchases. Turning to our outlook for q three, we expect total revenue to be between $663,000,000 and $673,000,000 implying a year over year increase of 14 to 16% for our outlook range. We expect for sale year over year revenue growth in Q3 to be similar to the revenue growth we reported in Q2, driven by residential revenue growth in the mid single digit range and mortgages category revenue growth in the high 20% range. Of note, we expect Zillow Home Loans origination volume to grow 40% plus in the quarter. Our guidance reflects our expectation that challenging housing market conditions and macro uncertainty will continue.

Jeremy Hofmann
Jeremy Hofmann
CFO at Zillow

We expect our rentals revenue growth to accelerate in q three, increasing more than 40% year over year driven by further acceleration in multifamily revenue. For q three, we expect EBITDA to be between a 150,000,000 and a $160,000,000, representing a 23 to 24% margin for our outlook range. This implies EBITDA expenses will increase increase from $500,000,000 in q two to an estimated $513,000,000 in q three. The majority of this increase is driven by strong traffic and lead trends from the Redfin rentals partnership, which results in incremental costs in our cost of revenue. We expect the strength of Redfin's performance to translate into additional multifamily properties and package upgrades for us.

Jeremy Hofmann
Jeremy Hofmann
CFO at Zillow

We continue to expect the Redfin partnership to be accretive to EBITDA dollars in the 2025. For the full year 2025, we now expect to deliver mid teens revenue growth at the higher end of our previous outlook of low to mid teens revenue growth this year. For the full year, we continue to expect rentals revenue growth to be approximately 40%. We expect fixed cost investments to grow modestly with inflation while investing in variable costs ahead of revenue to drive future growth, primarily in rentals and Zillow Home Loans. We are on track to deliver expanded EBITDA margins and positive net income for the full year 2025.

Jeremy Hofmann
Jeremy Hofmann
CFO at Zillow

To close, we are successfully executing on our strategy and are on track toward our full year goals with mid teens revenue growth and continued margin expansion. We have the right investments in place to support our strategy and are delivering strong growth despite a housing market that continues to bounce along the bottom of the cycle. We are growing revenue nicely while staying disciplined on costs, and the combination of revenue growth and cost discipline is driving expanding margins and positive GAAP net income. As we look forward, we are very excited about the opportunities ahead of us. And with that, operator, we'll open the line for questions.

Operator

Thank you. At this time, if you would like to ask a question, please click on the raise hand button, which can be found on the black bar at the bottom of your screen. When it is your turn, you will receive a message on your screen from the host allowing you to talk, and then you will hear your name called. Please accept, unmute your audio, and ask your question. We'll wait a moment to allow the queue to form.

Operator

Our first question will come from Ron Josey with Citi. Your line is open. Please ask your question.

Ron Josey
Ron Josey
Managing Director at Citi

Great. Thanks for taking the question. And and hey, guys. I wanted to ask a little bit more and drill in on the rentals business just given, you know, the the goal or or the guidance for accelerating growth in the back half, but then also just the strength in multifamily properties and the net additions. So help us understand just on the insights, what you're seeing, what you're hearing with your conversations from large property managers, maybe your go to market strategy from a pricing perspective, how that's helping, and just your overall, call it, confidence level, which I presume to be pretty high given the comments in the prepared remarks, but just going forward as as rentals becomes a larger part of the overall business. Thank you.

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

Yeah. Thanks, Ron. I'll I'll start maybe, and you can jump in with anything I miss. I think at the high level, you're seeing the results both in q two and our confidence for the for q three and second half of the year just come from the strategy working, the team executing, and great partner satisfaction. We are, as I said in prepared remarks, really building this comprehensive two sided marketplace.

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

That is what solves the renter's number one problem, having as much of the inventory as possible because there is no one stop shop for all the inventory. Zillow rentals now has the most, right, at 2,400,000 active rental listings. And then on top of that content, building a modern transaction experience for the renter and the property manager. Right? So for the renter, it's not just about getting the content.

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

It's about being able to apply, sign a lease, pay rent, report your rent to the credit bureaus to build credit. For the property manager, it's having a transaction focused experience for them to find these high quality renters. So all of that strategy yields the audience. That's why we have the largest audience. 36,000,000 unique visitors per Comscore, a lead that continues to grow, and not just volume, the number one brand preference among renters.

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

So you solve the renter problem. You get the renters preferring you and using you. And I say all that because all that setup is what then leads advertisers to see such great ROI. That's why you're seeing now 64,000 properties up from 50,000 at the end of the year wanting to advertise on the Zillow network, wanting to get in front of that audience. So that is the strategy coming to life and the execution.

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

And then to your question on sales, well, now we've expanded that offering to not just our partnership with realtor.com, but our partnership with Redfin. And so advertisers are getting access to the renters not just on Zillow Group sites, but on Redfin sites and on realtor.com as well. So it's more content for all those renters. It helps all of those sites grow their audience as well, which then flips back around to be even better ROI for the advertiser. So that's part of what drove not just q one into q two.

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

It's part of what's driving our confidence in the full year and the acceleration in the second half. And it's also why we're really excited about the billion dollar target out in front of us. You know, there's a 140,000 buildings out there. We're not even halfway there, and we have a ton of great ROI conversations to go have with these partners to help them bring more of their portfolios online with us, to help them try higher packages with us. So, you know, there's a long, road ahead for us.

Ron Josey
Ron Josey
Managing Director at Citi

Yeah. Thank you, Jeremy.

Jeremy Hofmann
Jeremy Hofmann
CFO at Zillow

And, Ron, I'll just chime in just to put some numbers behind it. Jeremy hit it well. But q one, we grew rentals 33%. Q two, we grew rentals 36%, including 56% within multifamily. Q three, we expect 40% plus, and full year, we expect 40% for for rentals.

Jeremy Hofmann
Jeremy Hofmann
CFO at Zillow

So that acceleration, you really start to see build, and it's on the back of, a lot of good work and a lot of good sales efforts as well.

Ron Josey
Ron Josey
Managing Director at Citi

That's great. Thanks, guys.

Operator

Our next question will come from Brad Erickson with RBC. Your line is open. Please ask your question.

Brad Erickson
Brad Erickson
Equity Analyst - Internet at RBC Capital Markets

Hey, guys. Two for me. So one, you know, last quarter, resi rev growth was a little bit below the market, and this quarter, it was noticeably ahead. Thanks for appreciate all the drivers within marketplace and kind of software services you gave in the prepared remarks. But I guess quarter over quarter, what specifically would you say the change was that drove the faster than market growth?

Brad Erickson
Brad Erickson
Equity Analyst - Internet at RBC Capital Markets

And and I'm talking, of course, excluding the mortgage piece of it. And then I have a follow-up.

Jeremy Hofmann
Jeremy Hofmann
CFO at Zillow

Thanks, Brett, for the question. I'll take it. It's Jeremy Hoffman. We were quite pleased with q two, revenue growth and the outperformance there, and that was in both residential and and for sale more broadly. And I think you've heard this from us many times before, but we'll say it again.

Jeremy Hofmann
Jeremy Hofmann
CFO at Zillow

We tend to look at this metric over, a time period of kind of full year multiyear view. And if you look back, there those periods in time are pretty smooth. So look at the last two years, for example, on a two year stack basis, for sale outperformed the the market, by 15%. And that outperformance is what really gives us confidence for the longer term mid cycle targets. Right?

Jeremy Hofmann
Jeremy Hofmann
CFO at Zillow

We're trying to go from 27% of connections in these enhanced markets, now to 35 by the end of this year and then 75% for those mid cycle targets. It's that formula plus everything else within, residential and and and the for sale segment that we're that we're doing. And it's some combination of continuing to execute on enhanced markets, showcase continuing to expand, Zillow Home Loans growing, alongside that enhanced markets expansion, you know, follow-up boss getting in the hands of more people across the premier agent base and the broader agent population. Real time touring continues to expand. It's a it's a bigger portion of connections, this quarter than it was, obviously, a year ago in drives conversion.

Jeremy Hofmann
Jeremy Hofmann
CFO at Zillow

And then, you know, last but not least, the new construction business continues to perform well too. So when we look at the formula, we are appreciative of the outperformance over time, and love the opportunity ahead of us as well.

Brad Erickson
Brad Erickson
Equity Analyst - Internet at RBC Capital Markets

Got it. And then just to follow-up on Reynolds, kind of along the lines of Ron's question. You know, we get asked a lot about the contribution from Redfin on this back half acceleration where where you're calling for. Can you help us just maybe unpack that at all? Or maybe if you could just walk us through how we should think about the Redfin contribution that's layering on top of the rentals growth? Thanks.

Jeremy Hofmann
Jeremy Hofmann
CFO at Zillow

Yeah. I'll take that one as well. We are really pleased with the partnership. It launched, late April late April, early May, and has has started great. Our Salesforce executed well in q two.

Jeremy Hofmann
Jeremy Hofmann
CFO at Zillow

We added 9,000 properties. I would expect that to to normalize to pre q two levels going forward. But when we look at the value Redfin and realtor.com bring to us, it's the ability to take the expanded distribution and leads to all 64,000 existing properties and sell into the rest of the roughly 76,000 buildings we don't yet have on Zillow. So within the 64,000 properties, we are adding more value. We are bringing more customers, and we're hopeful that folks will upgrade their packages accordingly.

Jeremy Hofmann
Jeremy Hofmann
CFO at Zillow

And then it gives us the opportunity to go sell into a much larger addressable market than we are today. So that's the way I would think about it. It's a component of a an important component of a larger rentals business we are building, not a separate piece. And the positives these folks bring to us impact the entire business.

Brad Erickson
Brad Erickson
Equity Analyst - Internet at RBC Capital Markets

Got it. That's great. Thanks.

Operator

Our next question will come from Ryan McKevany with Zelman and Associates. Your line is open. Please ask your question.

Ryan Mckeveny
Managing Director at Zelman & Associates

Hey. Thanks, guys. Nice job on the quarter. Wanted to drill in a bit on on Zillow Showcase. You called out it's now on about two and a half percent of listings, up from 2% last quarter, 1% a year ago.

Ryan Mckeveny
Managing Director at Zelman & Associates

So, obviously, some nice momentum there. As we think about the translation from market share of listings to the showcase revenue opportunity, I think that discussion historically has revolved around effectively, like, a subscription fee per listing that works out to about, you know, $500 per listing. But in a scenario where a homeowner actually comes directly to Zillow and says, hey. You know, I want this for my home when I list it. I want help connecting with a listing agent who uses Showcase.

Ryan Mckeveny
Managing Director at Zelman & Associates

You know, presumably, that's a pretty nice connection opportunity to to take that demand and bring it to one of your listing partners. So I guess I'm curious if that potential for monetizing the connection is embedded within the revenue targets for showcase, or could that be a source of upside over time? Thank you.

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

Hey, Ryan. Thanks for the question. The short answer to your question is it's all considered part of the showcase opportunity. I think the the longer answer is kind of maybe why that is. So you're right. Two and a half percent of all new listings. We put out a goal of kind of five to 10% of all listings in intermediate term, and we don't think that's the end state.

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

We think showcase is something that becomes the default expectation for buyers and sellers. You wanna get to that 10% number to then really start to have it become an expectation, have a flywheel. And the question you're asking, you know, does a seller ask for it, or does an agent pitch it to a seller? That starts to become both things start to contribute to to seller growth. We do that now.

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

I mean, if you use the Zillow website and you don't have a a listing agent and you ask for a listing agent, you you are asking about Showcase, and we will connect you with a great agent that is trained to use Showcase, and that's a new opportunity for them. So we do think about both sides of that, both agent driven and seller driven, but we don't think about them as kind of separate revenue opportunities. It's more about bringing showcase and changing the customer expectation experience for the buyer and seller. And then, of course, the incremental benefit for the agent is agents win more listings with showcase. Right?

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

And when an agent walks into a listing presentation and they say, well, I'm aligned with Zillow, and I have these great Zillow digital tools. It's why you should list with me. They're winning more listings. That is the real ROI that agents are feeling and why they're subscribing and renewing. So we think about the opportunity for seller more broadly as both the seller and the agent.

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

And I think it will take a while, but the expectation change in the industry to just expect this rich media on more types of listings is what will really power that flywheel.

Ryan Mckeveny
Managing Director at Zelman & Associates

Yeah. That's that's very helpful. Thank you for that that that detail. Second question. So in the in the press release, it it called out that part of the contribution to the the residential growth was through the new construction marketplace.

Ryan Mckeveny
Managing Director at Zelman & Associates

And I feel like the new construction marketplace tends not to be kind of a big part of the quarterly update. So maybe you can just talk to us about what's driving that. Is that some of the macro trends that we see on the homebuilding side of things? Know, is that share gains within the space, expanding the number of homebuilding partners? Maybe you could just unpack the the new construction marketplace side of things a bit.

Jeremy Hofmann
Jeremy Hofmann
CFO at Zillow

Yeah. Ryan, I'll take that one. I would think of our new construction business as one that deals table stakes, for builders. So similar to the rest of the residential business and what you're familiar with on the agent front, that business just tends to do quite well because we're a really good advertising channel, and we've been able to grow nicely through the various swings in macro as a result.

Ryan Mckeveny
Managing Director at Zelman & Associates

Got it. Okay. Thanks, guys. Appreciate it.

Operator

Our next question will come from John Colantuoni with Jefferies. Your line is open. Please unmute your line and ask your question.

John Colantuoni
John Colantuoni
Equity Research Analyst - Internet at Jefferies

Hi. Great. Thanks for the questions. I wanted to ask two. Starting with variable expenses, they've been outpacing revenue growth in the past couple of years.

John Colantuoni
John Colantuoni
Equity Research Analyst - Internet at Jefferies

Can you talk about the key areas of investment you're you've been making and what milestones you're looking to achieve before you'll start turning down the dial so variable expenses start tracking more closely with revenue? And second, turning to the Redfin partnership specifically, and if possible, can you discuss, sort of incrementality from the leads you're now receiving from Redfin versus the opportunity to find new property managers using Redfin's existing relationships? Thanks.

Jeremy Hofmann
Jeremy Hofmann
CFO at Zillow

Yeah. John, I'll take the first one, and and I'll start on the second. Jeremy, chime in. So the first one, we expect our variable cost base to grow ahead of revenue in 2025 with our initiatives, but grow more in line over time as initiatives scale and mature. We have to make sure, and we will make sure that we're rightsizing our investments to meet the expected growth curves we see.

Jeremy Hofmann
Jeremy Hofmann
CFO at Zillow

And we're primarily investing in rentals and Zillow home loans, both of which are obviously growing faster than our overall revenue base. On the rentals front, we're investing in multifamily sales heads, lead acquisition costs, and advertising to support that, you know, 45% property growth, and 56% multifamily revenue growth we saw in q two. And then for ZHL, we're really hiring loan officers as we expand our enhanced market footprint and bring ZHL to more customers. So that's where that is on the variable front. There are other parts of the variable cost structure that we've obviously gotten leverage over time.

Jeremy Hofmann
Jeremy Hofmann
CFO at Zillow

The primary places that we're investing are the places where we're seeing the most growth. I think I'd just remind you, the the real profit driver here for the company and why you're seeing us continue to, expand margins is we're controlling fixed costs and scaling revenue. That's the way that we grow profits faster than revenue. And fixed costs this quarter, you know, across the cost base, were up 3%. We expect to continue to do that, for the rest of 2025 and deliver positive net income in 2025 as well.

Jeremy Hofmann
Jeremy Hofmann
CFO at Zillow

So I think that's the first one. And then the second one on the Redfin leads versus opportunity, I think the way to think about it is similar what to what we said a little bit earlier, which is the opportunity now is to take the expanded distribution that we have with Zillow, HotPads, Trulia, StreetEasy in New York, Redfin, realtor.com. That's now the expanded distribution. We take that to the 64,000, property, proper 64,000 properties that we have on-site Snaps now, and we look to upsell them into higher packages. That will be one opportunity.

Jeremy Hofmann
Jeremy Hofmann
CFO at Zillow

That will be coupled with bringing, bring bringing that distribution channel to, the 76,000 or so properties that we don't yet have. So it's it's less it's less, segmented out and more just think about it as the offering is just incrementally compelling, and we're gonna go look to bring that to the entire space.

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

Yeah. And maybe and only thing I'd add there is you the incremental, which Jeremy commented on, these are incremental customers. Right? Because there is no one stop shop yet for all rental listings. You're finding renters on multiple sites.

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

Right? And so Zillow Rentals is the most, but Redfin has great rental sites and realtor.com has a rental site, and you find renters on there that are not on Zillow or vice versa. And so that becomes more value for the advertiser, and the advertiser wants to advertise to that network. It's it's more customers to go attract for the advertising dollars. That's great ROI for them.

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

And then that flywheel spins because when those advertisers bring more content on, that provides more content to the entire network, which drives the traffic for all those sites. So the incremental benefit to us and to our partners is really positive here, and the cool thing about that is it's a huge benefit for the renter too. So a renter finds one of these sites largely from top of funnel sources, and all of a sudden, they're finding more content. Right? So for free, they have more choice and more content available to them than they would have without the partnership.

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

So that's why we get so excited about it. It's a great consumer experience, and it's a great advertiser experience.

John Colantuoni
John Colantuoni
Equity Research Analyst - Internet at Jefferies

Great. Thanks so much.

Operator

Our next question will come from Trevor Young with Barclays. Please unmute your line and ask your question.

Trevor Young
Trevor Young
Director & Internet Research Analyst at Barclays Capital

Great. Thanks. Just back to the the comment around Redfin and, being, you know, dollar accretive in two h. Just to clarify, is that for two h in aggregate, or should we expect it to start being accretive here in three q?

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

Yeah. Trevor, I think

Jeremy Hofmann
Jeremy Hofmann
CFO at Zillow

I'll take it, Jeremy. I think about it as both

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

Yeah.

Jeremy Hofmann
Jeremy Hofmann
CFO at Zillow

Both three q and second half of the year, and then, obviously, we expect it to be more accretive, beyond that.

Trevor Young
Trevor Young
Director & Internet Research Analyst at Barclays Capital

Great. Thank you.

Operator

Our next question will come from Benjamin Black with Deutsche Bank Research. Please unmute your line and ask your question.

Jeff Seiner
Jeff Seiner
VP & Equity Research Analyst - Internet at Deutsche Bank

Hi. This is Jeff on for Ben. Thanks for taking my question. Can we just talk about some of the assumptions that you're making about the broader real estate market as we look into q three and the back half of the year? And and what kind of levers can can you pull to further increase monetization on a on a per connection basis even in a a slower housing market? Thank you.

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

Pop, maybe I'll start. I think the short answer is we're not assuming a lot of help from the macro, and we're just focused on driving growth in spite of that. Right? We grew total company revenue 15% in '24. We expect mid teens growth in '25.

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

We grew 15% in q two. We're guiding to 14 to 16% in q three, and that's with the housing market largely flat. Right? It was flat in q two, and we don't expect a lot of relief, into the latter part of the year. The story on the housing market is it's gonna take a while to normalize, right, because the affordability challenge we have is really an availability problem.

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

So mortgage rates easing helps on the margin, but we're still dealing with the fact that we're nearly 5,000,000 homes underbuilt from not building enough new construction inventory coming out of the the global financial crisis. And so that plus a bunch of sellers being locked into high high mortgage or low mortgage rates not wanting to trade up creates a supply demand imbalance. That's why you've seen prices run up so much from the pandemic, and it's why even with prices starting to ease in so many markets, you're still seeing volume low. So all that doesn't paint a story of a housing market that untangles itself quickly. So we aren't factoring a lot of goodness in.

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

I think we hope that you actually see some home prices start to come down more. There are many markets where home prices have already rolled over and are down a few percentage points year on year and are continuing to go down because there's enough listing inventory out there. But, again, we don't expect that to provide overall total transaction value relief anytime soon, and so we are just planning to grow through that. We're gaining share in for sale. We're gaining share in rentals, and we're doing that because the strategy we're putting together allows us to build great products and services for the consumer and for the professional, and they choose to use us and our stuff more often, and that drives transaction share for us and for our agent partners.

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

So at some point, the housing market will become a growth tailwind, but we plan to grow regardless.

Jeff Seiner
Jeff Seiner
VP & Equity Research Analyst - Internet at Deutsche Bank

Okay. Great. And and maybe just as as a follow-up, could you talk to if if you're seeing any regulatory or listing access changes influencing your your platform or agent ecosystem and or any, you know, kind of early trends trends in agent behavior? Thank you.

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

Sure. We're quite pleased to see the really, the vast majority of the industry agrees with our listing standards, right, which were crafted to work alongside the listing cooperation rules that many MLSs and brokers already practice. So, we love to see that, you know, the entire industry really has been encouraged to formally implement what they most already believe, that if you're gonna market a listing publicly to some consumers, you should market it to all consumers. It's a huge consumer benefit that buyers can see all available inventory, that sellers can maximize their exposure, and it's a huge industry benefit. Because if you're an agent, whether you're at a big brokerage or a small brokerage, to do your job effectively, you gotta see all the content and be able to count on the MLS to have it all.

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

So we are really pleased that early on, we've seen the majority of the industry largely adopt these standards.

Operator

Our next question will come from Tom Champion with Piper Sandler. Please unmute your line and ask your question.

Thomas Champion
Thomas Champion
Senior Research Analyst at Piper Sandler Companies

Hi. Good afternoon, guys. One of the questions we get a lot is around enhanced markets. And perhaps you could just talk about what you're seeing in the intermediate enhanced markets that are maybe part of the 2024 cohort. Curious if those are kind of coming up the maturity curve like you expect.

Thomas Champion
Thomas Champion
Senior Research Analyst at Piper Sandler Companies

And then maybe for Jeremy Hoffman, I'm wondering if you could just talk to the outperformance of mortgage in Q2. Looked like the growth stepped up quite a little bit, but maybe it's going to expect it to settle back down to high 20s in 3Q. Just curious if you could walk us through the trend in mortgage and linearity that that you've seen through the year. Thank you.

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

Sure. Jeremy, why don't I take the enhanced markets question, then you can hit mortgage? We're pretty pleased with the overall progress we're seeing in enhanced markets. You we're know, gonna start to sound like a broken record when we say methodical rollout, but that is really the name of the game here. In every market, it's about finding the next agent team or helping the agent team we have grow to take on more customers, and then it's about going into the next market and starting that process while measuring the conversion, the Zillow Home Loans adoption, and most importantly, the customer satisfaction of that experience with the buyers and sellers that we introduce these people to.

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

And we're seeing those metrics within our expectations across all cohorts, both new and old. You know, we are on track to getting to 35% of our customers by the end of the year. That was the goal we put out at the beginning of the year with y'all. And, you know, we're at 27% in q two, and we feel good about getting to 35. And what gets us excited about that is that's still barely a third of Zillow customers.

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

Right? That is still means the two thirds of Zillow customers are not getting this enhanced market experience yet, and that's opportunity we wanna, mow down as fast as we can on our way to 75%, at least 75% of our customers, you know, sometime in the future. So we feel great about that progress. It is one part digital and one part analog, and the software goes faster. As I talked about earlier, getting to 96% of our connections going through Follow-up Boss is great.

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

It's a great job by the team to get most of our agent teams, nearly all of them on Follow-up Boss. We roll out real time touring faster because we can train on that software faster. But then staffing up Zillow Home Loans, loan officers, and creating the relationships between loan officer and agent and agent team is hand to hand combat with, you know, with individual humans, and it's important to get that right one at a time. And so that those are the things that govern our progress and why we get to 27% now, 35% end of the year, 75% in the future. All that adds up to the billion dollars of incremental revenue that we see coming just from rolling out and expanding this set of services, let alone the upside from improving these services, which, of course, we will do over time.

Jeremy Hofmann
Jeremy Hofmann
CFO at Zillow

Yep. And then to your second one on mortgage, we expect mortgages revenue growth in the high 20% range for q three, which includes 40% plus purchase loan origination volume growth as the key component. I think that's an important one to call out. As you've heard us say time and again across the for sale business, we don't over function on the quarterly fluctuations. And for mortgages, things like loan value, gain on sale, that'll fluctuate quarter to quarter.

Jeremy Hofmann
Jeremy Hofmann
CFO at Zillow

The market's been bouncing along the bottom for a while now, and we've consistently grown quite nicely despite that and expect to continue to do so. And then when we zoom out, where we're really pleased, and Jeremy hit this as well, is the consistent double digits adoption rates across the enhanced markets while the number of markets have meaningfully increased. It's a crew ZHL is a critical portion of this overall strategy, and we're really excited about the progress.

Thomas Champion
Thomas Champion
Senior Research Analyst at Piper Sandler Companies

Makes sense. Thanks, guys.

Operator

Our next question will come from Dae Lee with JPMorgan. Your line is open. Please ask your question.

Dae Lee
Dae Lee
VP - Equity Research at JP Morgan

Great. Thanks for taking my questions. I have two, and those are follow ups. First one on the rental opportunity. You did talk about growing the wallet share with your advertisers as one of the opportunities.

Dae Lee
Dae Lee
VP - Equity Research at JP Morgan

So curious, like, where you are in terms of unlocking some of that opportunity, and is the billion dollar medium term target more driven by the supply growth, or is the growing wallet share part of that?

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

Yeah. I'll I can start and Hof jump in. I I think part of why we don't talk about it is because we see just such a greenfield opportunity in front of us in terms of of volume at the ROI we're providing for our partners. So Jeremy talked about it a bit. We have plenty of room as we win new advertisers.

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

They bring a portion of their portfolio, and they try one of our packages. And then they experience these great ROI benefits of being on the Zillow Rental Network, and they bring more of their portfolio, and they upgrade their packages. So, we see that sales go to market as really durable growth for us, and you're seeing that in the results. Right? You're seeing 56% multifamily revenue growth coming from that.

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

That's from 45% property count growth. So that shows both bringing new advertisers on and having them use the Zillow rental network more. So as long as we continue to deliver increasing value and increasing ROI to them, we'll have the opportunity to win more and more of their business. And the percentage of advertisers we have reached is still, as Jeremy Hoffman said, not even 50%. So that's why we feel so great about the billion dollar plus opportunity and why we see a lot of ways to go grow and get to it.

Dae Lee
Dae Lee
VP - Equity Research at JP Morgan

Got it. And as a follow-up, on enhanced markets, I think in May, you guys, put out a release saying you're targeting 60 additional markets at the July. So I was curious if that 27% number you have in the letter includes that. And if not, how are you progressing on, getting those additional markets live? And when you get these markets up and running, how long does it take for them to show up in your results?

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

Yeah. Good question. So, the 27% a q two does not include that, but I will encourage you to think about percent of connections rather than market count. We we started moving out of that as a better source of, modeling because each market has a different mix and share and capacity of agent teams, loan officer capacity, and all that. So think about it more as we are at 27% as of the end of q two, and our goal is to get to 35% by year end.

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

And then it's, you know, about a year to start to see the accretive benefits of the new experience across the cohort of customers and agents for that share of connections. So, it is, it is quite an involved process to get all the folks up and running and all the staff and training up and running. But once you do, you really see agents not just gain share, but are able to grow their businesses with our software and tools. And you start to see them try and use a little home loan as to drive adoption. So that's the formula in the playbook we're we're focused on, and I think percent of connections is probably the right way to try and think about it.

Dae Lee
Dae Lee
VP - Equity Research at JP Morgan

Got it. Thank you.

Operator

Our next question will come from Stephen Sheldon with William Blair. Your line is open. Please ask your question.

Stephen Sheldon
Research Analyst - Technology, Media & Communications at William Blair & Company, L.L.C

Hey. Thanks. Just wanted to follow-up on Zillow Showcase. I'm curious how monetization of that solution has been trending and whether it's becoming a more material contributor, revenue contributor to the residential segment. And then as we think about the housing backdrop, has that actually become more favorable for Showcase given that home sellers and their agents could be a little more concerned about the home selling altogether and the price received in in this environment?

Stephen Sheldon
Research Analyst - Technology, Media & Communications at William Blair & Company, L.L.C

I guess, yeah, just what are you seeing on demand side there?

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

Sure. So, showcase now at two and a half percent of new listings, you know, up from 2% '1. I I think trying to tease it out as a part of the overall residential component is gonna be tough just actually because of the earlier question. It's all part of the agents ROI. So we feel great about that progress.

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

And the thing I think we're most excited about is agents see the value in winning more listings with it, and sellers and buyers both see the value in having it. Right? So it's this really rare kind of win win where everyone has a great experience with it. The macro question's a good one. I think the reality is it's too small, showcases to be a macro driver yet.

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

But I will point out we're growing showcase this nicely in a in what has historically been mostly a seller's market. And as if the market were to shift to more balance, you'd think the seller and the seller's agent would benefit even more from showcasing their listing. But if you go talk to our agent partners who use it, you know, what they sing the benefits of is their ability to win more listings with it. Right? And so in an environment where they have to work harder to win a listing presentation, Showcase is an even more powerful tool, and we're not exactly just sitting still with Showcase.

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

Right? Showcase launched a little more than a year ago, and we've been improving it ever since. So we added the listing dashboard last quarter. We just added Sky Tour, which you haven't if you haven't checked it out, you should really go check out a Sky Tour listing. It's an immersive experience outside the home.

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

It stitches drone photography together to get you to be able to fly around the exterior and really get a sense of what the home is like. Those are just a couple examples of how we'll continue creating this incredibly immersive experience that the buyer, of course, loves. Therefore, the seller will want. Therefore, the agent will have to offer if they wanna win listings.

Stephen Sheldon
Research Analyst - Technology, Media & Communications at William Blair & Company, L.L.C

Great. Thank you.

Operator

Our last question will come from Andrew Boone with Citizens Bank. Please unmute your line and ask your question.

Andrew Boone
Managing Director at Citizens JMP

Thanks so much for taking my question. I wanted to ask about AI and the improvement of just automation across the platform. You guys mentioned in the letter the 2,000,000 people me. The 2,000,000 smart messages that have been exchanged since June. Can you guys just talk about what AI allows for automation in terms of connecting buyers and sellers more efficiently?

Andrew Boone
Managing Director at Citizens JMP

And what's kind of the overall vision if we think kind of one to two years out of what you guys can do with follow-up boss, and it's just more capabilities are enabled? Thanks so much.

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

For sure. Thanks, Andrew. We are tremendously excited about AI's potential to rewire the industry, just as it rewires all of us as workers. And if you think about the real estate industry as such a highly considered regulated purchase where you need great professionals, that is just tailor made for supercharging the services that humans are doing and allowing humans to be great at what they do. And you're already seeing that today.

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

Right? I mean, just look at some of the examples we called out, this quarter. For the consumer, it's a better customer experience. Right? It's things like I just talked about with SkyTour, virtual staging AI, better personalization while you're shopping.

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

For the professional, the hardworking professional that has so much work to do to help delight clients, it's AI powered relationship management software to supercharge them, to let them do what they do best, which is client relations and advice and consulting and guidance, same thing for the loan officer, by taking away the busy work, by, automating follow ups, by suggesting messages, by pulling in insights to make them a better client manager. So those are the features we're already putting into the wild today, and that's really, in many ways, the low hanging fruit to start to elevate the professional and make the transaction experience more delightful. If you fast forward a couple years into the future, you can just draw a line on what we're doing now to where we might be able to get to to really create a more magical transaction for the buyer and seller and allow the professionals to do what they do best and have the software and the tools do more of the work for them.

Andrew Boone
Managing Director at Citizens JMP

Great. Thank you.

Operator

This completes the allotted time for questions. I will now turn the call back over to Jeremy Waxman for any closing remarks.

Jeremy Wacksman
Jeremy Wacksman
CEO at Zillow

Thank you all for joining us today. We really appreciate your continued support. We are excited for what's ahead and look forward to speaking with you all next quarter.

Operator

Thank you for joining Zillow Group's second quarter financial results call. This concludes today's conference call. You may now disconnect.

Executives
Analysts
    • Bradley Berning
      VP - Strategic Affairs & IR at Zillow
    • Ron Josey
      Managing Director at Citi
    • Brad Erickson
      Equity Analyst - Internet at RBC Capital Markets
    • Ryan Mckeveny
      Managing Director at Zelman & Associates
    • John Colantuoni
      Equity Research Analyst - Internet at Jefferies
    • Trevor Young
      Director & Internet Research Analyst at Barclays Capital
    • Jeff Seiner
      VP & Equity Research Analyst - Internet at Deutsche Bank
    • Thomas Champion
      Senior Research Analyst at Piper Sandler Companies
    • Dae Lee
      VP - Equity Research at JP Morgan
    • Stephen Sheldon
      Research Analyst - Technology, Media & Communications at William Blair & Company, L.L.C
    • Andrew Boone
      Managing Director at Citizens JMP
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