Zillow Group NASDAQ: Z reported second-quarter revenue growth that exceeded its outlook, led by gains in its For Sale and Rentals businesses, while outlining an accelerated transition to its Zillow Preferred agent-partner model and a restructuring intended to streamline operations.
Revenue rose 18% year over year to $772 million in the quarter, while adjusted EBITDA reached $176 million, representing a 23% margin. The company reported a GAAP net loss of $4 million, but adjusted net income of $118 million, or $0.52 per diluted share, compared with $0.40 a year earlier. Year-to-date free cash flow increased 19% to $223 million.
“Q2 was another quarter of strong results that demonstrate our consistent execution and the durability of our strategy,” Chief Executive Officer Jeremy Wacksman said. He said Zillow continued to outperform the broader housing market despite pressure from higher mortgage rates and a flat year-over-year purchase mortgage market.
For Sale and Mortgage Growth
For Sale revenue increased 14% from a year earlier to $549 million. Residential revenue rose 7% to $465 million, driven primarily by expansion of Zillow Preferred connections in its integrated transaction experience, as well as contributions from Zillow Showcase, new-construction offerings and agent software tools.
Mortgage revenue increased 75% to $84 million, aided by a 95% increase in purchase loan origination volume. Chief Operating Officer and Chief Financial Officer Jeremy Hofmann said the growth reflected a greater share of connections through the Preferred program and better-than-expected conversion rates among customers in the company’s pipeline.
Zillow said its Zillow Home Loans business is now among the country’s top 25 purchase lenders. Wacksman said the company’s integrated pre-approval experience and direct consumer traffic contribute to customer acquisition costs that are lower than those of traditional lenders.
The company is accelerating its conversion to the Zillow Preferred model, expecting more than 75% of connections to be serviced by Preferred partners by the end of 2026. Zillow had 61% of connections in the integrated experience during the second quarter, compared with 44% at the end of 2025.
Hofmann said Zillow generated 23% more revenue per connection under the Preferred model than under its legacy advertising model in 2025, and expects that premium to reach 35% by the end of 2026. However, the transition shifts some revenue reporting from the residential category into mortgages and delays recognition of mortgage revenue until loans originate, typically six to 12 months after a connection is delivered.
Those dynamics, along with the seasonal decline in connections typically seen in the fourth quarter, are expected to weigh on reported For Sale growth in the near term, Hofmann said.
Rentals Momentum Continues
Rentals revenue increased 31% year over year to $209 million, driven by a 42% increase in multifamily revenue. Zillow had 2.8 million average monthly active rental listings and a record 79,000 multifamily properties in the quarter, up 23% from a year earlier.
Wacksman said property managers have continued to renew and upgrade their Zillow advertising packages because of the platform’s return on marketing investment. He also pointed to Zillow Rentals’ inclusion in Google Gemini’s connected apps ecosystem, under which Zillow provides rental availability, tour scheduling and booking confirmation when users search Gemini for apartments.
The company maintained its expectation for roughly 30% full-year Rentals revenue growth and said it sees a path to more than $1 billion in annual Rentals revenue.
AI, Agent Tools and Listing Products
Zillow said its AI Mode feature is live for roughly 20% of signed-in users. According to Wacksman, consumers using AI Mode spend more than three times as long on Zillow, view more than twice as many homes, conduct nearly three times as many searches and contact agents at nearly three times the rate of users who do not use the feature.
The company is also expanding agent-facing products. Follow Up Boss reached 138,000 monthly active users in the second quarter, up 21% year over year. Zillow recently launched Zillow Pro nationwide, a membership that includes tools such as My Agent, which lets agents collaborate with contacts on Zillow, and Likely to List, an AI-based feature designed to identify contacts exhibiting pre-listing activity.
Zillow Showcase, its enhanced listing-marketing product, was used on about 5% of all new listings, up from 2.5% a year earlier. The company said agents using Showcase on most of their listings win 35% more listings than peers who do not. Zillow Preview, a pre-market listing product, has more than 100 brokerage partnerships, and Zillow said preview listings will be syndicated to Realtor.com later in the summer.
Restructuring, Capital Returns and Outlook
Zillow announced a restructuring that eliminated approximately 7% of employees. The company recorded $36 million in restructuring costs during the second quarter and expects an additional $23 million to $28 million in costs in the third quarter. Hofmann said the actions are expected to yield approximately $75 million in annualized EBITDA savings from second-quarter run rates, or $140 million when including reductions in previously planned hiring.
Wacksman said the restructuring was not expected to affect the company’s growth initiatives. Zillow also appointed Hofmann to the expanded role of COO and CFO. Former COO Jun Choo is stepping down to focus on his health and will remain an adviser through year-end.
The company ended the quarter with $682 million in cash and investments, down from $783 million in the first quarter after repurchasing $200 million of stock. Year-to-date share repurchases totaled $826 million, and Zillow had about $1.1 billion remaining under its existing repurchase authorizations.
For the third quarter, Zillow forecast revenue of $745 million to $760 million, representing about 11% year-over-year growth at the midpoint. It expects For Sale revenue growth of 5% to 7%, mortgage revenue growth above 50%, high-20% Rentals revenue growth, and adjusted EBITDA of $180 million to $200 million.
For full-year 2026, Zillow reaffirmed its outlook for total revenue of $2.92 billion to $2.96 billion, representing mid-teens growth, and adjusted EBITDA of $730 million to $760 million. The company now assumes purchase mortgage originations will decline by low- to mid-single digits for the year, compared with its earlier expectation for a flat market.
About Zillow Group (NASDAQ:Z)
Zillow Group, Inc is an online real estate marketplace company that operates a portfolio of consumer-facing websites and mobile apps designed to connect buyers, sellers, renters, homeowners and real estate professionals. The company's platforms aggregate property listings, rental listings, and related information to help users search for homes, estimate property values and connect with agents and service providers. Zillow generates revenue primarily through advertising and lead-generation services for real estate professionals, property managers and mortgage lenders.
Key products and services include the Zillow and Trulia consumer websites and apps, which provide searchable listings, photos, neighborhood data and the company's automated home valuation tool known as the “Zestimate.” Zillow also offers a rentals marketplace, a mortgage marketplace and tools for home buying and selling such as Zillow Premier Agent for agent advertising and leads, as well as ancillary services designed to support transactions, including closing and title-related offerings.
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