ZG — Zillow Group, Inc. Class A

Zillow Group (ZG) Q1 2026 Earnings Call Summary

1. Key Financial Results and Metrics

• Total Revenue: $708 million, up 18% year-over-year, near the high end of the outlook range.
• EBITDA: $182 million, exceeding expectations, with a margin of 26% (flat year-over-year).
• Net Income: $46 million, representing a net income margin of 6%, up over 500 basis points year-over-year.
• Free Cash Flow: $127 million, a 44% increase year-over-year.
• For Sale Revenue: $514 million, up 12% year-over-year; residential revenue grew 8%, and mortgage revenue surged 56%.
• Rentals Revenue: $183 million, up 42% year-over-year, driven by a 57% increase in multifamily revenue.

2. Strategic Updates and Business Highlights

• Zillow's strategy focuses on integrating the entire housing journey, enhancing user experience through AI and technology.
• The company is leveraging its unique advantages in content, context, and integration to improve consumer outcomes and drive growth.
• AI Initiatives: Launched a consumer-facing AI mode, currently available to 5% of users, showing promising engagement metrics.
• Zillow Preview: A new product allowing pre-market listings to gain visibility, quickly adopted by over 60 broker partners.
• Continued investment in tools for agents and property managers, enhancing operational efficiency and user experience.

3. Forward Guidance and Outlook

• Q2 2026 Revenue Guidance: Expected between $750 million and $765 million, implying approximately 16% year-over-year growth.
• Full Year 2026 Outlook: Anticipating mid-teens total revenue growth, with rentals expected to grow approximately 30%.
• EBITDA Guidance for Q2: Expected between $150 million and $165 million, with a focus on maintaining margins despite increased legal and advertising expenses.

4. Bad News, Challenges, or Points of Concern

• The housing market is expected to remain flat, impacting residential revenue growth, which is projected at mid-single digits for the year.
• Increased legal expenses and advertising costs are anticipated to pressure margins in the short term.
• Competition remains a concern, particularly in the rentals market, as Zillow aims to maintain its leading position while facing evolving market dynamics.

5. Notable Q&A Insights

• Zillow Preview Reception: Early feedback indicates strong demand from sellers and agents, with public exposure seen as beneficial for maximizing sale prices.
• Market Sentiment: Agent sentiment is currently low due to slower-than-expected transaction volumes, which could impact future performance.
• Mortgage Business: While growing, the mortgage segment is still developing, with margins expected to improve as the business scales.
• AI Mode Insights: Early users of the AI mode are engaging more deeply with the platform, indicating potential for higher conversion rates and customer satisfaction.

Overall, Zillow Group reported solid financial performance in Q1 2026, driven by strategic initiatives and a strong focus on integrating technology into the housing market. However, challenges remain in the form of a flat housing market and rising costs, which the company is addressing through careful management and continued innovation.