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Welcome, everybody. We have the Zillow Fireside Chat at the Goldman Sachs Communicopia and Technology Conference. My name is Mike Yang, and I cover Zillows here at the firm. It's my absolute privilege to introduce Jeremy Hoffman, who is the Chief Financial Officer and Chief Operating Officer at ZillOW. First and foremost, thank you so much for being here, Jeremy. I really appreciate you coming out here again. Yeah, thanks for having me. Awesome. To start things off, I would just love to ask a big picture strategic question. You know, Zillow, clearly a household name, the primary digital front door for real estate discovery diligence in the United States, an incredible amount of reach, you know, as measured by unique users. So, you know, to kick things off could you just walk through some of the core operational pillars of the Zillow ecosystem and how the strategy has evolved over time? Sure. Yeah, so we've been in existence for about 20 years now. I'd say the first 15 years were really around building what I'd call the dream and shop layer for our business. So what most people know us for today is you go on Zillows and you dream and shout. That has yielded great benefit to us. So our brand is quite strong. We're anywhere from 70% to 75% of category share in real estate online. The term Zillow is more often Googled than the term real estate, and 80% of our traffic is direct to us. That comes from great product and innovation and really building that dream and shop layer, and it comes from having more content than anyone else across existing homes for sale, rentals, and new construction. So the shopping experience is more robust than you'll find anywhere else. That was, I'd say, the first 15 years and the mission around really building a big consumer brand. Over the last five years, we've been building out as fast as we can a transactional layer and underlying operating system for real estate. And I'll click into each of those because I think they're important. They're the things that are driving the revenue growth, but probably less understood to a day-to-day consumer. So on the underlying operating system front, we now power 90% of all tours in the country with Zillow through Showing Time. Dotloop sees 50% ofall offers in thecountry, another piece of software that we own. Our rich media, which is proprietary technology that we built and developed around floor plans and 3D media virtual walkthroughs, that's on more than 10% of aullistings in thecountry today. And in our biggest markets, it's upwards of 30%. Last but not least is FollowUpBoss, which is a CRM that we bought now about three years ago. That is the CRM for the most productive real estate agents in the country. That is their first thing they log into on a day-to-day basis. We have about 138,000 active users of that on a monthly basis, which is up over 20% year-over-year. and within the most productive real estate agents, the folks that we work with, that we call preferred agents who really work with our consumers, pretty much all of those preferred agents who are the most productively in the country use follow-up boss. So we have the Dream & Shop layer, we have The Operating System layer, and then we have the Transactional layer. That Transactational layer has been the big set of bets that we've made over the past few years. It's really been around move the brand from just Dream & Shopify to buy, sell, rent, and finance. And underlying those words has been really good growth. Zillow Home Loans has become a top 25 lender in the country. We continue to take share both in buy-side and sell-side transactions with Preferred. And we are rapidly growing a rentals business on the back of that strategy as well. So that's been the strategic evolution. started with Dream and Shop, moved into operating system for real estate professionals and a transactional layer. The biggest challenge we've had in the category and the biggest challenge with the real estate category online is it is a long shopping cycle. It is an infrequent purchase and a lot of it still happens offline. Now we fast forward to today, AI gives us the opportunity to really accelerate and reinforce all three of those layers and give people so much more advice than we were able to do when it was solely map-based search. So in each of those Layers, Dream and Shop, we are now able to marry a really comprehensive and good visual search with a conversational assistant to learn more about what you're doing from a Dreaming and Shopping perspective than we're ever able to be before. We can answer so many more questions with AI and having an assistant guide you through that process. On the operating system layer, we are great builders of software. We have made the products better with AI and we are the most capable technologists in the real estate space. So the software strength that we have from those assets I highlighted earlier get only stronger with AI. And last but not least, the transactional layer, there's so much more advice we can give people using AI in the transactational layer than we were ever able to do when it was solely map-based search. So we look at today and say, in the way that we've built the business and the underlying layers that we now have, AI becomes a reinforcement mechanism and an accelerant. And to finish all that off, we've been executing quite well through this period of time as we've done on this strategy. The company's grown revenue 29% annually since being public, at a 29% CAGR. Last few years, we've grown revenue mid-teens in the housing market that's been as challenged as it's ever been. We're growing profits faster than revenue. We've growing net income faster than both EBITDA and revenue. And we've shrunk the share count by, call it 10% over the last, call it three or four years as well. Great. Yeah. And to your point, the results in many ways speak for themselves in terms of the revenue growth that you've been able to deliver and what's been a very sideways real estate market. Yeah. You know, I was wondering if you could talk a little bit about how unifying the CFO role and the COO role, you know, positions Zillow allows you, right, to execute with a higher level of, you Know, speed and effectiveness. this? Yeah, it's been a pretty seamless transition. I stepped into the role about a month ago alongside our last earnings call. And I've been at the company for almost a decade now. I've Been heavily involved in the strategy and operations of the company through that period of time, know the leaders well, I've worked with the management team. And, I think, combining the roles, what I look forward to and what I've enjoyed even in the first month since has just been, can we move with more speed? Like, are we able to, the strategy feels pretty well set. The growth, kind of structural growth algorithm is intact. And now it's how fast can we go and capture that? And going back to the first question, how much can AI really accelerate the business strategy as well? Great. Moving to some of the revenue lines within the financial model, Maybe we can start with with for sale revenue. You know, that line grew 13 percent year over year. Looking out into the second half of 2026, an increasing portion of for sale modernization moves from residential into mortgage. It's a little bit harder, I think, to tease out what's happening as it relates to the underlying growth of the business just because of some of that movement. but maybe you can just shed some light in terms of what's happening there in that residential to mortgage transition and how we should think about just the underlying growth of the business. For those of you that may not be as familiar with Zillow, what we're doing is we are moving the primary monetization model with real estate agents from a pay-upfront ad-based model to a success-based mode when a transaction closes. So that is the move from market-based pricing to preferred, which Mike just called out. That is a better business model for us because it allows us to more tightly integrate with the real estate agents that are working with our customers. It allows us be more directive on the software and tooling that they use in service of those consumers. and then it allows us to better integrate services like Zillow Home Loans because we are working with the real estate agents in a more tightly integrated manner. So that's the reason why we're doing it. What it means is that some of our residential revenue actually shifts into the mortgages category, and as a result, there are some moving pieces that we outlined over the course of the next few quarters. When we get past that transition, why did we do this? Why do we want to do it? it is to accelerate our transaction layer, basically. Having a tightly integrated set of partners who work really closely with us and are incentivized the same, like all of us being incentivized the same way, which is basically happy customer, right? A consumer moves, agent gets paid, we get paid. That's a great mechanism to build a transaction strategy on top of, and we see our revenue per connection actually increasing as a result. So in the preferred model in 2025, that grew 23% more than the legacy ad-based model. And we expect that to be roughly 35% more growth in 2026. So it's a better business model. It's a bigger opportunity because we can touch more transactions. And then it's coupled with our home loans business getting profitable. So we can profitably scale that as well. That's why we're doing it. That's Why We're So Excited. And the moving pieces between residential and mortgages is just mechanically what we have to do as we accelerate. And we wanted to make sure folks understood that. But the underlying growth drivers feel well intact for us. Great. Zillow has also made a lot of progress monetizing the sell side of the transaction, which, you know, I guess hasn't always been the case. But maybe we can talk a little bit about Zillows Showcase, which has scaled to 5% of all listings nationwide. How's the expansion of listing products like Zillow Showcase and agent software packages like ZILLOW Pro, you know, helping with your relationships with listing agents and brokerages? And then, you Know, from a strategic standpoint, do you view some of the standalone software subscriptions evolving into distinct high margin recurring revenue streams beyond just the transactional based nature that, you Know, some of your other revenue streams are based off? So what I've talked about in Preferred is basically how we come to market with buyers looking to buy a home, right? It's integrating agent and integrating homeless and then ultimately other adjacent services as well, doing more and more of that online. What Mike's asking about is now what are we doing on the sellers, the folks that are looking to sell a home now? We've been able to grow our share there fairly rapidly over the last few years, primarily on the back of a product we call Zillow Showcase, which is a souped-up listing. It's basically you get higher-quality photo, a digital walkthrough of the property, an integrated floor plan so you really understand where you are, and that's all built on our technology that we've been developing over the last, call it, 10 or so years. It's a place, so the seller, that's been great. We've been happy to grow the way that we have. I think seller continues to be an opportunity that is far bigger than even what we've being able to do. And that's where I get really excited about some of that conversational assistant stuff we were talking about earlier where, you know, before we had an AI mode, there's only so much you can put on a screen, right? It's like contact an agent, get pre-qualified, take a tour. It's about as much as a consumer can handle on a listing. In a conversational way, there are so many more ways in which we can interact with consumers. And on the sales side, nothing to share today, but there's a lot of exciting ideas around the ability to be more impactful in helping people thinking about listing, potentially listing their home, and on and on. And we compare that with best-in-class real estate agents to help guide them through. but there's so much more we can do online than we were ever able to think about pre-having this really rich conversation back and forth with, you know, prospective sellers. So buy side feels well intact. Sell side, there's a lot of growth to come on the back of what we've already seeded plus the, you Know, ability to use AI to make a seller even more thoughtful in what they do. And then you couple that with this software that we've either built or acquired over the years. to your question there, what we're trying to do is make a real estate agent's life easier and make them more productive. So we invest heavily to go do that. The software business for us, the software line item is already decently sizable. It's part of the reason why residential has grown the way that it has. But most important in the software is to really help facilitate transactions. And then, yes, there's high-margin business on top of that, but the bigger opportunity is around transactions. And with the software that we have, we want it really for adoption, and we'll make money on top OF that, but it's really around adoption such that the transaction strategy is even further accelerated. Perfect. If we could turn to rentals, this is a business where Zillow certainly hasn't achieved their fair share yet. And I think that speaks to some of the very strong growth that you've realized in that business to date. I think you have guidance for high 20% year-over-year revenue growth for the upcoming quarter, 30% for full year 2026. So I was just wondering if you could walk through some of levers that are driving that high growth trajectory within rentals and any moving pieces that you would call out just as we think about the full year outlook. And then just to level it up, the stuff I've been talking about to date has all been on the for sale part of our business. We have two main lines of business. It's for sale, which is residential and mortgages, and then rentals. So as you think about how to think about the growth in Zillow, there's for-sale, there's rentals, there're total company, and we've been able to grow those quite nicely because the business has diversified. more than it was maybe five and ten years ago the big driver of that has been the rentals business and the strategy there is to be the place that has all the rentables inventory available it is single-family homes for rent and apartment buildings for rent that has that's like a labor of love we've been after it for a long time but we're now at a point where more than 70% of all single-family homes for rent in the country are on Zillow, and the majority of those are unique to us, so that drives traffic advantage. And as we've been able to do that, we've be able to rapidly grow our multi-family apartment buildings on the site as well, and that's been the big driver of revenue growth over the past three or four years. Going forward, the goal is to get more and more of that inventory, And then with multifamily specifically, it is continue to grow properties and to continue to have the advertisers that advertise on Zillow spend more with us by upgrading their packages. So it's, you know, it's been a pretty tried and true strategy over the last three or four years. The business has grown quite well. And we think we have a real right to win in multifamily because our ROI is best in class. Great. I guess related to rentals, I wanted to ask about the Redfin partnership. There was a recent settlement reached with the FTC and Zillow as it relates to the RedFin partnership. I was just wondering if you could lay the foundation for what the partnership was, what the settlement is, and if there are any changes that come on the back of that. Yeah, so this would have been early 2025. We did a partnership with Redfin, which basically had us distributing our multifamily content to Redfin sites and apps. And Redfin drives more and more traffic to their sites and maps, which provides value to the Zillow advertising product. So a property management company who is the buyer of this advertising, before the Redfin partnership, when we went and sold to them, we would say, hey, you're going to get great exposure on Zillow, Trulia, Hotpads, Realtor.com. That was another partnership we did. Fast forward to post doing the Redpin partnership, we could walk into those folks' offices and say, and by the way, now you're getting Redfin, Rent.com, and ApartmentGuy. So this is expanding our network, expanding our reach. And for us, it's a win because it allows us to give even more value to the property managers. That's allowed us to really grow that property count. For Redfin, it was a win because they were getting more content than they had previously. So that helped their traffic. And then for consumers, it is a win because consumers are now seeing more properties on more parts of the Internet. So it was pretty clear win-win-win, which is when you get into these partnerships, The only way they work is everybody has to be happy. Otherwise, one side doesn't invest. So that's where we went. FTC had some questions about that. We got to a settlement probably about a month ago or so at this point, maybe a little bit less than that. And we're pleased with the settlement. The partnership stays intact. So the way that we sell today will be the way we continue to sell. And then there will be potential SKUs of Redfin-only and Zillow-only ad products, so that adds potential ad products to the marketplace. But the most attractive advertising to these property management companies will continue to be what we are offering today, so we're not allowed to change the business as a result. Nobody would willingly reduce their reach, I suppose. But that's, yeah, when you put yourself in the persona of each person, it's like a consumer wants to see more in more places. A property management company wants to advertise in moreplaces. And both we and Redfin are incentivized to grow the pie. Great. Very clear. If I could jump back to the for sale piece just to talk about mortgages since we haven't, you know, gone into a deep dive on that. you know just given some of the macro softness across the residential lending industry you know how does Zillow view the sustainability of mortgage revenue growth you know how does the company balance scaling originations and profitability particularly given that you know mortgage rates likely will remain elevated for the rest of the year yeah so I'll take it in pieces from an overall opportunity perspective, we are only scratching the surface in mortgage. We basically started with a standing start in 2022. Fast forward to today, we have 10x the amount of loans that we've been able to underwrite. That makes us a top 25 lender in the country. It is still quite small versus what we think the opportunity is. We think the opportunity for us in mortgage is to be one of the top one, two, or three purchase lenders in the country because we have a great consumer-friendly product. We have a set of real estate agents in Preferred who are amongst the best in the country, and that tends to be distribution. And we have great brand where a lot of the prospective buyers are already on Zillow when they're thinking about getting a mortgage. So that's the high level, why are we in the mortgage business? Why do we think it's the right consumer experience? And what do we think the potential growth opportunity is. We have been able to structurally grow well beyond the market. So as rates fluctuate, we have 10x the business over four years, and I think mortgage originations are probably flat over that period of time, if not down. So that gives you a sense for the opportunity in front of us, regardless of what rates do. On the margin, month to month, will there be fluctuations in conversion rates as a result of rising interest rates sure but the long-term structural opportunity is to be far bigger than we are today and we have the underlying building blocks in place with respect to speed of that it is a business we have to be really thoughtful in how we roll out because you really only get one shot with a consumer and you only get OneShot with a real estate agent to provide a good mortgage experience so it's just not one of these things you go and blitz scale like we have grown it quite nicely but when it is a consumer looking to get into a home and saying hey little home loans are you delivering such that i can close that home that is not an a b test like you have to get that right um so we havegrown it i'd say quickly but methodically and we will continue to do that uh one because the consumer experience and agent experience has to be great but two the opportunity in front of us feels so substantial, like stubbing our toes, trying to move too quickly doesn't feel like the right answer, particularly given even the top player today has 5% market share. So it's a really fragmented market, and we have a real right to win. Combine that with we are now at a place where it is profitable on a variable indirect basis so that scaling mechanism feels even more interesting as you get to profitability in that line. Great. At the onset of the conversation, you talked a little bit about AI mode, and I was just wondering if you could spend a minute and talk about how AI impacts Zillow. How are you using AI for some of your consumer-facing features? And what are some of the proprietary data sets or things that Zillow has to make a differentiated product using AI for real estate that others may have a harder time doing? Yeah, I think it comes back to those kind of three layers I talked about earlier, which is stream and shop, the operating system, and the transactional layer. And they all kind of reinforce each other with AI mode. So I'll give you some examples. Right now, AI mode is on 20% of all logged-in users. So we are being methodical because we need the experience to be really good. It's not just a search layer. It's supposed to be an assistant all the way through the transaction. So we're methodically scaling. Early days, the promise of it is good. Like we're seeing far more engagement for those that use AI mode than those that don't. That's the first thing you want to see. The conversations are richer. the types of questions we can answer are so much more than when we were just in kind of map-based search and trying to put as many facts and figures on a mobile screen. So that all feels really good early days. What it ultimately should do for us over time is make the dream and shop experience better because we can ask more questions about neighborhoods and commutes and schools and all sorts of stuff that we otherwise really couldn't do pre this conversational assistant beyond other topics as well we can also start to infuse smarter and smarter data about consumer search behaviors writ large so you as a consumer say hey is this market hot or cold that question by a human being is pretty hard to answer that question when you have all of Zillow's consumer data flowing through is a lot easier to answer so that would be an example of like, why is it better? And there are many more as we go on this journey. On the software side, we are highly capable technologists, particularly in the real estate space. It is fairly clear. You talk to a real estate agent, they say, who's the best technology company in the space? It's us. And we can make the software products better and stickier and make the softwares products allow agents to be more productive. So we're doing that already in a variety of ways, but AI really infuses there or really helps there. The other thing to think about with our software is now we can start to marry Zillow data with the software. So Zillows Pro is a good example of this where a real estate agent gets into a follow-up boss, works ZillOW consumers that way, but also has a network of people that just sit in their CRM that sit fairly dormant. We are now marrying Zillow consumer behavior, so long as that consumer opt-ins, into follow-up boss so that the real estate agent who hadn't talked to you in six months gets a ping that says, oh, Mike's actually searching in these areas. You should probably reach out to him. That's not replicable. You have to have Zillows data and follow-ups. So that's a good example of where AI can really help us as well. And then on the transactional layer, it is making the transaction more efficient, of course, and AI will, of course, do that, but really important, too, is the richness of the conversations we're having with prospective buyers and sellers allow us to offer more to them and introduce them to Zillow Home Loans or a preferred agent in way different ways because it's not just three potential clicks. Before, it was contact an agent, get pre-qualified, take a tour. Now, it's like the questions are infinite and the way in which we can introduce these people is way more conversational and persistent than solely those three sets of pixels so all of that is like you can probably tell I'm pretty excited about and I'm getting even more excited about being in the COO role and seeing this stuff way more deeply than I probably was just in the CFO role but you know So it's fairly early days today, and the signs are quite positive, and then it's like, you know, how much can we innovate from there? We consistently over the course of our history as a company cross technology chasms quite well, and we expect to do so here too. Great. If I can ask a nearer term, you Know, financial question, I just want to ask about the guidance. You know, you have revenue guidance for this year of mid-teens, year-over-year growth. you know, for the third quarter, you guys did call out some, you know impacts from the mortgage market as well as the transition timing because of the preferred agent program. So, you know, could you reiterate the guidance today? Is there anything that you would provide, you know, texture wise to just help us understand why the guidance is set the way it is? Yeah, guidance I would reiterate today. The The moving pieces and how we got it for Q3 and Q4 were two main factors. One was we were accelerating preferred. So there are some moving pieces on the way in which we get revenue between our residential segment and our mortgages segment. There's a shift in that. And then there are a few things that are headwinds. So one is a seasonal, basically like a seasonal impact where the old model did better in Q4 than preferred does, and then preferred does better inQ1 than the old model did. So that's just a, you know, a quarterly thing, but it's a headwind for Q4. And the other is just the time it takes for a loan to actually become revenue that's slower than an advertising based uh base model that's so that was like the stuff that was in our control as we accelerated preferred the other thing that we called out and we're seeing play out is just softer macro we had thought macro was going to be about flat for the year and uh now we think it's down and we incorporated that into the guide uh and thought about that as we thought about Q3 and full year 2026. Great. You know, I wanted to ask about the mid-cycle targets. You Know, Zillow has mid- cycle targets of $5 billion of total revenue, 45% EBITDA margins. It is anchored around a macro assumption of 6 million units existing home sales sold annually. I was just wondering if you could talk about some of the drivers to reach those mid-cycle targets? How much of it is contingent on macro? What can you do without macro conditions improving? I think it'd be helpful just to talk about how much is actually in your control. Yeah, there's a bunch in our control. And for context, 6 million home sales. Today, we're talking about 4 million home sales. So we are nowhere close to normal. And that 4 million homes sales has been pretty consistent over the last four years at this point. I think 2023, 24, 25, and 26 will all be about four million home sales. So we're in a particularly depressed time in a cyclical market. We've been able, we Zillow have been able to grow right through that. We expect to be able to continue to grow straight through that, and I would use history as a mechanism to think about how we think about the go forward, which is we expect to significantly outgrow the real estate market. And we've grown in the mid-teens pretty consistently through that housing market downdraft. And We've grown EBITDA faster than revenue. We've gotten to gap profitability. We're growing net income faster than both revenue and EBITTA. And our expectation is we continue to do that regardless of the housing market. So our expectation is we grow quite nicely through a challenged housing market. And when the housing market comes back, that's an obvious accelerant to the business, but we're not waiting for it. Great. In the last few minutes here, I wanted to ask two more. One is just around listing access standards, right? Like lots of things happening in listing access standard, Zillow Preview, pre-marketing. I was just wondering if you could provide an update of, you know, the state of pre-marketing today. Is it an opportunity? Is it a threat? How do you guys think about it? Yeah, so the question here is really around will marketing your home privately become more of a standard? The real estate market has always had some small portion of listings be private, right? If you think about ultra luxury, divorces, deaths, you name those types of things, that's always been around, I don't know, 1% to 2% of all the available inventory in the country. Regardless of the rhetoric that has been thrown out, that number has been stubbornly the same. So the amount of noise has ticked up substantially over the last few years. The amount of private listings has stayed basically the same, like somewhere between 5,000 and 10,000 listings at any given time. 5,000 or 10,000 listings on the back of 1.1 million active listings in the country. So this is just kind of a ridiculous set of conversations, regardless of why they exist. I can't totally figure that out. But the consumer behavior is you're going to sell the most important asset you own for most people. You want the most eyeballs on it. That's like the most obvious statement on the planet. It's like trying to argue whether the sky is blue. And lo and behold, 98% to 99% of the country continues to market their homes that way because it makes sense for the vast, vast majority of people. That has been the case. That will continue to be the case, we do not see how limiting the amount of eyeballs people are able to put on a home results in a higher price for a seller. So that's the private listings. with respect to the coming soons, like do you preview your home on the market before you go and sell it more broadly? There are markets where that can make some sense, and we have a product called Zillow Preview to satiate that, but still not even close to the norm. You know, our ZillOW Preview is quite small, and any other coming sooms are quite small as well. So we expect that to, you know, based on consumer behavior we see, We don't expect that to become the norm, but if it is, we think preview is a better position than anything else. In the last minute we have, I would just love for you to tie it all together for us and maybe talk about some of the things that you're looking forward to the most over the next one to two years, execution-wise, milestone-wise that you would call out. Yeah, I'd say a lot of it you all have heard today, but the structural growth levers across for sale and rentals are intact and we see growth opportunity well into the future not to even mention all the things that we will invent from there but the structure of growth levers that you've seen be able to grow as nicely as we have over the last few years we see intact going forward and our job is to do that while growing even on an income faster than revenue, and we think we're well positioned to do that with, you know, a lot of internal excitement about what AI mode is going to do on top of that and whatever we invent around generative AI from here. It's a great way to wrap it up. Jeremy, thank you so much for participating in our conference. It's been a privilege to have you on stage here with us. Thanks for having me.