Q4 2023 Zillow Group Inc Earnings Call

Ladies and gentlemen, please remain holding the conference call will begin momentarily.

Operator: Ladies and gentlemen, please remain holding. Your conference call will begin momentarily. Again, please remain holding. Your conference call will begin momentarily. Good afternoon.

Ken: Ken Please.

Ken: The conference call will begin momentarily.

Ken: [music].

Operator: My name is Sierra, and I will be your conference operator for today. At this time, I would like to welcome everyone to Zillow Group's fourth quarter and full year 2023 conference call. All lines have been placed on mute to prevent any background noise.

Ken: Good afternoon.

Sierra: My name is Sierra and I will be your conference operator for today.

Sierra: At this time I would like to welcome everyone to Zillow group's fourth quarter and full year 2023 conference call.

Sierra: All lines have been placed on mute to prevent any background noise.

Operator: After the speaker's remarks, there will be a Q&A session. If you'd like to ask a question during this time, simply press the star key followed by the number one on your telephone keypad. If you would like to withdraw your question, press the star 2 key.

Sierra: After the Speakers' remarks, there'll be a Q&A session.

Sierra: If you'd like to ask a question. During this time simply press star followed by the number one on your telephone keypad.

Sierra: If you'd like to withdraw your question press the star two keys.

Brad Erickson: Please note, this event is being recorded. I would like to turn the conference over to Brad Birning, Vice President of Strategic Affairs and Investor Relations. Please go ahead.

Sierra: Please note this event is being recorded.

Sierra: I would now like to turn the conference over to Brad Berning, Vice President of strategic Affairs and Investor Relations. Please go ahead.

Brad Erickson: Thank you good afternoon, and welcome to Zillow group's fourth quarter and full year 2023 conference call.

Brad Erickson: Thank you. Good afternoon, and welcome to Zillow Group's fourth quarter and full year 2023 conference call. Joining me today to discuss our results are Zillow Group co-founder and CEO, Rich Barton, CEO, Jeremy Waxman, and CFO, Jeremy Hoffman. During today's call, we'll make forward-looking statements about our future performance and operating plans and the housing market based on current expectations and assumptions. These statements are subject to risk and uncertainties, and we encourage you to consider the risk factors described in our FCC filings for additional information. 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.

Brad Erickson: Joining me today to discuss our results are Zillow group's co founder and CEO Rich Barton.

Brad Erickson: Oh, Oh, Jeremy Wacksman and CFO Jeremy Hoffman.

Speaker Change: During today's call, we'll make forward looking statements about our future performance and operating plans and the housing market based on current expectations and assumptions. These.

Speaker Change: 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 we undertake no obligation to update these statements as a result of new information or future events, except as required by law.

Speaker Change: This call is being broadcast on the Internet and is accessible on our Investor Relations website.

Speaker Change: Recording the call will be available later today.

Speaker Change: During the call you will discuss GAAP and non-GAAP measures, including adjusted EBITDA, which we referred to as EBITDA. We encourage you to read our updated investor presentation shareholder letter and our earnings release, which can be found on our Investor relations website as they contain important information about our GAAP and non-GAAP results.

Brad Erickson: During the call, we will discuss gap and non-gap measures, including adjusted EBITDA, which we refer to as EBITDA. We encourage you to read our updated investor presentation, shareholder letter, and our earnings release, 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. We will now open the call with remarks followed by live Q&A. With that, I will turn over the call to Ripp.

Speaker Change: Including reconciliations of historical non-GAAP financial measures, we will now open the call with remarks, followed by live Q&A with that I will turn over the call to rich. Thank.

Richard N. Barton: Thank you Sarah and thanks, Brad Good afternoon, everyone. Thanks for dialing in for our fourth quarter and full year 2023 results. We are posting great revenue numbers across the whole of our increasingly diversified and growing businesses are early cohort of enhanced markets are working so we are pressing the accelerator on expansion.

Ripp: We are posting great revenue numbers across the whole of our increasingly diversified and growing business. Our early cohort of enhanced markets is working, so we are pressing the accelerator on expansion in 2024. I'm also pleased to share that we've released an updated investor presentation available on our Investor Relations website to bring you all up to speed on the progress we've made on our growth pillar. We'll kick off the discussion today by walking you through our quarterly results, briefly addressing what's happening in the broader real estate industry, highlighting the opportunity ahead of Zillow, and then taking you through the exciting progress we're making on our journey to innovate and transform the way people buy, sell, finance, and rent homes. Starting with our quarterly results, we reported better than expected and accelerated revenue growth with Q4 total revenue of $474 million, up 9% year over year; residential revenue of 349 million increased 3% year over year, returning to positive year over year. During the same time frame, the broader real estate industry declined by 4%, meaning Zillow's residential revenue outperformed the industry by 700 basis points. As I said, Q4 now marks the sixth consecutive quarter of meaningful outperformance versus the industry.

Richard N. Barton: In 2024.

Speaker Change: I'm also pleased to share that we released an updated investor presentation available on our Investor Relations website to bring you all up to speed on the progress we've made on our growth pillars.

Speaker Change: Well kick off the discussion today by walking you through our quarterly results briefly addressing what's happening in the broader real estate industry highlighting the opportunity in front of Zillow and then taking you through the exciting progress, we're making on our journey to innovate and transform the way people buy sell finance and rent homes.

Speaker Change: Starting with our quarterly results, we reported better than expected and accelerated revenue growth with Q4 total revenue of $474 million up 9% year over year.

Speaker Change: Residential revenue of $349 million increased 3% year over year, returning to positive year over year growth.

Speaker Change: During the same timeframe the broader real estate industry declined by 4%, meaning Zillow is residential revenue outperformed the industry by 700 basis points.

Speaker Change: As I said Q4, now marks the sixth consecutive quarter of meaningful outperformance versus the industry.

Ripp: Our ongoing efforts to improve our customer funnel, capture more demand, connect more of that demand to our partner network, and focus on conversion continue to drive impressive results. Rentals also had a strong quarter with accelerating revenue growth up 37% year over year to $93 million. This performance was driven by accelerating multifamily property growth with over 37,000 properties listed across Zillow at the end of Q4 2023. We continue to be the number one most visited rental platform, with average monthly rental unique users up double digits year over year in Q4. We are well positioned for future rental revenue growth, which Jeremy Waxman will discuss in more detail later in the call. We're also making excellent progress in our mortgages push, growing our purchase mortgage origination volume by more than 100% year over year in Q4 and further integrating Zillow home loans with our premier agent partner. Before we dive deeper into all the progress we've made over the last two years, I'd like to give our view of the latest real estate industry goings-on. We're monitoring the progress of numerous lawsuits against several organizations within the industry.

Speaker Change: Our ongoing efforts to improve our customer funnel capture more demand connect more of that demand to our partner network and focus on conversion continue to drive impressive results.

Speaker Change: Rentals also had a strong quarter with accelerating revenue growth up 37% year over year to $93 million.

Speaker Change: This performance was driven by accelerating multifamily property growth with over 37000 properties listed across the Zillow at the end of Q4 2023.

Speaker Change: We continue to be the number one most visited rentals platform with average monthly rentals unique users up double digits year over year in Q4.

Speaker Change: We are well positioned for future rentals revenue growth, which Jeremy Wacksman will discuss in more detail later in the call.

Speaker Change: We're also making excellent progress in our mortgages push growing our purchase mortgage origination volume by more than 100% year over year in Q4, and further integrating zillow home loans with our Premier agent partners.

Speaker Change: Before we dive deeper into all of the progress we've made over the last two years I'd like to give our view of the latest real estate industry goings.

Speaker Change: We're monitoring the progress of numerous lawsuits facing several organizations within the industry.

Ripp: Zillow is not a named party in these suits, and we are confident in our ability to meaningfully grow our company in this evolving climate. We will continue to advocate for what we believe is best for consumers and the industry as a whole.

Speaker Change: Zillow is not a named party in these suits and we are confident in our ability to meaningfully grow our company in this evolving climate.

Speaker Change: In November we laid out our marketplace principles that underlies the loss position.

Speaker Change: We continue to advocate for what we believe is best for consumers and the industry as a whole.

Speaker Change: First we believe in our real estate marketplace that is transparent and fair in which consumers and agents have easy and equitable access to listings and information.

Ripp: We believe in a real estate marketplace that is transparent and fair, in which consumers and agents have easy and equitable access to listings and information. Additionally, we believe buyers and sellers deserve independent representation. And finally, we believe consumers should be well informed on agent compensation and their right to negotiate. Recently, we elaborated on these views on a new web page, advocacy.zillowgroup.com, that outlines consumers' real estate rights and how we are working to elevate industry standards on their behalf. This includes efforts to allow better integrated search experiences that can include all listing types in one view, be they for sale by agent, for sale by owner, new construction, or for rent, as well as to educate consumers on the potential pitfalls of double-siding with dual-agency, among others.

Speaker Change: Second we believe buyers and sellers deserve independent representation.

Speaker Change: And finally, we believe consumers should be well informed on agent compensation and their rights to negotiate.

Speaker Change: Recently, we elaborated on these views on a new webpage advocacy Zillow group Dot com that outlines consumers real estate rights and how we are working to elevate industry standards on their behalf.

Speaker Change: This includes efforts to allow better integrated search experiences that can include all listing types in one view bofa for sale by agents.

Speaker Change: For sale by owner New.

Speaker Change: New construction or for rent as well as to educate consumers on the potential pitfalls of double siding with dual agency.

Among others.

Speaker Change: We recently supported legislation in our home state of Washington that requires buyer's agent agreements. So that consumers are aware of the services they are buying and who pays.

Ripp: We recently supported legislation in our home state of Washington that requires buyer's agent agreements so that consumers are aware of the services they are buying and who pays. In New York, our Street Easy and Zillow teams are working with lawmakers and advocates to create much-needed transparency for consumers, ensure agents are fairly compensated, and open the door for more access and affordability in New York's rental market. Those are just a few examples.

Speaker Change: In New York, our Streeteasy and Zyla teams are working with lawmakers and advocates to create much needed transparency for consumers ensure agents are fairly compensated and opened the door for more access and affordability in new York's rental market.

Speaker Change: Those are just a few examples but the key takeaway is that we have found a louder and CRISPR voice championing, what's good for mover consumers agents and the industry as a whole given legacy practices are being actively debated and negotiated right now.

Ripp: But the key takeaway is that we have found a louder and crisper voice championing what's good for mover consumers, agents, and the industry as a whole, given legacy practices are being actively debated and negotiated right now. Settlements and court-ordered equitable relief may provide some near-term direction for the industry, and some industry practices will likely be improved. For example, it could become more common to use buyer-agent agreements to make fees more transparent and negotiable.

Speaker Change: Settlements and court ordered equitable relief may provide some near term direction for the industry and some industry practices will likely be improved for example, it could become more common to use buyer agent agreements to make these more transparent than negotiable, but ultimately we continue to expect industry change to play out over many years.

Ripp: But ultimately, we continue to expect industry change to play out over many years. Regardless of the industry debates, Zillow is well positioned for all weather due to our long history and future of technological innovation driving differentiated products and services, which has resulted in a large engaged audience, a beloved brand, and a growing diversified business. We believe all roads lead to Zillow.

Yes.

Regardless of the industry debates zillow is well positioned for all weather due to our long history and future of technology innovation driving differentiated products and services, which has resulted in a large engaged audience, a beloved brand and a growing diversified business.

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Speaker Change: We believe all roads lead to Zillow.

Ripp: Zooming out from our quarterly results in the latest state of play in the real estate industry, two years ago, we introduced our new growth strategy and broke down the massive TAM opportunity for Zillow. This quarter, we've released a refined and better way to size that opportunity, resulting in a $30 billion accessible TAM of customers already in our funnel and raising their hands to connect. I'll do the math to arrive at this number in a moment and then pass it over to Jeremy Waxman to talk you through the progress we've made over the last two years, the proof points, and the reasons why we are confident in pressing the accelerator on expansion

Speaker Change: Zooming out from our quarterly results in the latest state of play in the real estate industry. Two years ago, we introduced our new growth strategy and broke down the massive tam opportunity for Zillow.

Speaker Change: This quarter, we released a refined and better way to size that opportunity, resulting in a $30 billion accessible tam of customers already in our funnel and raising their hands to connect.

Speaker Change: I'll do the math to arrive at this number in a moment and then pass it over to Jeremy Wacksman to talk you through the progress we've made over the last two years the proof points of the signal why we are confident and pressing the accelerator on expansion.

Ripp: We are pleased with what we have accomplished since laying out our growth pillars in early 2022. We see this strategy as a continuation of what we've been working on since we founded the company in 2006 with the charge of turning on the lights in real estate. Over the years, we've built engaging and practical products and services designed to empower consumers with data and information, transforming a previously opaque marketplace into the more transparent one we experience today. But turning on the lights only got Zillow and our large audience so far. To effect real change for consumers and open up a much larger opportunity, we needed to focus on the digital transformation of the moving experience end to end and begin our work on the transaction itself. Everyone who's moved knows that the process is complicated, time-consuming, and expensive.

Jeremy Wacksman: We are pleased with what we've accomplished since laying out our growth pillars in early 2022.

See this strategy is a continuation of what we've been working on since we founded the company in 2006 with the charge of turning on the lights and real estate.

Jeremy Wacksman: Over the years, we've built engaging in practical products and services designed to empower consumers with data and information.

Jeremy Wacksman: Transforming a previously opaque marketplace into the more transparent one we experienced today.

Jeremy Wacksman: But turning on the lights, only got Zillow and our large audience so far.

Jeremy Wacksman: To affect real change for consumers and open up a much larger opportunity we needed to focus on digital transformation of the moving experience end to end and begin our work on the transaction itself.

Ripp: The onus is primarily on the consumer to play the role of project manager slash systems integrator to research, shop, select, finance, appraise, and close, bringing all these disparate pieces together. It's a labyrinth, and it's clear that consumers want and need better, and they'll eventually get it. They always do.

Jeremy Wacksman: Everyone knows move knows that the process is complicated time consuming and expensive.

Jeremy Wacksman: The onus is primarily on the consumer to play the role of project managers slashed systems integrator to reach research shop select finance appraise and close bringing all of these pieces together.

Ripp: So, we set out to build the Housing Super App, an integrated digital experience wherein all the disparate pieces of the gnarly moving process are brought together on one platform. Zillow.

Jeremy Wacksman: It's elaborate and it's clear that consumers want and need better and they'll eventually get it they always do.

Ripp: Rooted in our original commitment to turn on the lights, Zillow's Housing Super App empowers consumers by delivering real estate data and education. A suite of Zillow-owned solutions and a network of best-in-class partners at their fingertips. Well, the Housing Super App is here today. It's called Zillow.

So we set out to build the housing Super App.

Jeremy Wacksman: An integrated digital experience, where in all the different pieces of the gnarly moving process are brought together on one platform zillow.

Jeremy Wacksman: Rooted in our original commitment to turn on the lights Zillow is housing Super App empowers consumers by delivering real estate data and education.

Ripp: Zillow is now the container into which we will continually place new features and services that work together seamlessly to solve real customer and partner pain points during their move. We have tested and iterated the experience over the last two years, updating you all along the way. Our growth pillars, which Jeremy Waxman will talk more about in a moment, serve as a roadmap for the continual upgrades and improvements we're adding to the Zillow experience as we expand our breadth and depth of coverage across more markets. Our opportunity is to take our current small slice of a large total addressable market and grow it into a much bigger piece of the pie. US for sale housing represents $2 trillion in total transaction value, or TTV. Of that $2 trillion of TTV, there were approximately $162 billion of service fees in 2023 across buy and sell side agent referral fees, mortgage fees, and closing costs. Based on survey data, we estimate that 70% of all consumers who transact visit and use Zillow, resulting in a $113 billion Zillow visitor tax.

Jeremy Wacksman: Our suite of Zillow home solutions, and a network of best in class partners at their fingertips.

Jeremy Wacksman: Well the housing Super App is here today.

Jeremy Wacksman: It's called the Zillow Zillow is now the container into which we will continually placed new features and services that work together seamlessly to solve real customer and partner pain points in their moves.

Jeremy Wacksman: We have tested and iterate the experience over the last two years updating you all along the way.

Jeremy Wacksman: Our growth pillars, which Jeremy Wacksman will talk more about in a moment serve as a roadmap for the continual upgrades and improvements we're adding to the zillow experience as we expand our breadth and depth of coverage across more markets.

Jeremy Wacksman: Our opportunity is to take our current small slice of a large total addressable market and grow it into a much bigger piece of the pie.

Ripp: Cutting that down to just shoppers who raise their hands on Zillow, meaning they proactively request to connect with one or more of our services, we estimate, first, a $16 billion opportunity made up of brokerage referral, mortgage, closing, and other home buyer-related transaction fees associated with those high-intent buyers. This is low-hanging fruit by Sidetam, not just people visiting our site but actual buyers actively engaged in seeking to do business. Additionally, on the sell side, we have a good line of sight on an estimated 14 billion in sell side TAM, which derives from our increasing opportunity to capture more sell side referral fees and listing marketing budgets from those agents already actively engaged in our platform. This adds up to a current accessible $30 billion for sale revenue opportunity with Today we capture $1.5 billion of that $30 billion accessible. That $1.5 billion is our reported 2023 residential and mortgages. Measured as a fraction of TTV, we stood at a mere seven basis points in 2023. Oh my, so much blue ocean.

Jeremy Wacksman: U S for sale housing represents two trillion in total transaction value or T. TV.

Jeremy Wacksman: Of that two trillion of CTV, there were approximately $162 billion of service fees in 2023 across buy and sell side agent referral fees.

Mortgage fees and closing fees.

Jeremy Wacksman: Based on survey data, we estimate that 70% of all consumers, who transact visit and use zillow, resulting in a $113 billion Zillow visitor Tam.

Jeremy Wacksman: Cutting that down to just shoppers, who raised their hands on zillow, meaning they proactively request to connect with one or more of our services.

Jeremy Wacksman: We estimate first.

Jeremy Wacksman: $16 billion opportunity made up of brokerage referral mortgage closing and other homebuyer related transaction fees associated with those high intent buyers.

Ripp: Our position as one of the largest internet brands in the United States, alongside iconic brands such as Facebook, Spotify, and Netflix, gives us confidence that we have many years of growth into that $30 billion of revenue TAM accessible in our funnel today. Over the last 15 plus years, we've released a constant stream of novel, engaging, and practical product innovations, which is how great brands are created. Zillow has over 60% unaided brand awareness amongst shoppers, which is rare for a brand to achieve in any category. Okay, that is, of course, internal survey data.

Jeremy Wacksman: This is low hanging fruit by side, Tim not just people visiting our site, but actual buyers actively engaged in seeking to do business with us.

Jeremy Wacksman: Additionally, on the sell side, we have good line of sight on an estimated $14 billion of sell side Tam derived from our increasing opportunity to capture more sell side referral fees and listing marketing budgets from those agents already actively engaged in our funnel.

Jeremy Wacksman: This adds up to a current accessible $30 billion for sale revenue opportunity with high intent hand, raising consumers already in zellers funnel.

Ripp: But you can see a good impartial proxy for this strength in our Google search activity, where Zillow is searched for more on Google than the category term, quote, real estate, and three times more than our nearest competitor's brand. Further evidence of our brand strength is seen in our traffic composition. About 80% of Zillow's traffic is organic, as well as in our app usage, which is more than three times our nearest competitor. We pioneered mobile real estate shopping with our leading iPhone and Android. And when Apple first launched the iPad, the Zillow app was highlighted by Steve Jobs on stage at the launch. Taking things full circle this month, we partnered with Apple once again for the launch of Zillow Immerse on the new Apple Vision Pro to offer movers consumers an interactive and immersive way to explore listings and showcase listings with spatial technology. Try it.

Jeremy Wacksman: Today, we capture $1 5 billion of that $30 billion.

<unk> Tam.

Jeremy Wacksman: That $1 5 billion is our reported 2023 residential and mortgages revenue.

Jeremy Wacksman: Measured as a fraction of CTV, we stood at a mere seven basis points in 2023.

<unk> so much blue Ocean.

Jeremy Wacksman: Our position as one of the largest internet brands in the United States alongside iconic brands, such as Facebook Spotify and Netflix gives us confidence that we have many years of growth into that $30 billion of revenue Tam accessible in our funnel today over the last 15 plus years, we've released a constant stream of novel engaging in practical.

Ripp: It's early, but it's an extraordinary home touring experience. We have been and will continue to be the company that is on the leading edge of utilizing technology to create magical new consumer and agent experiences. So I've laid out a more refined view of the opportunity as we see it, quite large, quite complex, quite accessible. We monetize very little of it today, yet it's in our store. I've also outlined the reasons to believe that Zillow can and will tap this $30 billion accessible TANF. 1.

Jeremy Wacksman: Innovations, which is how great brands are created.

Jeremy Wacksman: Zillow brand has over 60% unaided brand awareness amongst shoppers, which is rare for a brand to achieve in any category.

Jeremy Wacksman: Okay that is of course internal survey data, but you can see a good impartial proxy for this strength in our Google search activity, whereas Louis searched more on Google than the category term real estate unquote, and three times more than our nearest competitors brand.

Jeremy Wacksman: Further evidence of our brand strength is seen in our traffic composition about 80% of the less traffic is organic.

Ripp: We have the leading audience, brand, and engagement. Two, we have proven technology and product talent that is unrivaled in the real estate industry.

Jeremy Wacksman: As well as in our App usage, which is more than three times our nearest competitor.

Jeremy Wacksman: We pioneered mobile real estate shopping with our leading iPhone and Android apps.

Jeremy Wacksman: And when Apple first launched the iPad. The Zillow App was highlighted by Steve jobs on stage at the launch event.

Ripp: We have built an extensive, talented, and increasingly integrated partner network, and four. We have a strong balance sheet that gives us the flexibility to pursue current and future growth opportunities. For these reasons, we are uniquely well positioned to transform and replatform the largest industry in the country. We spent the last two years building the integrated transaction experience and testing it in Enhanced Mark.

Jeremy Wacksman: Taking things full circle. This month, we partnered with Apple once again for the launch of Zillow immerse on the new Apple vision pro to offer mover consumers and interactive and immersive way to explore listing showcase listings with special technology.

Ripp: Now it's time to press down on the accelerator to increase our breadth of coverage across more markets and our depth of penetration in those markets. We made a great deal of progress in 2023. We will make more progress in 2024.

Jeremy Wacksman: Try it.

Jeremy Wacksman: It's early but it's an extraordinary home touring experience.

Jeremy Wacksman: We have been and will continue to be the company that is on the leading edge of utilizing technology to create magical new consumer and agent experiences.

Jeremy Waxman: I've talked about our opportunity and our vision for the future of real estate. Now I will pass the microphone over to our COO, Jeremy Waxman, to give you a more detailed progress report and where we are. Thank you, Rich, and good afternoon, everyone.

Jeremy Wacksman: So I've laid out a more refined view of the opportunity as we see it quite large quite complex quite accessible for us.

We monetize very little of it today, yet it's in our store.

Jeremy Wacksman: I have also outlined the reasons to believe that Zillow can and will tap this $30 billion.

Jeremy Waxman: As Rich said, Zillow's Housing Super App is the container into which we're continually adding upgrades and improvements, guided by five areas of growth: Touring, Financing, Seller Solutions, Enhancing Our Partner Network, and Integrating Our Services. Our growth pillars mark the pathway to meeting our goals to grow customer transaction share from 3% to 6% by the end of 2025 and grow our revenue alongside that transaction share. You'll note that we've also added rentals as an additional growth pillar this quarter. We're excited about the opportunities here as our rental marketplace continues to accelerate and accounted for nearly 20 percent of Zillow's total revenue in 2023. I'll kick off our growth pillar update with Tori.

Jeremy Wacksman: <unk> Tam.

Jeremy Wacksman: One.

Jeremy Wacksman: We are the leading audience brand and engagement.

Jeremy Wacksman: We have proven technology and product talent that is unrivaled in the real estate industry.

Jeremy Wacksman: We have built an extensive talented and increasingly integrated partner network.

Jeremy Wacksman: And for.

Jeremy Wacksman: We have a strong balance sheet that gives us the flexibility to pursue current and future growth opportunities.

For these reasons, we are uniquely well positioned to transform and re platform the largest industry in the country.

Jeremy Wacksman: We spent the last two years building the integrated transaction experience and testing it and enhanced markets.

Jeremy Wacksman: Now it's time to press down on the accelerator to increase our breadth of coverage across more markets and our depth of penetration in those markets.

Jeremy Wacksman: We made a great deal of progress in 2023, we will make more in 2024.

Jeremy Waxman: The investments we're making here continue to drive our industry's outperformance. When a customer raises her hand to look at a home she's been coveting on Zillow, it's a strong signal of serious intent to transact. As we work to convert more visitors on our site into transactors, the home tour remains a critical focus area for us. Touring has historically been painful for both movers and agents, so we've invested in making the process more seamless than it's ever been.

Jeremy Wacksman: Okay.

Speaker Change: I've talked about our opportunity and our vision for the future real estate now I will pass the microphone over two hours.

Speaker Change: Jeremy Wacksman to give you a more detailed progress report.

Jeremy Wacksman: Where we are headed.

Jeremy Wacksman: Thank you rich and good afternoon, everyone as.

Jeremy Wacksman: As rich said Zillow is housing Super App is the container into which we're continually adding upgrades and improvements guided by five four sale growth pillars.

Jeremy Waxman: Our real-time touring product, powered by ShowingTime, is meaningfully improving our ability to connect high-intent customers to our premier agent partners. We ended Q4 with our real-time Tory product delivering approximately 10% of our total connections. We expect to expand our breadth of coverage by launching additional markets and increase our depth by growing real-time touring to account for approximately 20% of connections by the end of 2020. This is driving a better customer and agent experience with less friction as we see increased successful connections and more customers working with it. Equally as important as touring is finance.

Jeremy Wacksman: <unk> financing seller solutions, enhancing our partner network and integrating our services.

Our for sale growth pillars, Mark the pathway to meeting our goal is to grow customer transaction share from 3% to 6% by the end of 2025 and grow our revenue alongside that transaction share growth.

Jeremy Wacksman: You'll note that we've also added rentals as an additional growth pillar. This quarter. We're excited about the opportunities here as our rentals marketplace continues to accelerate and accounted for nearly 20% of <unk> total revenue in 2023.

Jeremy Wacksman: I'll kick off our growth pillar update with Tori.

Jeremy Waxman: And as a reminder, approximately 40% of all homebuyers start their journey shopping for a mortgage, and 80% of those buyers don't yet have an agent. Knowing that almost all of these mortgage seekers use Zillow positions us well to build a substantial direct-to-consumer purchase mortgage business that is seamlessly integrated with our extensive Premier Agent partner network. By integrating Zillow Home Loans with our Premier Agent Partner Network, we are creating a better customer experience from the start of the home buying journey on Zillow to when a customer moves into that brand new home.

Tori: The investments, we're making here continue to drive our industry outperformance.

Tori: When a customer raises their hand to look at her home. She is been covering on Zillow. It's a strong signal of serious intent to transact.

Tori: As we work to convert more visitors on our site and <unk> the home to a remains a critical focus area for us.

Tori: Turing has historically been painful for both movers and agents. So we've invested in making the process more seamless than it's ever been.

Jeremy Waxman: And it's clear that customers and partners are increasingly enjoying this integrated housing super epic. Most notably, our efforts are driving purchase mortgage growth. In our original four enhanced markets, we saw our customer adoption rates climb from 6% to 15% over the course of 2020. Furthermore, since Q1 2023, the percentage of purchase mortgages in which a customer works with a Premier Agent Partner increased from 23% to 53%. All of this success translates to $487 million in purchase loan origination volume this quarter, a more than 100% year-over-year increase despite a very challenging mortgage rate environment.

Tori: Our real time touring product powered by showing time is meaningfully improving our ability to connect high intent customers to our premier agent partners.

Tori: We ended Q4 with our real time, Tory product delivering approximately 10% of our total connections.

Tori: We expect to expand our breadth of coverage by launching additional markets and increase our depth by growing real time touring to account for approximately 20% of connections by the end of 2024.

Tori: This is driving a better customer and agent experience with less friction as we see increased successful connections and more customers working with agents.

Tori: Equally as important is touring is financing and as a reminder, approximately 40% of all homebuyers start their journey shopping for a mortgage and 80% of those buyers don't yet have an agent.

Jeremy Waxman: We expect continued mortgage growth as we follow our roadmap to 2025, including spanning integration with premier agent partners, rolling out more enhanced markets, and converting more high-intensity customers into I'll now move on to seller services, honing in on listing showcases. Listing showcases elevate agents' brand presence on Zillow and helps them win more listings. Our AI-powered listing showcase also improves the shopper experience through listings that are powered by our homegrown rich media and floor plan technology.

Tori: Knowing that almost all of these mortgage secret view zillow positions as well to build a substantial direct to consumer purchase mortgage business that is seamlessly integrated with our extensive premier agent partner network.

Tori: By integrating Zillow home loans with our Premier agent partner network, we are creating a better customer experience from the start of the home buying journey on zillow to when a customer moves into that brand new home.

Jeremy Waxman: This is a unique differentiator in the marketplace and a significant benefit to buyer engagement and experience. We are in the early days of this product, having launched in Q3, but it is clear already there is significant demand from listing agents and significant engagement with consumers. Showcase listings received 68% more page views, 66% more saves, and 63% more shares.

Tori: And it's clear that customers and partners are increasingly enjoying its integrated housing Super App experience.

Tori: Most notably our efforts are driving purchase mortgage growth.

Tori: In our original four enhanced markets, we saw our customer adoption rates climb from 6% to 15% over the course of 2023.

Tori: Since Q1 2023, the percentage of purchase mortgages in which a customer works with a premier agent partner increased from 23% to 53%.

Jeremy Waxman: We are actively rolling out listing showcases nationwide with the intermediate term goal of five to ten percent listing coverage, which represents a one hundred and fifty to three hundred million dollar annual revenue opportunity, and we believe there is potential future growth beyond that. Moving on to our next growth pillar update, enhancing our partner network. Our mandate here is simple: help the best agents provide better service to more of our shared customers to grow their businesses and ours. And we are doing this in a few ways.

Tori: All of this success translates to $487 million in purchase loan origination volume this quarter, a more than 100% year over year increase despite a very challenging mortgage rate environment. We.

Tori: We expect continued mortgage growth as we follow a roadmap to 2025, expanding integration with Premier agent partners Rolling out more enhanced markets and converting more high intent customers on zillow.

Jeremy Waxman: First, we're expanding our enhanced market partners, increasing our depth of coverage in existing markets, and our breadth by growing our enhanced market footprint from 9 at the end of 2023 to a projected 40 markets by the end of 2024. Second, we're working to deliver an integrated experience between ZHL and Premier HL. As a result, one in two premier agent partners in our enhanced markets are now introducing their customers to Zillow Home Loans, and that's up from one in five at the end of 2020.

Tori: I'll now move on to seller services honing in on listing showcase.

Tori: Lifting showcase elegance elevates agents brand presence on Zillow and help them win more listings. Our AI powered listing showcase also improves the shopper experience through listings that are powered by our homegrown rich media and floor plant technology.

Tori: This is a unique differentiator in the marketplace and a significant benefit to buyer engagement and experience.

Jeremy Waxman: Lastly, we are excited to accelerate improvements to Follow-Up Bots and make it available to more agents to increase conversion. With the power of follow-up bots, our premier agent partners will be better equipped than ever to deliver the best possible customer experience while supercharging their business. We think these efforts across the board will drive transaction conversion to help close the gap on the vast majority of Zillow connections that transact elsewhere and better cap the $30 billion accessible revenue TAM that Rich walked you through. Moving on to our last for sale growth pillar update, integrating our service. Doing this requires us to pull together consumer, agent, and loan officer technology in one place, Zillow, to create an end-to-end experience that carries the customer through the entire transaction process with more transparency and ease.

We are in the early days of this product having launched in Q3, but it is clear already there is significant demand from listing agents and significant engagement with consumers.

Tori: Listings showcase listings received 68% more page views, 66% more save 63% more shares.

Tori: We are actively rolling out lifting showcase nationwide with the intermediate term goal of 5% to 10% listing coverage, which represents a $150 million to $300 million annual revenue opportunity and we believe there is potential future growth beyond that.

Tori: Moving on to our next growth pillar update enhancing our partner network.

Tori: Our mandate here is simple helped the best agents provide better service to more of our share customers to grow their businesses and our business and.

Tori: And we are doing this in a few ways.

Tori: First we're expanding our enhanced market partners, increasing our depth of coverage in existing markets and our breadth by growing our enhanced market footprint from nine at the end of 2023 to a projected 40 markets by the end of 2024.

Jeremy Waxman: It's no small feat, but it's what consumers want, and we're in the best position to deliver it. As evidenced by our performance in our earliest two enhanced markets, Phoenix and Atlanta, our integrated strategy is working to drive customer transaction share gains. Since the beginning of 2022, our customer transaction share has grown more than 80%. Additionally, across our entire set of nine enhanced markets, we are seeing consistent outperformance in connection growth versus the industry. This gives us great confidence to further expand our enhanced markets footprint more rapidly in 2020. As we expand to a projected 40 enhanced markets by the end of 2024, our integration within those markets is going to cover 20% of total Zillow connections by the end of the year.

Tori: Second we're working to deliver the integrated experience between DHL and Premier agent.

Tori: As a result, one into premier agent partners and our enhanced market are now introducing their customers to zillow home loans and Thats up from $1 five at the end of 2022.

Tori: Lastly, we are excited to accelerate improvements to follow a boss and make it available to more agents to increase conversion.

Tori: With the power of follow up off our Premier agent partners will be better equipped than ever to deliver the best possible customer experience, while supercharging their businesses.

Tori: We think these efforts across the board will drive transaction conversion to help close the gap on the vast majority of Zillow connections that transact elsewhere and better cap the $30 billion accessible revenue Tam that rich walked you through.

Jeremy Waxman: We land in each market with a subset of partner and customer coverage and work to expand our product offerings across the market over time. We are seeing share gains that will move the needle as we roll out more enhanced markets throughout the year into 2025. I'll wrap up with a progress update on rental.

Tori: Moving onto our last four sale growth pillar update integrating our services.

Tori: Doing this requires us to pull together consumer agent and loan officer technology in one place Zillow to create an end to end experience that carries the customer through the entire transaction process with more transparency and ease.

Jeremy Waxman: Rentals is a fast growing business with a big opportunity in front of it. Nearly every homebuyer starts out as a renter, and providing our customers with optionality is as important as ever in a challenging housing market. Today, we have the largest audience of renters and the most listings in the market with limited marketing spend to date. We're now leveraging our position as a traffic leader to grow our multifamily properties, which has accelerated our multifamily revenue growth year-on-year from 14% in Q4 2022 to 52% in Q4 2022. As we look to serve more of this market and grow revenue, we plan to expand the number of multifamily properties and deliver a superior experience for our rental partners. Before handing it over to Jeremy Hoffman, I do want to highlight that while we've been building these past few years, we've meaningfully outperformed a challenged child. For full year 2023, Zillow reported over $1.9 billion in revenue, outperforming the real estate industry by 1,600 basis points. I'm grateful to our teams who have been working hard to bring Zillow's Housing Super App to life over the last two years, solving We are looking forward to continued growth in the years ahead. With that said, I will now pass the line over to Jeremy. Thanks, Jeremy. And hello, everyone.

Tori: It's no small feat, but it's what consumers want and we are in the best position to deliver it to them.

Tori: As evidenced by our performance and our earliest to enhance markets Phoenix and Atlanta, Our integrated strategy is working to drive customer transaction share gains.

Tori: Since the beginning of 2022, our customer transaction share has grown more than 80% <unk>.

Tori: Additionally across our entire set of nine enhanced markets, we are seeing consistent outperformance and connections growth versus the industry.

Tori: This gives us great confidence to further expand our enhanced market footprint more rapidly in 2024.

Tori: As we expand to a projected 40 enhanced markets by the end of 2024, our integration within those markets is going to cover 20% of total zillow connections by the end of the year.

Tori: We land in each market with a subset of partner and customer coverage and work to expand our product offerings across the market over time we.

Tori: We are seeing share gains that will move the needle as we rollout more enhanced markets throughout the year into 2025.

Tori: I'll wrap up with a progress update on rentals rentals is a fast growing business with a big opportunity in front of it.

Tori: Nearly every homebuyer starts out as a renter and providing our customers with optionality is as important as ever and a challenging housing market.

Tori: Today, we have the largest audience of renters and the most listings in the market with limited marketing spend to date.

Jeremy Hoffman: As you heard from Rich and Jeremy, we are pleased with how he's executed on our strategy, and we are starting to see those efforts show up in our financial results, despite a persistently challenging housing macro backdrop. In my comments today, I will cover our Q4 results, our outlook for Q1, and some early thoughts on 2024 to help you all understand how we expect the year to play out, as well as the financial philosophy that underpins how we will manage the business moving forward. I will start with our Q4 2023 results, which exceeded expectations across the board. Revenue growth accelerated in Q4, up 9% year-over-year to $474 million, which was more than $31 million above the midpoint of our outlook. Revenue outperformance was driven by acceleration across each of our revenue lines for residential, mortgages, and rent. On a gap basis, our Q4 net loss was $73 million, representing 15% of our revenue.

Tori: We're now leveraging our position as traffic leader to grow our multifamily properties, which has accelerated our multifamily revenue growth year on year from 14% in Q4, 2022% to 52% in Q4 2023.

Tori: As we look to serve more of this market and grow revenue we plan to expand the number of multifamily properties and deliver a superior experience for our rentals partners.

Speaker Change: Before handing it over to Jeremy Hoffman I do want to highlight that while we've been building. These past few years, we've meaningfully outperformed a challenged housing market for.

Jeremy Hoffman: For full year 2023, Zillow reported over $1 9 billion in revenue outperforming the real estate industry by 600 basis points.

Jeremy Hoffman: I am grateful to our teams who have been working hard to bring Zillow housing Super App to life over the last two years solving real customer pain points with exceptional Tech solutions and partners we.

Jeremy Hoffman: EBITDA was $69 million for the quarter. When excluding the impact of a $14 million one-time expense related to the partial lease termination of our Seattle office space, EBITDA would have been $83 million, resulting in an 18% EBITDA margin and marking a return to positive year-over-year EBITDA margins. The combination of our revenue outperformance and effective cost management delivered the improved year-over-year EBITDA results despite a macro housing environment that remains. Going a click deeper, the partial lease termination option for our Seattle office, which we previewed on our last earnings call, was exercised in December.

Jeremy Hoffman: Looking forward to continued growth in the years ahead with that I will now pass the line over to Jeremy.

Jeremy Hoffman: Thanks, Jeremy and Hello, everyone as.

Jeremy Hoffman: As you heard from rich and Jeremy we are pleased with how we've executed on our strategy and we are starting to see those efforts show up in our financial results. Despite a persistently challenging housing macro backdrop.

Jeremy: And my comments today I will cover our Q4 results our outlook for Q1. Some early thoughts on 2024 to help you all understand how we expect the year to play out as well as the financial philosophy that underpins, how we'll manage the business moving forward.

Jeremy Hoffman: As a result, we estimate our 2024 facilities costs will decrease by $8 million, and we will release an estimated $37 million in EBITDA expenses in total over the remaining life of the Seattle project, which more than makes up for this one-time expense impacting our Q4 EBITDA. Returning to more details on the quarter, our Q4 residential revenue of $349 million outperformed our outlook, and revenue growth accelerated to 3% year-over-year Our residential revenue performance was 700 basis points above the industry decline of 4%, according to data from the National Association of Real Estate.

Jeremy: I will start with our Q4 2023 results, which exceeded expectations across the board.

Jeremy: Revenue growth accelerated in Q4 up 9% year over year to $474 million, which was more than $31 million above the midpoint of our outlook range.

Jeremy: Revenue outperformance was driven by acceleration across each of our revenue lines for residential mortgages and rentals.

Jeremy: On a GAAP basis Q4, net loss was $73 million, representing 15% of our revenue.

Jeremy Hoffman: We believe our Q4 outperformance was primarily driven by our ongoing investments in our top of funnel and mid-funnel experiences that continue to drive improvements in our overall lead volume. Rental revenue growth accelerated in Q4, with revenue increasing 37% year over year to $93 million, primarily driven by our multifamily revenue, which grew 52% year over year in Q4. Our rental strategy is working well, and our team is executing on growing the number of multifamily properties on our apps and sites, which reached an all-time high of 37,000 multifamily properties as of yet. Total listings across our entire rental marketplace were also up 40% year over year to an industry-leading 1.7 million. Mortgage revenue of $22 million in Q4 returned to positive growth, up 22% year over year, with purchase loan origination volume growing 105% year over year.

Jeremy: EBITDA was $69 million for the quarter.

Jeremy: When excluding the impact of a $14 million one time expense related to the partial lease termination of our Seattle office space EBITDA would have been $83 million.

Jeremy: <unk> and an 18% EBITDA margin and marking a return to positive year over year EBITDA margin expansion.

Jeremy: The combination of our revenue outperformance and effective cost management delivered the improved year over year EBITDA results. Despite a macro housing environment that remains constrained.

Jeremy: Going a quick deeper the partial lease termination option for our Seattle office space, which we previewed on our last earnings call was exercised in December.

Jeremy: As a result, we estimate our 2024 facilities costs will decrease by $8 million and we will release, an estimated $37 million in EBITDA expenses in total over the remaining life of the Seattle lease, which more than makes up for this one time expense impacting our Q4 EBITDA.

Jeremy: Returning to more details on the quarter, our Q4 residential revenue of $349 million.

Jeremy Hoffman: We are executing on our mortgage strategy to help more of our customers get financing through Zillow Home Loans. The tools and integration capabilities we have built are creating a bridge between Premier Agent Partners, ZHL Loan Officers, and our buyer customers, which is why we are seeing more than 50% of funded loans across all markets coming from customers working with our Premier Agent partners. This was a critical puzzle for us to solve before expanding more rapidly in 2024, and we are pleased with the progress. EBITDA expenses in Q4 totaled $405 million.

Jeremy: Formed our outlook range.

Jeremy: And revenue growth accelerated to 3% year over year.

Jeremy: Our residential revenue performance with 700 basis points above the industry decline of 4%. According to data from the National Association of Realtors.

Jeremy: We believe our Q4 outperformance was primarily driven by our ongoing investments in our top of funnel and mid funnel experiences that continue to drive improvements in our overall lead volumes.

Jeremy: Rental revenue growth accelerated in Q4 with revenue, increasing 37% year over year to $93 million.

Jeremy: Primarily driven by our multifamily revenue, which grew 52% year over year in Q4.

Jeremy Hoffman: Excluding the one-time partial lease termination expense I mentioned earlier, EBITDA expenses would have totaled $391 million, roughly flat sequentially from Q3 and at the low end of our outlook range as a result of our ongoing focus on costs. Cost of revenue increased $26 million, or 29% year-over-year, primarily due to an increase in website development costs as we continue to test and release new products. We ended the year with $2.8 billion in cash and investments, down from $3.3 billion at the end of Q3.

Jeremy: Our rental strategy is working well and our team is executing on growing the number of multifamily properties on our apps and sites, which reached an all time high of 37000 multifamily properties as of yearend.

Jeremy: Total listings across our entire rentals marketplace were also up 40% year over year to an industry, leading one 7 million listings.

Jeremy: Mortgages revenue up $22 million in Q4 returned to positive growth up 22% year over year.

Jeremy Hoffman: This includes the benefit of net cash provided by operating activities, the impact of $88 million in share repurchases during Q4, the impact of $56 million towards convertible debt repurchases below par, and the approximately $400 million closing cash purchase price, a follow-up loss. Post repurchases of convertible debt in the quarter, we have $1.6 billion of principal output. Before turning the page to 2024, I want to highlight how pleased I am with our execution throughout the entirety of 2020. We accelerated revenue growth from a decrease of 13% year-over-year in Q1 to an increase of 9% year-over-year in Q2. When combining revenue growth with a disciplined approach to our cost structure, we feel well-positioned to enter the market. Turning to our outlook for Q1, I first want to set the tone on what we expect for existing homes' total transaction value. We estimate total transaction value to be between a decline of 4% to up 1% year over year in Q1.

With purchase loan origination volume growing a 105% year over year.

Jeremy: We are executing on our mortgage strategy to help more of our customers get financing through Zillow home loans.

Jeremy: The tools and integration capabilities. We have built are creating a bridge between premier agent partners DHL loan officers and our buyer customers, which is why we are seeing more than 50% of funded loans across all markets coming from customers working with a premier agent partner.

Jeremy: This was a critical puzzle for us to solve before expanding more rapidly in 2024, and we are pleased with the progress to date.

Jeremy: EBITDA expenses in Q4 totaled $405 million.

Jeremy: Excluding the onetime partial lease termination expense I mentioned earlier EBITDA expenses would have totaled $391 million.

Jeremy: Roughly flat sequentially from Q3 and at the low end of our outlook range as a result of our ongoing focus on cost management.

Jeremy: Cost of revenue increased $26 million or 29% year over year, primarily due to an increase in website development costs as we continue to test and release new products.

Jeremy: We ended the year with $2 8 billion in cash and investments down from $3 3 billion at the end of Q3. This includes the benefit of net cash provided by operating activities the impact of $88 million in share repurchases during Q4, the impact of $56 million towards convertible debt repurchases below.

Jeremy Hoffman: With that as a backdrop, we expect total company revenue to be between $495 million and $510 million, implying a year-over-year increase of 7% at the midpoint of our outlook. We expect residential revenue to be between $365 million and $375 million, up 2% year-over-year at the midpoint of our outlook. Despite the tough macro existing home sales environment, we expect our residential revenue to outperform the industry in Q1, as our growth pillars begin to contribute to revenue and the investments we have made in our overall funnel continue to deliver benefits. We expect rental revenue to continue to grow more than 30% year over year in Q1 as we benefit from the strength of our execution and favorable industry backdrop driving landlord demand for advertising.

Jeremy: Par and the approximately $400 million closing cash purchase price of follow up post repurchases of convertible debt in the quarter, we have $1 6 billion of <unk>.

Jeremy: Principal outstanding.

Speaker Change: Before turning the page to 2024 I want to highlight how pleased I am with our execution throughout the entirety of 2023.

Speaker Change: We accelerated revenue growth from a decrease of 13% year over year in Q1, two an increase of 9% year over year in Q4 when.

Speaker Change: When combining the revenue growth with a disciplined approach to our cost structure, we feel well positioned entering this year.

Speaker Change: Turning to our outlook for Q1, I first want to level set on what we expect for existing homes total transaction value.

Speaker Change: We estimate total transaction value to be between a decline of 4% to up 1% year over year in Q1.

Jeremy Hoffman: We expect positive growth in mortgage revenue year over year in Q1. We plan to expand integration with our premier agent partners in enhanced markets, send more of our mortgage leads to ZHL directly, and drive engagement with more consumers on our apps and sites to grow our origination volume. For Q1, we expect EBITDA to be between $95 million and $105 million, implying a 20% margin at the midpoint of our outlook. This implies EBITDA expenses will increase from the $391 million in Q4 that excludes the lease termination.

Speaker Change: With that as a backdrop, we expect total company revenue to be between 495 million to $510 million implying.

Speaker Change: Implying a year over year increase of 7% at the midpoint of our outlook range.

Speaker Change: We expect residential revenue to be between 365 million to $375 million.

Speaker Change: Up 2% year over year at the midpoint of our outlook range.

Speaker Change: Despite the tough macro existing home sales environment, we expect our residential revenue to outperform the industry in Q1 as our growth pillars begin to contribute to revenue and the investments we have made in our overall funnel continue to deliver benefits.

Jeremy Hoffman: The increase is being driven by three primary factors. One, we take on a full quarter of operating costs for follow-up losses. 2.

Speaker Change: We expect rental revenue to continue to grow more than 30% year over year in Q1, as we benefit from the strength of our execution and favorable industry backdrop, driving landlord demand for advertising.

Jeremy Hoffman: There is an annual increase in payroll taxes that occurs every day. And three, we are staffing up a variable headcount for sales, given the growth we expect in 2024 from rentals, listing showcase, and Zillow home. Moving on to 2024 as a whole, we want to provide some color for how we expect the year to play out based on the information we have today. First, we are currently assuming that the housing market is relatively flat in aggregate for the full year. With that as a backdrop, we expect to drive double-digit revenue growth for the full year, implying accelerated year-over-year revenue growth throughout the year from the high single digits in Q As we increase the breadth and depth of our products and services throughout the year, we expect our growth pillars will drive the vast majority of the revenue growth across our business in 2020. More specifically, in our residential revenue category, we expect continued market outperformance as we expand touring, make top of funnel improvements, integrate follow-up Boss into our sales process, and expand the rollout of listening shows. I will note that we expect the revenue contribution from follow-up losses to be a low single-digit percentage of our total company revenue in 2020.

Speaker Change: We expect positive growth in mortgages revenue year over year in Q1.

Speaker Change: We plan to expand integration with our Premier agent partners and enhanced market send more of our mortgage lease to DHL directly and drive engagement with more consumers on our apps and sites to grow our origination volumes.

Speaker Change: For Q1, we expect EBITDA to be between $95 million and $105 million, implying a 20% margin at the midpoint of our outlook range.

Speaker Change: This implies EBITDA expenses will increase from the $391 million in Q4 that excludes the lease termination expense.

Speaker Change: The increase is being driven by three primary factors.

Speaker Change: One we take on a full quarter of operating cost for follow up.

Speaker Change: Two there is an annual increase in payroll taxes that occurs every Q1 and three we are staffing up variable head count for sales given the growth. We expect in 2024 from rentals listings showcase and Zillow home loans.

Speaker Change: Moving on to 2024 as a whole we want to provide some color for how we expect the year to play out based on the information we have today.

Speaker Change: First we are currently assuming that the housing market is relatively flat in aggregate for the year.

Jeremy Hoffman: In rental, we expect continued strong growth as we increase our multifamily properties and total. In mortgages, we expect Zillow Home Loans integration with Premier Agents and our enhanced market expansion to drive meaningful. On the cost side, we believe our fixed investments are at the right level, which should result in our fixed costs growing modestly with inflation and our variable costs growing with or slightly ahead of revenue initially as we ramp up new hires to be fully productive. When combining our expected revenue growth and cost discipline, we expect modest EBITDA margin expansion for the full year. Beyond our revenue and EBITDA expenses, share-based compensation expense is an area of focus. We expect the absolute dollars of 2024 share-based compensation expense to be lower than 2026.

Speaker Change: With that as a backdrop, we expect to drive double digit revenue growth for the full year implies accelerated year over year revenue growth throughout the year from the high single digits in Q1 that I discussed in our outlook.

Speaker Change: As we increased the breadth and depth of our products and services throughout the year, we expect our growth pillars will drive the vast majority of the revenue growth across our business in 2024.

Speaker Change: More specifically in our residential revenue category, we expect continued market outperformance as we expand touring make top of funnel improvement integrate follow up off into our sales motions.

Speaker Change: And expand the rollout of lifting showcase.

Speaker Change: I will note that we expect the revenue contribution from follow up off to be a low single digit percentage of our total company revenue in 2024.

Speaker Change: In rentals, we expect continued strong growth as we increase our multifamily properties and total listings.

Jeremy Hoffman: And we expect to leverage SBC as a percentage of revenue from the combination of lower absolute dollars in SBC expense and projected revenue. Stepping back from our Q4 results, Q1 outlook, and early thoughts about 2024, I want to discuss the financial philosophy we have as a company as we execute on our go forward strategy. As you heard from both Rich and Jeremy, Zillow today is a much different business from what it was several years ago.

Speaker Change: In mortgages, we expect Zillow home loans integration with Premier agents, and our enhanced market expansion to drive meaningful growth.

Speaker Change: On the cost side, we believe our fixed investments are at the right level, which should result in our fixed costs growing modestly with inflation and our variable cost growing with or slightly ahead of revenue initially as we ramp up new hires to be fully productive.

Speaker Change: When combining our expect expected revenue growth and cost discipline, we expect modest EBITDA margin expansion for the full year.

Jeremy Hoffman: Our revenue base has diversified to the point where a majority of our revenue is now derived from sources other than buy-side. We have growth pillars we are executing against and are excited about, with a $30 billion for sale revenue opportunity accessible in our funnel today. As we continue to execute on our growth pillars while controlling fixed costs and gaining leverage on share-based compensation expense, we expect to deliver operating leverage resulting in strong gap profitability over time. Additionally, beyond our organic investments, we have made several acquisitions to accelerate our growth. For example, we acquired Showing Time in 2021, which accelerated our launch of real-time touring. Since then, we have acquired two real estate media companies. VRX and Aereo to scale Showing Time Plus's listing showcase product with both first-party and third-party photography

Speaker Change: Beyond our revenue and EBITDA expenses share based compensation expense is an area of focus for us.

Speaker Change: We expect the absolute dollars of 2024 share based compensation expense to be lower than 2023, and we expect to leverage SBC as a percentage of revenue from the combination of lower absolute dollars in SBC expense and projected revenue growth.

Speaker Change: Stepping back from our Q4 results Q1 outlook and 2024 early thoughts I want to discuss the financial philosophy, we have as a company as we execute on our go forward strategy.

Speaker Change: As you heard from both rich and Jeremy Zillow today is a much different business from what it was several years ago.

Speaker Change: Our revenue base is diversified to the point, where a majority of our revenue is now derived from sources other than buy side fees.

Speaker Change: We have growth pillars, we are executing against and are excited about with a $30 billion for sale revenue opportunity accessible in our funnel today.

Jeremy Hoffman: We also acquired Spruce, a tech-enabled title and closing business, to add to our housing super app experience over time. And most recently, we acquired Follow Up Boss to create a best in class CRM for our premier agents. However, M&A is not our core strategy. However, we will continue to pursue selective opportunities when we find ways to accelerate our growth. Beyond our day-to-day operating philosophy, we have been active in deploying capital over the past several years. We're turning $1.7 billion to shareholders since the beginning of our stock repurchase program in Q4 2021. And we plan to continue to be opportunistic with the program going forward. Finally, we remain focused on retiring our outstanding convertible debt. In 2023, we repurchased a total of $58 million in principal of our 2025 net.

Speaker Change: As we continue to execute on our growth pillars, while controlling fixed costs and gaining leverage on share based compensation expense, we expect to deliver operating leverage resulting in strong GAAP profitability overtime.

Speaker Change: Beyond our organic investments, we have made several acquisitions to accelerate our growth pillars.

Speaker Change: For example, we acquired showing time in 2021, which accelerated our launch of real time Tory.

Speaker Change: Since then we acquire two real estate media businesses, the Rx scenario to scale showing time pluses lifting showcase product with both first party and third party photographers.

Speaker Change: We also acquired spruce, a tech enabled title and closing business to add to our housing Super App experience over time.

Speaker Change: And most recently, we acquired followup off to create a best in class CRM for our premier agents in the industry.

Speaker Change: M&A is not our core strategy. However, we will continue to pursue selective opportunities when we find ways to accelerate our growth pillars.

Jeremy Hoffman: We now have $1.6 billion of convertible senior notes which we may opportunistically redeem if they become callable. To close, I'll reiterate what you have heard from us before. 2022 was a year where we re-strategized and re-organized around our Housing Super App vision. 2023 was a year for us to release new products and tests in various markets, setting us up for more depth and more breadth in 2024 and 2025. We are clearly executing on our strategy and look forward to sharing more updates throughout 2020. And with that, Operator, we'll open the line for questions. Thank you. If you would like to ask a question, please press star followed by 1 on your telephone keypad. To remove your question, press the star followed by.

Speaker Change: Beyond our day to day operating philosophy, we have been active in deploying capital over the past several years, returning $1 $7 billion to shareholders. Since the beginning of our stock repurchase program in Q4, 2021, and we plan to continue to be opportunistic with the program going forward.

Speaker Change: Last we remain focused on retiring our outstanding convertible debt.

Speaker Change: In 2023, we repurchased a total of $58 million in principal of our 2025 minutes.

Speaker Change: We now have $1 $6 billion of convertible senior notes, which we may opportunistically redeem if they become call.

Speaker Change: To close I'll reiterate what you have heard from US before 2022 was a year, where we re strategize and reorganized around our housing Super App vision.

Operator: And if you are using a speakerphone, please pick up your handset before asking your question. Our first question of the day comes from John Campbell with Stevens. Please proceed. Hey guys, good afternoon.

123, with a year for us to release, new products and tests in various markets setting us up for more depth and more breadth in 2024 and 2025, we are clearly executing on our strategy and look forward to sharing more updates throughout 2024.

John Campbell: For the share gains, I just wanted to start, hey, maybe if we could start on the share gains. You guys are obviously using total real estate revenue, I guess, as a basis of comparison versus the industry. I know you guys aren't directly reporting on Premier Agent, but if we can, maybe below the surface, just isolate that for now. But my question is, with the growth initiatives you have in place, and then obviously, the flex pricing changes, would you expect to see a similar rate or maybe even a greater degree of outperformance versus the national market just over the balance of the year and maybe even in the, Hey, John, this is Jeremy Waxman. I think the way we think about it is the share gains that we gave out this quarter, the two most mature markets, you know As a reminder, those were the ones where we had great year-over-year data and enough time for the cohorts to mature.

Speaker Change: And with that operator, we'll open the line for questions.

Speaker Change: Thank you.

Speaker Change: If you'd like to ask a question. Please press star followed by one on your telephone keypad.

Speaker Change: To remove your question press Star followed by two.

Speaker Change: If youre using a speakerphone please pick up your handset before asking a question.

Speaker Change: Our first question today comes from John Campbell.

John Campbell: With Stephens. Please proceed.

John Campbell: Hey, guys good afternoon.

John Campbell: Further as our gains I'm just wondering if we start there.

John Campbell: Maybe if we could start on the share gains you guys are obviously using total real estate revenue I guess is the basis of comparison versus the industry. I know you guys aren't directly reporting on premier agent, but if we can maybe below the surface just isolate that for now but my question is what the growth initiatives you have in place and then obviously the flex pricing changes would you expect to see a similar rate.

John Campbell: Or maybe even greater degree of outperformance for some national market just over the balance of the year and maybe even in the next.

Jeremy Waxman: And then, as I said earlier, the nine markets that we're in now, we're seeing connection growth that grows faster in the industry, which is a great leading indicator for share gains. So that's why we're so confident in getting from nine to 40 by the end of 2024. And as we build the depth with more partners to offer the services to more customers in those markets, you should expect to see similar share gains from the set of customers and partners that we're working with in those markets. Okay, that's helpful.

John Campbell: Hey, Jon this is Jeremy Wacksman.

Jeremy Wacksman: I think the way we think about it is the share gains that we gave out this quarter are the two most mature markets over that two year period help show the path for what you should expect to see as we brought more enhanced markets right. As a reminder, those were the ones, where we have great year over year data it enough time for the cohorts to mature and then.

Jeremy Wacksman: As I said earlier, the nine markets that we're now we're.

Jeremy Wacksman: We're seeing connections growth that out.

John Campbell: And then one quick follow up. I'm sure you guys are bracing for this question. But on the co-star media blitz, if you will, obviously spending, you know, I guess we'll find out soon how much this year, but it seems like a lot. I think the burning question with a lot of investors is, will you guys respond? Will this be something that requires you guys to maybe up your brand investment spend? Maybe if you could talk about that?

Jeremy Wacksman: That grows faster than the industry, which is a great leading indicator for share gains. So that's why we're so confident in getting from nine to what will be 40 by the end of 2024 and as we build the depth with more partners to offer the services to more customers in those markets you should expect to see similar share gains.

Jeremy Wacksman: The set of customers and partners that were working within those markets.

Speaker Change: Okay. That's helpful. And then one quick follow up I'm sure you guys are bracing for this question, but on the Costar media Blitz, If you will obviously spending.

Rich: I know you guys have called out the 80% organic traffic, which is a pretty important number. But maybe if you could just shed some light on that. Okay, John, yeah, this is Rich.

Speaker Change: I guess, we'll find out soon how much this year, but it seems like a lot.

Speaker Change: I think the burning question with a lot of investors as will you guys respond will this be something that requires you guys. So maybe up your brand investment spend maybe if you could talk to that I know you guys have called out the 80% organic traffic which is.

Rich: So I guess I'd start out by saying we're not currently seeing any impact from this spend nor the build-up to the spend. You know, as really Jeremy Hoffman discussed, our numbers are great. Our progress versus our growth pillars is great, and we really like our go forward growth plan to expand our super app to more markets, as Jeremy Waxman was just talking about. You know, and all this culminated, you know, we're giving Jeremy Hoffman his 2024 soft guidance on revenue growth to double digits with this, you know, with the competitive context in mind. And so that's how we feel things are going to develop. To your specific question, or do you think we'll need to change anything? You know, we are a company that believes, as we think about our marketing mix, we think about it very broadly. We are technologists in our DNA.

Speaker Change: I am pretty important number, but maybe if you could just shed some light on that.

Richard N. Barton: Okay. John This is rich so I guess I'd start out by saying, we're not we're not currently seeing any impact.

Richard N. Barton: From this spend nor the buildup to the spend.

Richard N. Barton: As really Jeremy Hoffman discussed our numbers are great our progress versus our growth pillars is great.

Richard N. Barton: And we really like our go forward growth plan to expand our Super App to more markets of Jeremy Wacksman was just talking about.

Richard N. Barton: And all of this culminated.

Richard N. Barton: We are we're giving Jeremy Jeremy Hoffman gave his 2020 for soft guidance on revenue growth to double digits with this.

Rich: We are product builders. The customers are North Star. We have always believed that the most important part of the marketing mix is the product itself. This has served us really well historically.

Richard N. Barton: The competitive context in mind.

Richard N. Barton: And so that's how we feel things are.

Rich: It is what has put us in the position we are in today of being the traffic leader, the brand leader, the engagement leader, and it's put us in a strategic position that is highly differentiated from anybody else in the industry. We are really trying to digitize the whole of the transaction. We're trying to replatform this whole industry. We're trying to integrate it all into the same Zillow housing super app. This is difficult stuff.

Richard N. Barton: Going to develop to your.

Speaker Change: Specific question or do you think will need to change anything.

Speaker Change: A.

Company that Billy as we think about our marketing mix, we think about it very broadly.

Speaker Change: Our technologists in our DNA, we are product builders the customers our north star we have always believed that the most important part of the marketing mix is the product itself.

Rich: It is highly differentiated, and we believe this is what ensures that we win long term. Makes a lot of sense. Thanks for the time, guys.

This has served us.

John Campbell: Our next question comes from Brad Erickson with RBC. Please proceed. Thanks. I guess just first on real-time touring in the markets where you've had some time to see how it plays and appreciate those charts in the presentation. What would you say are the kind of like the main friction points and then time frame that lie kind of between an agent getting, starting to get those new higher quality leads and then choosing to lean in with their spend? And then I will follow up. Yeah, Brad, you know, on real-time touring, it is a mix of eligibility between both the consumer and the agent and the listing, right? It's like all three things.

Speaker Change: Really well historically is what has put us in a position we are in today.

Speaker Change: Being the traffic leader of the brand leader the engagement leader and it's put us in a strategic position that is highly differentiated from anybody else in the industry. We are really trying to digitize the whole of the transaction. We're trying to re platform. This whole industry, we're trying to integrate it all in.

Speaker Change: The same zillow housing Super App. This is difficult stuff. It is highly differentiated and we believe this is what ensures that we win long term.

Speaker Change: Makes a lot of sense. Thanks for the time guys.

Speaker Change: Your next question comes from Brad Erickson with RBC. Please.

Brad Erickson: Please proceed.

Brad Erickson: And so we're really pleased with how real-time touring has gone. And I think you heard earlier that we talked about getting from 10% of connections currently to 20% by the end of 2024. And that's through a mix of going broad into more markets but also going deeper in those markets, you know, with both customers and agents. And then on your specific question, you know, on the sort of agent partnership with the buyer, what we tend to find as we talk about this enhanced market strategy is that when we start to work with these enhanced partners on the whole basket of services, real-time touring, Zillow Home Loans, seller services, increasingly follow- And so it is one part of the overall playbook we work with.

Brad Erickson: Thanks.

I guess just first on on real time touring in the markets, where you've had some time to see how it plays and appreciate the charts in the presentation. What would you say are kind of like the main friction points and then timeframe that lie between an agent getting starting to get those new higher quality leads and then choosing to lean in with their spend.

Speaker Change: And then I will follow up.

Speaker Change: Yes, Brett.

Speaker Change: On real time touring it is a mix of eligibility with both the consumer and the agent and the listing right. It's like all three things and so.

Speaker Change: We're really pleased with how real time Tory has gone and I think you heard earlier, we talked about getting from 10% of connections currently to 20% by the end of 2024, and that's through a mix of going broader into more markets, but also going deeper in those markets.

Speaker Change: With both customers and agents and then on your specific question on the sort of agent partnering with the buyer what we tend to find as we talk about this enhanced market strategy is when we start to work with these enhanced partners on the whole basket of services realtime touring.

Jeremy Waxman: Of course, it's a really important one because these are incredibly high-value, high-intensity customers who want to go see a house right now. And so the feedback and the reception continues to be really positive when they get a chance to work with those buyers. But if you remember, we've talked a lot about how this is a new workflow for those agents as well. Many times, they have to build new muscle with their teams, with their team leads, with their individual agents to help service those customers, to really provide that delightful experience that we're creating for the customers. So, when it works, it's really magical because the consumer gets what they want, different from anything else in the industry.

Speaker Change: Home loans seller services.

Speaker Change: Increasingly follow a boss this becomes a much broader conversation around how to help them grow and operate their business better and service of our customers and so it is one part of the overall playbook. We worked with of course, it's a really important one because these are incredibly high value high intent customers, who want to go see a house right now and so the feedback on the reception continues.

Speaker Change: To be really positive when they get a chance to work with those buyers, but if you remember we've talked a lot about how this is a new workflow for those agents as well and many times they have to build new muscle with their teams with 13 leads with their individual agents to help service those customers to really provide that delightful experience that we're creating for the customers.

Jeremy Waxman: But to your point, it really is a new training mechanism, which is why we've been so methodical in testing and iterating on it in the markets we've been in. And then maybe just a quick follow-up on Follow Up Boss, can you just give a little more detail there on the unlock or the synergies you guys are going after within the PA business, and then just any integration costs or investment embedded there? Any color on that would be great. Yeah, maybe I'll start on the strategy, and Jeremy, you can hit on costs.

Speaker Change: When it works, it's really magical because the consumer gets what they want different from anything else in the industry, but to your point. It really is a new training mechanism, which is why we've been so methodical in testing and iterating on it and the markets we've been in.

Speaker Change: Got it and then maybe just a quick follow up follow up on follow up off.

Jeremy Waxman: You know, the strategy for Follow Boss, as Jeremy Hoffman says, is really twofold, right? One, it's helping make what is already one of the best CRMs in the industry even better, right? Give them oxygen and the ability to accelerate the roadmap of features and services that they have. And then, secondly, it's to help introduce Follow Boss to more customers. So it's already the most popular CRM with our premier agents, but many of our premier agents don't yet use it, and obviously, many agents industry-wide don't yet use it. So helping them grow and attract more agent customers is the second part. When we do both those things, that rising tide is going to lift all boats, it's going to lift the Zillow transaction boat, right? And our agents working with Zillow customers are going to be able to perform better, be more responsive, satisfy the customer better, and convert more. And you'll see that in conversion increases. So that's really the strategy. Maybe I'll turn it over to you for free.

Speaker Change: Can you just give a little more detail there just kind of on the unlock of the synergies you guys are going after within the business and then just any any.

Speaker Change: Integration costs for investment.

Speaker Change: Better there.

Speaker Change: Color on that would be great. Thanks.

Speaker Change: Yes, maybe I'll start on the strategy and Jeremy you can have cost.

So the strategy for fall box as Jeremy Hoffman's I was really twofold right. One it has helped.

Speaker Change: Make what is already one of the best CRM in the industry, even better right give them oxygen and the ability to accelerate the roadmap of features and services that they have and then secondly, it's to help introduce follow up Boston more customers. So it's already the most popular CRM with our premier agents, but many of our premier agents don't yet use.

And obviously many agents industry why don't you use and so helping them grow and attract more agent customers as the second part.

Speaker Change: We do both of those things that rising tide is going to lift all boats its going to lift the zyla transaction vote right in our agents working with the Zillow customers are going to be able to perform better be more responsive to satisfy the customer better and convert more and youll see that in conversion increases. So that's really the strategy.

Jeremy Waxman: The only thing I'll add on cost is that we're really excited to help them accelerate their roadmap. They had great plans in place already, and the acquisition just closed in December. So we're still early in our planning. Yeah, my name is Jeremy Hoffman.

Speaker Change: Maybe I'll turn it over to you for cost only the only thing I'll add on costs as we're really excited to help them accelerate their roadmap. They had great plans in place already and the acquisition just closed in December So we're still early in our planning.

Jeremy Hoffman: I'll reiterate what Jeremy Waxman just said. It is early, right? So I highlighted in our prepared remarks that we're seeing the first quarter of full cost to follow up on early in integration. I wouldn't say that there's outsized investment at this moment, but definitely really pleased with the product roadmap they have and the opportunity we have to really help them accelerate from here as we integrate them into our sales motion.

Speaker Change: Its Jeremy Hoffman ill reiterate what Jeremy Wacksman just said.

Jeremy Hoffman: It is early right. So I highlighted in our prepared remarks, we're having we're seeing the first quarter of full cost to follow up off early in integration I wouldn't say that there's outsized investment at this moment, but definitely really pleased with the product roadmap they have and the opportunity we have to really help them accelerate from here as we integrate.

Brad Erickson: Thanks. Our next question today comes from Mark Mahaney with Evercore. Please proceed. Okay, two questions, please.

Mark Mahaney: What sort of outperformance? I think you said it was about 700 bps of outperformance versus the residential market, but I think you first referred to 400 bps.

Them into our sales motions.

Speaker Change: Got it thanks.

Speaker Change: Our next question today comes from Mark Mahaney with Evercore.

Mark Mahaney: Please proceed.

Mark Mahaney: Okay two questions. Please.

Mark Mahaney: This sort of outperformance I think you said it was about 700 bps of outperformance versus the residential market. I think you had first guided to 400 bps. So just explain why you think you've been able to outperform I know you've been doing it for a while but maybe you outperformed a little bit more than you had expected in the quarter and just how should we think about or how do you think about.

Mark Mahaney: So just explain why you think you've been able to outperform. I know you've been doing it for a while, but maybe you outperformed a little bit more than you had expected in the quarter. And just how should we think about, or how do you think about how your level of outperformance versus the market goes into this next year, into 24? And then I want to switch and ask you about costs and get back to this question of if you're going to keep fixed costs fixed at this $1.1 billion and variable costs, get leverage against them at that $400 million level, and how long do you think you can sustain that for? You've been talking about it for a couple of quarters.

Mark Mahaney: Your level of outperformance versus the market goes into this next year.

Mark Mahaney: 24, and then I want to switch and ask you about costs.

Mark Mahaney: Get back to this question of if youre going to keep fixed cost fixed in this $1 1 billion in variable costs.

Mark Mahaney: Net leverage against it at that $400 million level and how long do you think you can sustain that for you've been talking about it for a couple of quarters. It sounds like youre, giving it a little bit on the variable cost showing a little bit of deleverage first before leverage but just is that framework still going to hold for you that you can keep that fixed cost at $1 1 billion in variable at $400 million and getting leverage against that over time.

Jeremy Hoffman: It sounds like you're giving in a little bit on the variable cost, showing a little bit of deleverage first before leverage. But just is that framework still going to hold for you that you can keep that fixed cost at $1.1 billion and the variable at $400 million and get leverage against that? Yeah, so it's Jeremy Hoffman, Mark. I'll take the second one first. On the cost structure, we continue to feel really good. So the fixed cost base, which we expect to get leverage on over time, we feel like we're at the right levels right now; it'll grow with inflation a bit, but generally at the right levels. And that's really with an eye towards our year-end 2025 targets on customer share gains, and we feel like we're well invested on the fixed side.

Yeah, So Jeremy Hoffman, Mark I'll take the second one first on the cost structure, we feel continue to feel really good. So the fixed cost base, we expect to get leverage on overtime, we feel like we're at the right levels right now it'll grow with inflation a bit but generally at the right levels and thats really with an eye towards our.

Mark Mahaney: Our year end 2025 targets on customer share.

Jeremy Hoffman: <unk> and we feel like we're well invested on the fixed side and then on the variable side Youre right over time, we will get leverage of course and lifting showcase in rentals in DHL, we see really exciting growth opportunities and we're staffing up sales ahead of that that will take a little bit of time to ramp to get people fully productive, but over time of course yet.

Jeremy Hoffman: And on the variable side, you're right, over time, we will get leverage, of course, in listing showcase and rentals. In VHL, we see really exciting growth opportunities, and we're staffing up sales ahead of that. That will take a little bit of time to ramp to get people fully productive, but over time, we will get leverage there. And we're looking for efficiencies across the entire cost base always. So I feel really good there.

Jeremy Hoffman: Leverage there and we're looking for efficiencies across the entire cost base always so feel really good there and then on the.

Jeremy Hoffman: And then on the outperformance side, I'd say, You know, Q4 was about as expected, and we're really pleased with the outperformance across all of 2023. We don't over-focus on quarter-to-quarter fluctuations, just given how fluid macro has been and will continue to be, but I think 2023 was a great year for us. We accelerated revenue from Q1 to Q4, total company revenue outperformed housing by 1600 basis points, and then we've had six straight quarters of outperformance in residential as well. And we expect more of the same in 2024. I alluded to it in my prepared remarks, but we expect to grow double digits in 2024 against the flattish housing market. And then to double-click further into that, we expect acceleration throughout 2024, with a lot of that acceleration coming from our growth pillars as we get into more markets and go deeper into existing markets.

Jeremy Hoffman: Outperformance side I'd say.

Jeremy Hoffman: Q4 was about as expected and we're really pleased with the outperformance across all of 2023.

Jeremy Hoffman: Don't over focus on quarter to quarter fluctuations just given how fluid macro has been and will continue to be but I think 2023 was a great year for us we accelerated revenue from Q1 to Q4 total company revenue outperformed housing by 600 basis points and then we've had six straight quarters of outperformance in residential as well.

Jeremy Hoffman: And we expect more of the same in 2024 I alluded to it in my prepared remarks, but we expect to grow double digits in 2024 against the flattish housing market and then to Doubleclick further into that we expect acceleration throughout 2024 with a lot of that acceleration coming from our growth pillars, as we get into more markets and go deeper.

Into existing markets and when I look across our enhanced markets are going to go from 9% to 40, covering 20% of all connections real time touring we think is going to go from 10% of all connections to 20% of all connections showcases really starting to sell broadly in January and we expect that revenue to build throughout the course of the year and then rentals is executing really.

Jeremy Hoffman: And when I look across, our enhanced markets are going to go from 9 to 40, covering 20% of all connections. Real-time touring, we think, is going to go from 10% of all connections to 20% of all connections. Showcase is really starting to sell broadly in January, and we expect that revenue to build throughout the course of the year. And then rentals is executing really, really well.

Jeremy Hoffman: Really well, we're expecting to see 30% plus growth again in Q1, and DHL will grow alongside market expansion and more consumption of mortgage leads so just across the business. It feels like we're really well set up for 2024 as well.

Ryan McIverney: We're expecting to see 30% plus growth again in Q1, and ZHL will grow alongside market expansion and more consumption of mortgage leads. So just across the business, it feels like we're really well set up for 2024 as well. Thank you. The next question comes from Ryan McIverney with Zellman Associates. Please proceed. Thanks a lot.

Speaker Change: Thank you Jeremy.

Our next question comes from Ryan <unk> with Zelman Associates. Please.

Ryan: Please proceed.

Ryan: Hey, Thanks, a lot congrats on the progress.

Jeremy Waxman: Congratulations on the progress. Curious if you can talk about a listing showcase, I guess just reception to date between what our premier agents and what's called a non-premier agents, and I asked because, You know, within the slide deck and kind of the opportunity ahead of 5.

Ryan: Just curious if you can talk about listing showcase.

Ryan: I guess just reception to date between.

Ryan: What our premier agents, and let's call it non premier agents and I ask because.

Ryan: Within the slide deck and kind of the opportunity ahead of getting to 5% to 10% share.

Ryan McIverney: Share of listings, you know, seems to suggest plenty of opportunity both for Premier Agents and kind of cross, showcase product, and non-Premier agents. So anything you can share with us to date, obviously, small at this point in time, but how that's going so far and how you think about the EPA side of things. SUE DAY OF THE TURNING OF THE CLOCK, Yeah, happy to.

Ryan: Share of listings.

Ryan: To suggest plenty of opportunity both.

Ryan: For Premier agents and kind of cross selling.

Ryan: <unk> showcase products and non premier agents. So anything you can share with us to date, obviously, knowing it's small at this point in time, but but.

Ryan: Yes, how that's going so far and how you think about that balance and opportunity between kind of cross selling in the <unk> side of things versus.

Ryan: New agents that don't currently.

With Zillow.

Speaker Change: Yes happy to I mean, you are right. It is early and lifting showcase having just launched in Q3, and we're just now flipping to national but in the early signal theres lots of signal.

Jeremy Waxman: I mean, you're right, it is early in the listing showcase having just launched in Q3, and we're just now flipping to national. But in the early signals, there's lots of signals. And as I talked about, the agent response has been really positive. I think folks are seeing it as a tool to market themselves and win more listings, as well as market the property. And then, of course, that provides those benefits to our buyer experience. And that results in, you know, the higher engagement with pageview saves and shares we shared some of the data on. We are, you know, seeing success with both premier agents and non-premier agents in the markets we've been in, and as we've continued to take it to more markets, and we expect that to continue.

Speaker Change: And as I talked about the agent response has been really positive.

Speaker Change: I think folks are seeing it as a tool to market themselves and win more listings as well as market to lifting and then of course that provides a benefit to our buyer experience.

Speaker Change: And that results in.

Speaker Change: Higher engagement with page views saves in shares we shared some of the data on.

Speaker Change: We are seeing success with both premier agents and non premier agents.

Speaker Change: In the markets, we've been in and as we've continued to take it to more markets and we expect that to continue.

Jeremy Waxman: And that's what gives us excitement for the intermediate-term target we shared with you all, going from what is less than 1% of listings today to, you know, 5 to 10% of total active listings at some point in the future. And we think there's growth and opportunity beyond that. You know, scaling this business requires solving a bunch of operational complexity. The team has been hard at work doing just that, as Jeremy Hoffman talked about. It required a bunch of media investments.

Speaker Change: That's what gives us excitement for.

For the intermediate term target.

Share with you all going from what is less than 1% of listings today to 5% to 10% of total active listings.

Speaker Change: At some point here in the future and we think there is there is growth and opportunity beyond that.

Yes.

Speaker Change: Scaling this business.

Speaker Change: Requires solving a bunch of operational complexity or the team has been hard at work doing as Jeremy Hoffman talked about a required a bunch of media investments. It requires a bunch of partner operations that the team has worked hard to get right and we're now benefiting from the fruits of a lot of that investment as we take this nation.

Jeremy Waxman: It requires a bunch of partner operations that the team has worked hard to get right, and we're now benefiting from the fruits of a lot of that investment as we take this nationwide. But it is still early.

Speaker Change: Nationwide. So it is still early we will share more as we learned from being in more markets with a larger set of partners, but we're really pleased with the response and the progress.

Jeremy Waxman: We'll share more as we learn from being in more markets with a larger set of partners, but we're really pleased with the response and the progress. And, you know, the ability to work with just great agents, whether they are existing premier agents or this is their way into working with Zillow for the first time, is an exciting opportunity for a listing showcase. And it's something we're seeing. That's helpful. And one on ZHL.

Speaker Change: The ability to work with just great agents, whether they are existing premier agents or this is their way into working with for the first time as an exciting opportunity for listing showcasing its something we're seeing.

Speaker Change: Thanks, that's helpful and then one on DHL.

Ryan McIverney: So the purchase, Volume Road, itself. I think it implies market share wise and the purchase, close to a doubling in just the last two quarters. So it's obviously good progress.

Speaker Change: So the purchase volume growth kind of speaks for itself, but I think it implies market share wise in the purchase origination business close to a doubling in just the last two quarters alone. So it's obviously good progress there I guess I'm curious on the comments you made about going from 23% to 53% of customers that are also.

Jeremy Waxman: I guess I'm curious about the comments you made about going, customers. They're all, Is that a combination of... the kind of connection approaches you've talked about in the past being proper, financing first, is that kind of a mix? P.A.

Working with the PAA is that is that a combination of the two kind of connection approaches you've talked about in the past being property first and financing first.

Speaker Change: Is that kind of a mix of both.

Speaker Change: Coming back to you and you're going to play and just any commentary on whether it's one of those approaches.

Jeremy Waxman: coming back to you, and just any commentary on whether it's one of those approaches, or whether it's the right track. Yeah, it's a good question. The short answer to your last question is it's both.

Speaker Change: Meaningfully driving things or if it's a combination of both both moving in the right direction. Thank you.

Speaker Change: Yes, it's a good question the short answer to your last question is both.

Jeremy Waxman: And I think the reason why it's both is important to remember sort of why a mortgage for the customer and for Zillow, right? And, you know, yes, we all know 80% of homes are financed with a mortgage, but it is more importantly that 40% of homebuyers start their journey shopping for a mortgage. And so that's why we talk so much about how most consumers either want to go see the house and book a tour, ideally with real-time touring, or they want to figure out what they can afford, which Zillow Home Loans can help them with. Ultimately, they need to go through both those experiences.

Speaker Change: And I think the reason why it's both it's important to remember sort of why mortgage for the customer and for Zillow right.

Speaker Change: Yes, we all know 80% of homes or finance with a mortgage but it is more importantly that 40% of homebuyers start their journey shopping for a mortgage and so thats why we talk so much about most consumers either want to go see the house and book a tour.

Speaker Change: Ideally with real time touring or they want to figure out what they can afford which zillow home loans can help them with ultimately they need to go through both those experiences and whichever door. They start with they need to use a great agent and they need to get a mortgage to get the house done and so it really is a contribution of both of those things thats driving that 23% to 53.

Jeremy Waxman: And whichever door they start with, they need to use a great agent, and they need to get a mortgage to get the house done. And so it really is a combination of both those things that's driving that 23% to 53%. And that's why we're so excited about the opportunity to grow and deliver that integration to more customers in more of these enhanced markets as we scale this recipe. And that really does speak to the strong customer acquisition cost advantage we think we have at Zillow. The majority of those customers, as Rich talked about, are already on Zillow, and many of them are already going through one of those doors. And so, helping them understand and get what they need to use more of our services to get the house transaction done, right?

Speaker Change: 3% and that's why we're so excited about the opportunity to grow and deliver that integration to more customers in more of these enhanced markets.

Speaker Change: As we scale this recipe and that really does speak to the strong customer acquisition cost advantage. We think we have a zillow. The majority of those customers as rich talked about are already on zillow and many of them are already going through one of those doors and so helping them understand and get what they need to use more of our services to get the house.

Speaker Change: Transaction done right that's.

Jeremy Waxman: That's a great business for us, but ultimately, as Rich said, it's what the consumer wants; it's what they need to be able to buy a house. So that's why we're so excited about mortgage. Yes, you're right; we're seeing over 100% year-over-year growth in purchase mortgage origination volume, and we expect growth to continue in 2024 as we continue to scale the business. Thanks a lot.

Speaker Change: Great business for us, but ultimately as rich said, it's what the consumer wants is what they need to be able to buy the house. So that's why we're so excited about mortgage.

Speaker Change: Youre right were seeing over 100% year over year growth in purchase mortgage origination volume and we expect growth to continue in 2024.

Speaker Change: As we continue to scale the business.

Speaker Change: Thanks, a lot.

Rich: The next question comes from Tom Champion, Wolf-Piper City. Please proceed. Hi, good afternoon.

Speaker Change: The next question comes from Tom Champion with Piper Sandler.

Tom Champion: Please proceed.

Tom Champion: Yes.

Tom Champion: Hi, Good afternoon rentals growth is really strong and it sounds like multifamily is driving a lot of that the business has been around for a while I'm just curious kind of the timing and why now.

Tom Champion: Rental growth is really strong, and it sounds like multifamily is driving a lot of that. The business has been around for a while.

Jeremy Waxman: I'm just curious about the timing and why now that it's become, you know, kind of so large and picked up so much momentum. And just curious if there's any comment on the single room initiative. I think that was announced recently. Thanks. Yeah, Tom, I'll take both of those.

Tom Champion: That it has become.

Tom Champion: Kind of so large and picked up so much momentum and so just curious if there's any comment on the single room initiative I think that was announced recently.

Speaker Change: Yes, Tom.

Tom Champion: I'll take both of those.

Tom Champion: I mean, I think, you know, the why now is just that the rental strategy we've had in place for a while is working. And it's working for both consumers and partners. We've had, and we have grown, and we have the largest audience in the category where we have the most renters coming to Zillow Group properties. Because we have the most listings, we have the most complete set of listings, which is really the number one problem to solve for renters. And we're able to leverage that audience growth and engagement to really drive multifamily growth and start to work with more multifamily partners to bring their inventory online onto our properties. And that's why we see a lot of growth potential ahead of us for rentals. You know, that's what's driving meaningful growth throughout 2023, and as Jeremy Hoffman said, we expect that to continue into 2024. And then you specifically asked about the room for rent.

Speaker Change: Think the.

Tom Champion: The why now is just the rental strategy that we've had in place for a while is working and it's working for both consumers and partners.

Tom Champion: And we have grown and have the largest audience in the category, where we have the most renters coming to Zillow group properties.

Tom Champion: Because we have the most listing we have the most complete set of listings, which is really the number one problem to solve for renters, and we're able to leverage that audience growth and engagement to really drive mulch.

Tom Champion: Multifamily growth and start to work with more multifamily partners to bring their inventory online onto our properties and that's why we see a lot of growth potential ahead of us for rentals.

Tom Champion: That's what's driven the meaningful growth throughout 2023, and as Jeremy Hoffman said, we expect that to continue into 2024, and then you specifically asked about the room for rent. That's again, so for those who didn't see we launched this week a new listing type, which is folks can post rooms for rent rather than entire places for rent, which is something that is increasing.

Jeremy Waxman: That's again, so for those who didn't see, we launched this week a new listing type, where folks can post rooms for rent rather than entire places for rent, which is something that is increasingly common and prevalent across a lot of our rental markets. And we're really pleased with the early results there. We just turned that on in the last couple weeks.

Tom Champion: Lee comment on prevalent across a lot of our rental markets.

And we're really pleased with the early results. There. We just turned out on the last couple of weeks, but that again speaks to the strategy of trying to organize and provide the most services and experiences for the renter and all rencher personas and segments, and then help them figure out which door they need to get through and which subset of inventory they want and that drives then the benefit for our partners.

Jeremy Waxman: But that again speaks to the strategy of trying to organize and provide the most services and experiences for the renter and all renter personas and segments and then help them figure out which door they need to get through and which subset of inventory they want. And that drives the benefit for our partners, for the folks who are trying to find the right renter, whether that is a big building or an individual single-family home. Our last question today comes from Ron Josie with Citigroup. Please proceed. Great, thanks for taking the time to answer the question. Just a quick follow up on the rental question right there.

Tom Champion: For the folks who are trying to find the right rent or whether that is a big building or an individual single family home.

Tom Champion: Okay.

Tom Champion: Our last question today comes from Ron Josey with Citigroup. Please proceed.

Ron Josey: Great. Thanks for taking the question just a quick follow up on the rentals question right. There just when you think about growth coming going forward.

Ron Josie: Just when you think about growth going forward, is that from the multifamily property growth at 37,000 and growing, or the mix of single-family and multifamily and sort of offering everything to everyone, which, given your audience, I'm assuming is the case, but any insights on those two, and then I think Jeremy, you talked about staffing, staffing up in head counts for sales, and you mentioned rentals and listing showcase and Zillow home loans. Talk to us a little bit more about just the maturity of the current sales force and how you're investing, I guess, across those newer, newer areas like Rental Showcase and DHL. Thank you. Yeah, maybe I'll start and you can hit the staffing.

Ron Josey: The multifamily property growth of 37000, and growing or the mix of single family multifamily and sort of offering everything to everyone, which given your audience I'm, assuming that's the case, but any insight on those two and then I think Jeremy you talked about.

Ron Josey: Staffing staffing up in head count for sales and you mentioned rental then lifting so showcase in Zillow home loans talk to us a little bit more about <unk>.

Ron Josey: The maturity of the current sales force and and how you're where you're investing I guess across those newer.

Newer areas like rentals showcase in DHL. Thank you.

Speaker Change: Yes, maybe I'll start and you can hit the stuffing.

Jeremy Waxman: I mean, the short answer is it's going to be a mix of both. You're seeing, I would say, over-indexed growth from a revenue contribution standpoint and multifamily right now, but back to the strategy of the most complete set of listings, we do have, you know, both multifamily growth and longer tail, smaller inventory growth in terms of our rental manager and suite of products and services that our landlords and property managers use on that side. So we're excited about both segments of supply, driving not just audience growth and engagement but business over time. But obviously, in the near term, you're seeing a faster acceleration and ramp on the multifamily side. In Q4, you saw that over the index, and I think you saw it in Q3 as well. And you should expect to see that early next year as well. And then maybe on the various staff ups. Yeah, I can hit that.

Speaker Change: I mean, the short answer is it's going to be a mix of both.

Speaker Change: Youre seeing I would say.

Speaker Change: Over indexing growth from a revenue contribution standpoint in multifamily right now, but back to the strategy of.

Speaker Change: Most complete set of listings, we do have both multifamily growth and.

Speaker Change: Longer tail smaller inventory growth in terms of our rental manager and suite of products and services that our landlords and property managers use on that side. So we're excited about both segments of supply.

Speaker Change: Driving <unk>.

Speaker Change: Not just audience growth and engagement, but the business over time, but obviously in the near term you're seeing a faster acceleration and ramp on the multifamily side.

Speaker Change: In Q4, you saw that over index and I think you've thought in Q3 as well and you should expect to see that early into next year as well and then maybe on the various step ups identifying yeah I can hit that I mean, I think it's natural at this point just given the evidence of traction that we have that we should be accelerating growth and it's across all three of those.

Jeremy Waxman: I mean, I think it's natural at this point, just given the evidence of traction that we have, that we should be accelerating growth across all three of those. They are all doing quite well but have a lot of opportunity ahead of them.

Speaker Change: They all are doing quite well, but have a lot of opportunity ahead of them and we want to make sure. We're well we are well positioned from a sales staff perspective to capture that growth.

Ron Josie: And we want to make sure we are well positioned from a sales staffing perspective to capture that growth. Thank you. Thank you for your questions. This will conclude our Q&A session, so I would like to pass the conference over to Rich for any further remarks. Thanks, Ciara. And thanks, everybody, for your questions. You've heard today about the tremendous progress that we've made over the past two years on our journey to transform and replatform this largest of industries. As we look ahead, we are pressing down on the accelerator, increasing the breadth and depth of our products and services across more markets as we tap into this $30 billion TAM that's already accessible, already raising their hands for help, already inside our stores. We'd like to thank you again for being on this journey with us, and we look forward to sharing more progress with you in the months ahead. All right, have a nice day. That will conclude today's conference call. Thank you all for your participation; you may now disconnect your lines.

Speaker Change: Got it thank you.

Speaker Change: Thank you for your questions.

Speaker Change: This will conclude our Q&A session. So I would like to pass the conference over to rich for any further remarks.

Richard N. Barton: Thanks, Sara and thanks, everybody for your questions.

Richard N. Barton: You've heard today about our tremendous progress that we've made over the past two years on our journey to transform and re platform this largest of industries.

As we look ahead, we are pressing down on the accelerator, increasing the breadth and depth of our products and services across more markets as we tap into this $30 billion Tam that's already accessible already raising their hands for help already inside our store.

Richard N. Barton: We'd like to thank you again for being on this journey with us and we look forward to sharing more progress with you in the months ahead.

Speaker Change: Alright, and have a nice evening.

Speaker Change: That will conclude today's conference call.

Speaker Change: Thank you all for your participation you may now disconnect your line.