Q3 2024 Zillow Group Inc Earnings Call

Hello, and welcome to Zillow <unk> third quarter 2024 financial results call. We ask that you. Please hold all questions until the completion of the formal remarks at which time, you'll be given instructions for the question and answer session.

Also as a reminder, this conference is being recorded today. If you have any objections. Please disconnect at this time, Brad you may begin.

Brad: Good afternoon, and welcome to Zillow group's third quarter 2024 call. Joining me today to discuss our results are Zillow group's CEO, Jeremy Wacksman and CFO Jeremy Hoffman.

Brad: During today's call, we will make forward looking statements about our future performance and operating plans based on current expectations and assumptions.

Brad: 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.

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

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

Brad: A recording of the call will be available later today.

Brad: During the call, we will discuss GAAP and non-GAAP measures, including adjusted EBITDA, which we refer to as EBITDA. We encourage you to read our shareholder letter and earnings release, 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.

Brad: We will now open the call with remarks, followed by live Q&A and with that I will turn the call over to Jeremy Wacksman.

Jeremy Wacksman: Thank you Brad and good afternoon, everyone. Thank you for joining us during a busy time of year, we're excited to share our third quarter 2024 results with you.

Brad: With <unk>, leading brand deep technology expertise and strong financial Foundation, we are successfully seizing our incredible opportunity to transform and digitize residential real estate on behalf of consumers agents and the broader industry as.

Brad: As you will here again today, we are in a strong position executing our strategy well and delivering solid results.

Brad: In Q3, we grew revenue by 17% and outperformed the residential real estate industry, all while demonstrating cost discipline as we steer towards sustainable profitable growth.

Brad: As with everything we do at Zillow, our approach begins with the customers, we serve movers agents and real estate industry professionals.

Brad: We invest in providing products and services that offer a superior end to end transaction experience.

Brad: This creates a top of funnel advantage that helps us identify and connect high intent movers with high performing partners and alongside our software tools. This drives increased connection rates and conversion rates, resulting in greater revenue.

Brad: And as we continue to leverage our cost structure, our consistent revenue outperformance shows up as expanded EBITDA margins.

Brad: Those outcomes bolster our continued confidence in our strategy.

Brad: Before I dive further into our results I'll remind you why we believe Zillow is best positioned to succeed in our ever evolving industry.

Brad: As we have said consistently throughout the past year, our perspective is grounded in zillow consumer advocacy principles.

Brad: We believe an easy and free access to all available real estate information and listings.

Brad: Independent representation for buyers and sellers and transparency regarding agent compensation and consumers right to negotiate it.

Brad: We launched Zillow with a promise to turn on the lights in real estate, because we believe everyone benefits from transparency and open free marketplace is good for sellers. Good for buyers good for agents and makes for a robust industry. We have here in the U S.

Brad: And as the industry has undergone its recent very healthy evolution towards more transparency, we are confident that zillow and agents, who work with us will benefit.

Brad: This is clear to us for three reasons.

Brad: First zillow has the most and highest intent movers.

Brad: More than two thirds of U S homebuyers usable today about 80% of our users come to us organically and we have three times more app users than anyone else in the category.

Brad: We have built and maintained a strong brand position by staying focused on what the customer wants and needs.

Brad: Delivering impressive and delightful tech innovations that improve their moving experience.

Brad: This quarter for example, we've launched help with new features like comprehensive climate risk data tools to help agents loan officers and mover streamline their communications and upgrades to our AI powered natural language search.

Brad: The second reason is that we partner with top agents and teams across the country those that offer superior customer service and real value for movers, a deep understanding of the industry and their local market and a proven ability to scale.

Brad: These are the agents who are the most successful at growing their business alongside us and are poised to take customer share.

Brad: Third we expect to benefit as the industry evolves, because we provide exceptional tech solutions to make moving more efficient not just for movers, but for agents brokers loan officers and other real estate professionals as well.

Brad: We believe a rising digital tide lifts all boats.

Brad: <unk> independent software solutions like showing time Dot loop bridge interactive and follow a boss are already used by hundreds of thousands of professionals across the residential real estate industry.

Brad: Our opportunity is to expand the breadth of those offerings and stitch them together.

Brad: During the industry to be more transparent faster and more integrated.

Brad: Considering all the professionals, we are already serving today with our digital workflow tools and foundational technologies. We believe this represents a significant opportunity for zillow to better serve customers and drive transactions within <unk> ecosystem.

Brad: It's solutions like these combined with our many products and services for movers that together make zillow a housing super App, giving buyers sellers agents in the industry, the seamless integrated and tech enabled experience they demand and deserve.

Brad: Now onto our third quarter 2024 results.

Brad: I am excited to share that we reported total revenue of $581 million in Q3 up 17% year over year exceeding our revenue outlook and outperforming the residential real estate industry.

Brad: Q3 residential revenue grew 12% year over year to $405 million.

[inaudible]

Brad: Rentals momentum continued with $123 million in revenue in Q3 up 24% year over year.

These are the agents who are the most successful at growing their business alongside us and are poised to take customer share.

Brad: Multifamily rentals revenue is up 38% year over year, driven by growth in our multifamily property count.

Third, we expect to benefit as the industry evolves because we provide exceptional tech solutions to make moving more efficient, not just for movers, but for agents, brokers, loan officers, and other real estate professionals as well. We believe a rising digital tide lifts all boats.

Brad: We're also making strong progress in mortgages Q3 revenue was 39 million accelerating to 63% year over year growth compared to 42% growth in Q2, with our purchase loan origination volume up 80% year over year.

Brad: We are delivering strong revenue performance, while growing our engaged audience of users for Q3, we reported 233 million average monthly unique users across the <unk> ecosystem of apps and sites according to our internal metrics.

Zillos independent software solutions like showingtime, dot loop, bridge interactive and follow-up boss are already used by hundreds of thousands of professionals across the residential real estate industry.

Brad: And 116 million average monthly unique visitors in Q3 according to Comscore.

Our opportunity is to expand the breath of those offerings and stitch them together, powering the industry to be more transparent, faster and more integrated.

Brad: As Youll recall Comscore is widely viewed among internet brands as a reliable transparent third party source because it aims to capture the number of unique visitors while <unk> been cookies.

Considering all the professionals we are already serving today with our digital workflow, tools and foundational technologies, we believe this represents a significant opportunity for Zillow to better serve customers and drive transactions within Zillow's ecosystem.

Brad: Our success is the result of solid execution on our growth strategy.

Brad: On the for sale side of our business, we're anchored by efforts in integrating our services financing touring seller solutions and enhancing our partner network.

It solutions like these combined with our many products and services for movers that together make Zillow a housing super app, giving buyers, sellers, agents and industry the seamless, integrated and tech-enabled experience they demand and deserve.

Brad: These investments are propelling us towards our goal to increase customer transaction share to 6% by the end of 2025.

Brad: We're also focused on expanding our rentals marketplace, which currently represents more than 20% of our revenue and is growing rapidly.

Now, on to our third quarter of 2024 results. I'm excited to share that we reported total revenue of $581 million in Q3, up 17% year of a year, exceeding our revenue outlook and outperforming the residential real estate industry.

Brad: The seamless transaction experience, we've been building out on Zillow. The housing Super App is most fully experienced by customers and our enhanced markets.

Brad: We've rolled out 43 enhanced markets, thus far surpassing our goal of reaching 40 by the end of this year heading into 2025, we expect to deepen our penetration in the existing markets and expand into more markets.

Q3 residential revenue grew 12% year over year to 405 million. Rensels momentum continued with 123 million in revenue in Q3 up 24% year over year. Multi-family rentals revenue is up 38% year over year driven by growth in our multi-family property count.

Brad: We've been pleased with the progress, we're making across the enhanced markets with this land and expand strategy and we continue to expect enhanced markets to cover 20% of our connections by the end of this year.

We're also making strong progress in mortgages. Q3 revenue was 39 million, accelerating to 63% year over your growth, compared to 42% growth in Q2, with our purchased loan origination volume up 80% year over year.

Brad: As of Q3 more than 80% of enhanced market connections are being managed through follow up boss and industry, leading customer relationship management system, we acquired about a year ago.

Brad: Follow up boss is used by many real estate agents and teams and manages $25 million leads each year.

We are delivering strong revenue performance while growing our engaged audience of users. For Q3, we reported 233 million average monthly unique users across Zillow's ecosystem of apps and sites, according to our internal metrics.

Brad: Our efforts to upgraded integrated are a key part of the housing Super App experience we're building.

Brad: For example in Q3, we introduced new features including piloting in App messaging to allow agents to communicate with buyers on zillow and in App option to connect buyers directly to a loan officer with Zillow home loans, and new and improved client insights, allowing agents to tailor their services to an individual clients needs and interests.

and 116 million average monthly unique visitors in Q3 core into Comscore. As you'll recall, Comscore is widely viewed among internet brands as a reliable, transparent, third-party source because it aims to capture the number of unique visitors while de-duping cookies.

Brad: When the customer agent loan officer, and other services are all connected through a common platform movers have a more seamless experience and real estate professionals can work more efficiently and serve their clients better.

Our success is the result of solid execution on our growth strategy. On the for sale side of our business, we're anchored by efforts in integrating our services, financing, touring, seller solutions, and enhancing our partner network.

Brad: Overall, we're excited that our efforts and enhanced markets are beginning to deliver results in February. We told you. Our first four enhanced markets had seen share gains of more than 50% since the beginning of 2023.

These investments are propelling us toward our goal to increase customer transaction share to 6% by the end of 2025.

We're also focused on expanding our rentals marketplace, which currently represents more than 20% of our revenue and is growing rapidly.

Brad: Then in August we told you it had risen to more than 80%.

Brad: Now it has doubled since the beginning of 2023 and we are seeing similar trends in the enhanced markets we've launched.

The seamless transaction experience we've been building out on Zillow, the Housing Super App, is most fully experienced by customers in our enhanced markets.

Brad: As we land and expand and more enhanced markets and keep working across the business to increase connection and conversion rates, we expect to see share growth relative to the industry total transaction value or T. TV in our residential and mortgages revenue.

We've rolled out 43 enhanced markets thus far, surpassing our goal of reaching 40 by the end of this year. Heading into 2025, we expect to deepen our penetration in the existing markets and expand into more markets.

Brad: As you can see in the chart in our shareholder letter our revenue per <unk> has increased meaningfully over the past two years, a great proof point that our investments are having an impact on our business.

We've been pleased with the progress we're making across the enhanced markets with this land and expand strategy, and we continue to expect enhanced markets to cover 20% of our connections by the end of this year.

Brad: Moving on to financing we are building a substantial direct to consumer purchase mortgage origination business integrated with our agent partner network to offer the many mortgage seekers on zillow financing options at the right point and Theyre moving journey.

As of Q3, more than 80% of enhanced market connections are being managed through Follow-Up Boss, an industry-leading customer relationship management system we acquired about a year ago.

Follow a Boss is used by many real estate agents and teams, and manages 25 million leads each year.

Brad: 40% of all homebuyers start their home shopping journey looking for a mortgage and more than 80% of those buyers don't yet have an agent.

Our efforts to upgrade and integrate it are a key part of the Housing Super App experience we're building.

For example, in Q3, we introduced new features including piloting in-app messaging to allow agents to communicate with buyers on Zillow, an in-app option to connect buyers directly to a loan officer with Zillow Home Loans, and new and improved client insights, allowing agents to tailor their services to an individual client's needs and interests.

Brad: So when a high intent customer comes to Zillow, whether theyre, starting with financing or starting by touring our property and being connected with a great agent we can help.

Brad: Providing a more seamless experience for movers agents and loan officers helps identify high intent customers in our funnel and drives conversion and revenue growth.

Brad: Most notably our efforts are accelerating mortgage growth origination revenue is beginning to scale with purchased loan origination volume up 80% year over year in Q3, and mortgages revenue up 63% year over year to $39 million.

When the customer, agent, loan officer, and other services are all connected through a common platform, movers have a more seamless experience, and real estate professionals can work more efficiently and serve their clients better.

Overall, we're excited that our efforts in enhanced markets are beginning to deliver results. In February, we told you our first four enhanced markets had seen share gains of more than 50% since the beginning of 2023. Then in August, we told you it had risen to more than 80%.

Brad: And enhanced markets, we've been in for more than six months customer adoption rates for Zillow home loans are in the mid teens with newer markets trending similarly at.

Brad: At the same time, we're seeing higher transaction conversion rates for agent partners, working with customers, who choose zillow home loans.

Now, it has doubled since the beginning of 2023 and we are seeing similar trends in the enhanced markets we've launched since.

Brad: As we help agents and loan officers better serve customers together when they are ready to transact.

As we land and expand in more enhanced markets and keep working across the business to increase connection and conversion rates, we expect to see share growth relative to the Industry Total Transaction Value, or TTV, in our residential and mortgages revenue.

Brad: We're also seeing an impact from our efforts to make booking a home tour as seamless as booking a restaurant reservation online.

Brad: As we work to help more zillow visitors transact touring remains a critical focus area for us. Both so we can identify high intent buyers and so we can solve a process that has historically been full of friction busy work and back and forth.

As you can see in the chart in our shareholder letter, our revenue per TTV has increased meaningfully over the past two years, a great proof point that our investments are having an impact on our business.

Brad: In 2021, we acquired showing time the industry leader in home touring technology, which facilitates 5 million showing a month across the country.

Moving on to financing, we are building a substantial direct-to-consumer purchase mortgage origination business integrated with our agent partner network to offer the many mortgage seekers on Zillow financing options at the right point in their moving journey.

Brad: Bringing showing time onto Zillow Tech enabled platform has uniquely positioned us to remove the friction and touring helping high intent buyers tour homes with ease and freeing up agents' time to focus on value added services for movers.

Forty percent of all homebuyers start their home shopping journey looking for a mortgage. And more than 80 percent of those buyers don't yet have an agent.

Brad: Our investments here are delivering improved connection rates and today more than 25% of our connections are coming through the digitized improved real time touring experience, which is contributing to residential revenue outperformance.

So when a high intent customer comes to Zillow, whether they're starting with financing or starting by touring a property and being connected with a great agent, we can help. Providing a more seamless experience for movers, agents, and loan officers helps identify high intent customers in our funnel and drives conversion and revenue growth.

Brad: Meanwhile, our consumer friendly touring agreement is helping agents adopt the new requirements stemming from the National Association of Realtors settlement.

Most notably, our efforts are accelerating mortgage growth. Origination revenue is beginning to scale, with purchase loan origination volume up 80% year-over-year in Q3, and mortgages revenue up 63% year-over-year to $39 million.

Brad: And is connecting them with higher intent buyers, who are more likely to take a tour.

Brad: While agents aren't required to use our Torrey agreement. It is available for more than 90% of our tour connections and is tailored by state.

Brad: Our toilet agreement process is automated digital and easy to use setting a gold standard for the industry. This is an example of how we've adapted alongside the industry in a way that is positively evolving our business.

In enhanced markets we've been in for more than six months, customer adoption rates for Zillow Home Loans are in the mid-teens, with newer markets trending similarly. At the same time, we're seeing higher transaction conversion rates for agent partners working with customers who choose Zillow Home Loans, as we help agents and loan officers better serve customers together when they're ready to transact.

Brad: We're also investing in seller solutions that not only makes selling a home easier, but also create real value for sellers and their agents were.

Brad: We're particularly excited about Zillow showcase, which we made available nationwide beginning this year.

We're also seeing an impact from our efforts to make booking a home tour as seamless as booking a restaurant reservation online.

Brad: As Youll remember Zillow showcase elevates agents brand presence on Zillow and provides a better shopping experience through our homegrown AI powered rich media and Floorplan technologies.

As we work to help more Zillow visitors transact, touring remains a critical focus area for us, both so we can identify high-intent buyers and so we can solve a process that's historically been full of friction, busy work, and back and forth.

Brad: There is truly nothing else like it on the market.

Brad: Showcase listings are driving higher engagement compared to similar non showcase listings on zillow more views more shares and more saves most.

In 2021, we acquired Showing Time, the industry leader in home touring technology, which facilitates 5 million showings a month across the country.

Brad: Most important however is that showcase listings are selling faster and for more money than similar non showcase listings on our site.

Bringing showing time onto Zillow's tech-enabled platform has uniquely positioned us to remove the friction in touring, helping high-intent buyers tour homes with ease and freeing up agents time to focus on value-added services for movers.

Brad: CLO showcase is already on nearly one 5% of new for sale listings nationwide, putting us on our way to achieving our intermediate term goal of 5% to 10% listing coverage on zillow.

Our investments here are delivering improved connection rates, and today, more than 25% of our connections are coming through the digitized, improved, real-time touring experience, which is contributing to residential revenue outperformance.

Brad: As we've said before we believe a rising digital tide lifts all boats, which is why we continue to look for ways to improve and expand our offerings for the benefit of the broader residential real estate industry, whether through buying building or partnering for example last month, we acquired virtual staging AI a company, whose technology helped sell.

Meanwhile, our consumer-friendly touring agreement is helping agents adopt the new requirements stemming from the National Association of Realtors Settlement and is connecting them with higher intent buyers who are more likely to take a tour.

Brad: <unk> agents and photographers create digitally stage listing images in seconds.

Brad: And in October we announced an agreement to share Zillow <unk> home tours and interactive floor plans to realtor dot com, helping agents easily provide our leading immersive virtual content to more home shoppers.

While agents aren't required to use our TORI agreement, it is available for more than 90% of our TORI connections and is tailored by state.

Our touring agreement process is automated, digital, and easy to use, setting a gold standard for the industry. This is an example of how we've adapted alongside the industry in a way that is positively evolving our business.

Brad: Finally, I'll update you on our continued progress in rentals as you know from our Investor presentation six months ago. We've spent the past several years building a highly differentiated two sided marketplace with a comprehensive suite of listings.

We're also investing in seller solutions that not only make selling a home easier, but also create real value for sellers and their agents.

Brad: <unk> multifamily properties with unique long tail properties, which we define as fewer than 25 units, but primarily comprised of single family homes.

We're particularly excited about Zillow Showcase, which we made available nationwide beginning this year.

Brad: As a result, zillow is rapidly becoming the nationwide marketplace renters and landlords have sorely needed.

As you'll remember, Zillow Showcase elevates agents' brand presence on Zillow and provides a better shopping experience through our homegrown, AI-powered, rich media and floor plan technologies.

Brad: And as we've said we're in the best position to fix the fragmented rental experience because our many years of success building great products for our massive audience of movers on the for sale side.

There is truly nothing else like it on the market.

Brad: Renters on Zillow can shop tour apply sign a lease and pay rent securely.

Showcase listings are driving higher engagement compared to similar non-showcase listings on Zillow. More views, more shares, and more saves.

Brad: And property managers can lift book tours screen applicants create leases and sign them electronically and collect rent payments all on one convenient platform zillow.

Most important, however, is that showcase listings are selling faster and for more money than similar non-showcase listings on our site.

Brad: These efforts to create a more seamless and convenient experience on both sides of the rental process are paying off yielding growth in traffic multifamily property count and revenue.

Zillow Showcase is already on nearly 1.5% of new for sale listings nationwide, putting us on our way to achieving our intermediate term goal of 5-10% listing coverage on Zillow.

Brad: Our multifamily advertising campaign, and our ongoing partnership to share rental listings with realtor Dot com are also helping boost our success by contributing to increased customer awareness of Zillow rentals.

As we've said before, we believe a rising digital tide lifts all boats, which is why we continue to look for ways to improve and expand our offerings for the benefit of the broader residential real estate industry.

Brad: In Q3, our total average monthly rentals unique visitors were up 20% according to Comscore.

whether through buying, building, or partnering. For example, last month we acquired Virtual Staging AI, a company whose technology helps sellers, agents, and photographers create digitally staged listing images in seconds.

Brad: We continue to expect multifamily to be the main engine of rentals revenue growth.

Brad: We now have 47000 multifamily properties on Zillow, having added close to 10000 year to date and multifamily revenue was up 38% year over year.

And in October, we announced an agreement to share Zillow 3D home tours and interactive floor plans to Realtor.com, helping agents easily provide our leading immersive virtual content to more home shoppers.

Brad: As it stands today with a combination of both long tail and multifamily properties, we have the most rental listings in the country and consequently, the most users with steady growth under our belts. We believe zillow rentals is well on its way towards the $1 billion plus revenue opportunity, we see in front of us.

Finally, I'll update you on our continued progress in rentals.

As you know from our investor presentation six months ago, we've spent the past several years building a highly differentiated two-sided marketplace with a comprehensive suite of listings.

Brad: Across the entire business I'm proud of the progress, we're making to improve the experience of getting home.

combining multifamily properties with unique long-tail properties which we define as fewer than 25 units but primarily comprises single-family homes.

Brad: We have a much loved and trusted brand with the largest most engaged audience of movers are partner network made up of some of the best and most productive agents and teams in the country, a solid financial foundation and deep Tech expertise that allows us to invest in software solutions to benefit movers in the entire industry.

As a result, Zillow is rapidly becoming the nationwide marketplace renters and landlords have sorely needed. And as we've said, we're in the best position to fix the fragmented rental experience because our many years of success building great products for our massive audience of movers on the for sale side.

Brad: Our business is increasingly diversified and we've continued to outperform the industry, while maintaining strong cost discipline.

Renters on Zillow can shop, tour, apply, sign a lease, and pay rent securely.

Brad: Looking ahead, we're focused on capturing a more meaningful share of the $30 billion accessible Tam in residential real estate, while continuing to deliver on behalf of our customers and shareholders.

And property managers can list, book tours, screen applicants, create leases, and sign them electronically, and collect rent payments, all on one convenient platform, Zillow.

Brad: Thank you as always for being on this journey with us and on that note I'll hand, the mic over to CFO Jeremy Hoffman.

These efforts to create a more seamless and convenient experience on both sides of the rental process are paying off, yielding growth in traffic, multifamily property count, and revenue.

Jeremy Wacksman: Thanks, Jeremy and good afternoon, everyone.

Jeremy Hoffman: As you just heard we delivered excellent results in Q3, and we are well positioned to continue doing so as we execute on our strategy.

Our multi-family advertising campaign and our ongoing partnership to share rental listings with Realtor.com are also helping boost our success by contributing to increased customer awareness of Zillow Rentals.

Brad: Our Q3 2024 results exceeded expectations for revenue and EBITDA with revenue up 17% year over year to $581 million, which was $28 million above the midpoint of our outlook range.

In Q3, our total average monthly rentals unique visitors were up 20% according to Comscore.

Brad: Executing on our strategy drove double digit year over year growth across each of our revenue categories, including residential rentals and mortgages, we outperformed the broader residential real estate industry by approximately 15 100 basis points as the housing market grew 2% this quarter okay.

We continue to expect multifamily to be the main engine of rentals revenue growth.

We now have 47,000 multifamily properties on Zillow, having added close to 10,000 year-to-date, and multifamily revenue is up 38% year-over-year.

As it stands today, with the combination of both long-tail and multifamily properties, we have the most rental listings in the country and consequently the most users. With steady growth under our belts, we believe Zillow Rentals is well on its way toward the billion-dollar-plus revenue opportunity we see in front of us.

Brad: <unk>.

Brad: Additionally, we estimate that the total purchase loan volume for mortgage buyers, which is more aligned with our customer base for Premier agent declined low single digits in Q3 underperforming the overall housing market.

Across the entire business, I'm proud of the progress we're making to improve the experience of getting home.

Brad: On a GAAP basis Q3, net loss was $20 million, representing 3% of our revenue.

We have a much-loved and trusted brand, with the largest, most engaged audience of movers, a partner network made up of some of the best and most productive agents and teams in the country, a solid financial foundation, and deep tech expertise that allows us to invest in software solutions to benefit movers and the entire industry.

Brad: EBITDA was $127 million for the quarter, resulting in a 22% EBITDA margin.

Brad: The combination of our revenue outperformance and effective cost management delivered better than expected EBITDA results in the third quarter.

Our business is increasingly diversified and we've continued to outperform the industry while maintaining strong cost discipline.

Brad: Residential revenue grew 12% year over year to $405 million outperforming our outlook range.

Looking ahead, we're focused on capturing a more meaningful share of the $30 billion accessible TAM in residential real estate, while continuing to deliver on behalf of our customers and shareholders.

Brad: Our premier agent revenue benefited from continued conversion improvements as more buyers and sellers transacted with Zillow agent partners.

Brad: We also had a strong quarter of growth in Zillow showcase, which now represents nearly one 5% of all new for sale listings in the country.

Thank you, as always, for being on this journey with us. And on that note, I'll hand the mic over to CFO Jeremy Hofmann.

Thanks, Jeremy, and good afternoon, everyone. As you just heard, we delivered excellent results in Q3, and we are well-positioned to continue doing so as we execute on our strategy.

Brad: Additionally, our new construction marketplace in our software solutions from showing time, plus and follow up off performed well the.

Brad: The combination of these factors led to better than expected results.

Our Q3 2024 results exceeded expectations for revenue in EBITDA, with revenue up 17% year over year to $581 million, which was $28 million above the midpoint of our outlook range.

Brad: Rental revenue grew 24% year over year in Q3 to $123 million.

Brad: Driven primarily by our multifamily revenue, which grew 38% year over year.

Executing on our strategy drove double-digit year-over-year growth across each of our revenue categories, including residential, rentals, and mortgages.

Brad: We increased the number of multifamily properties on our apps and sites by 34% year over year, reaching an all time high of 47000 multifamily properties as of the end of Q3 up from 44000 properties at the end of Q2.

We outperformed the broader residential real estate industry by approximately 1,500 basis points as the housing market grew 2% this quarter, according to NAR.

Brad: Total listings across our entire rentals marketplace were up 15% year over year to an industry, leading $1 9 million listings in September.

Additionally, we estimate that the total purchase loan volume for mortgage buyers, which is more aligned with our customer base for Premier Agent, declined low single digits in Q3, underperforming the overall housing market.

Brad: With steady growth under our belts, we believe zillow rentals is well on its way towards a $1 billion plus revenue opportunity, we see in front of us.

On a gap basis, Q3 net loss was $20 million, representing 3% of our revenue.

Brad: Mortgages revenue growth accelerated in Q3 up 63% year over year to $39 million with purchase loan origination volume growing 80% year over year to $812 million.

EBITDA was $127 million for the quarter, resulting in a 22% EBITDA margin.

The combination of our revenue outperformance and effective cost management delivered better-than-expected EBITDA results in the third quarter.

Brad: Our mortgage strategy is leading to more buyers choosing financing through zillow home loans.

Residential revenue grew 12% year-over-year to $405 million dollars outperforming our outlook range.

Brad: As expected we are also seeing our purchase loan origination volume growth more closely align with mortgages revenue growth.

Our premier agent revenue benefited from continued conversion improvements as more buyers and sellers transacted with the Zillow agent partners.

Brad: This means our purchase mortgage revenue is now the main growth driver of our overall mortgages revenue category.

Brad: Our disciplined cost management resulted in Q3 EBITDA expenses of $454 million.

We also had a strong quarter of growth in Zillow Showcase, which now represents nearly 1.5% of all new for sale listings in the country.

Brad: Roughly in line with our outlook and allowed our Q3 revenue upside to flow to the bottom line.

Additionally, our new construction marketplace and the software solutions from ShowingTimePlus and FollowUpBoss performed well.

Brad: Additionally, our Q3 share based compensation expense of $108 million was down year over year and we are on track for these full year 2024 expenses to decline from 2023 levels.

The combination of these factors led to better-than-expected results.

Rentals revenue grew 24% year-over-year in Q3 to $123 million, driven primarily by our multifamily revenue, which grew 38% year-over-year.

Brad: As we execute on our growth strategy, we are successfully driving operating leverage.

Brad: Looking ahead as we continue to grow revenue, we expect this leverage to play out in both expanding EBITDA margins and sustainable profitable growth over time.

We increased the number of multifamily properties on our apps and sites by 34% year-over-year, reaching an all-time high of 47,000 multifamily properties as of the end of Q3, up from 44,000 properties at the end of Q2.

Brad: We ended Q3 with $2 2 billion of cash and investments down from $2 6 billion at the end of Q2, primarily due to the maturity and settlement of our 2024 convertible debt in September which included aggregate cash payment of $610 million.

Total listings across our entire rentals marketplace were up 15% year-over-year to an industry-leading 1.9 million listings in September.

Brad: This was partially offset by Q3 net cash provided by operating activities of $171 million.

With steady growth under our belts, we believe Zillow Rentals is well on its way toward the billion-dollar-plus revenue opportunity we see in front of us.

Brad: As of the end of Q3, we had $918 million of outstanding convertible senior notes.

Mortgage's revenue growth accelerated in Q3, up 63% year-over-year to $39 million, with purchase loan origination volume growing 80% year-over-year to $812 million.

Brad: In December of this year, we will settle the $499 million of our outstanding convertible senior notes due in 2026.

Brad: We issued a notice of redemption for these notes on October eight and we plan to repay the principal in cash and issue shares to satisfy any conversion premium.

Our mortgage strategy is leading to more buyers choosing financing through Zillow Home Loans.

As expected, we are also seeing our purchase loan origination volume growth more closely aligned with mortgages revenue growth.

Brad: We have outstanding cap call hedges related to these notes and we expect any dilution from settling the 2026 notes ultimately to be offset by settlement of the cap calls upon unwind or at maturity.

This means our purchase mortgage revenue is now the main growth driver of our overall mortgages revenue category.

Brad: Because the cap calls have additional value as our class C share price appreciates up to approximately $81 per share. We don't expect to settle the cap calls at this time and we will continue to monitor and evaluate the economics of unwinding prior to maturity.

Our disciplined cost management resulted in Q3 EBITDA expenses of $454 million, roughly in line with our outlook, and allowed our Q3 revenue upside to flow to the bottom line.

Additionally, our Q3 share-based compensation expense of $108 million was down year-over-year, and we are on track for these full-year 2024 expenses to decline from 2023 levels.

Brad: After our Q4 debt settlement, we will have only the $419 million of senior convertible notes due in May 2025 outstanding.

Brad: Our current expectation is that we will also settle the principal balance of these notes in cash and any conversion premiums in shares of class C capital stock.

As we execute in our growth strategy, we are successfully driving operating leverage.

Brad: Once these notes are retired we expect to be convertible debt free in Q2 2025.

Looking ahead, as we continue to grow revenue, we expect this leverage to play out in both expanding EBITDA margins and sustainable profitable growth over time.

Brad: As we look in aggregate 2024 had been an important year for our capital allocation strategy.

We ended Q3 with $2.2 billion of cash and investments, down from $2.6 billion at the end of Q2, primarily due to the maturity and settlement of our 2024 convertible debt in September, which included aggregate cash payments of $610 million.

Brad: $1 $2 billion of cash has or will soon be returned to shareholders via the settlement of our convertible senior notes.

Brad: We have also had $301 million of share repurchases at a weighted average price of roughly $42.

This was partially offset by Q3 net cash provided by operating activities of $171 million.

Brad: We are pleased with our execution. This year from the end of 2021 to today, we have repurchased approximately $2 billion of stock at a weighted average price of roughly $45.

As of the end of Q3, we had $918 million of outstanding convertible senior notes.

Brad: Our balance sheet is rock solid and we believe the share repurchases. We've made since the end of 2021 has been a great use of capital as we execute on our growth strategy and drive share price appreciation over time.

In December of this year, we will settle the $499 million of our outstanding convertible senior notes due in 2026.

We issued a Notice of Redemption for these notes on October 8th, and we plan to repay the principal in cash and issue shares to satisfy any conversion premium.

Brad: Turning to our outlook for Q4, we expect total company revenue to be between $525 million and $540 million implying.

We have outstanding CAP call hedges related to these notes, and we expect any dilution from settling the 2026 notes ultimately to be offset by settlement of the CAP calls upon unwind or at maturity.

Brad: Implying a year over year increase of 12% at the midpoint of our outlook rich.

Brad: We expect our residential revenue to be between $364 million and $374 million.

Brad: Our residential revenue outlook for Q4 is driven by the normal seasonality of our premier agent revenue as well as the continued strength of revenue contributions from Zyla showcase showing time, plus new construction and follow ups.

Because the CAP calls have additional value, as our Class C share price appreciates up to approximately $81 per share, we don't expect to settle the CAP calls at this time, and we will continue to monitor and evaluate the economics of unwinding prior to maturity.

Brad: We expect that the housing market will continue to bounce around at current levels, implying modest year over year growth in the fourth quarter.

After our Q4 debt settlement, we will have only the $419 million of senior convertible notes due in May 2025 outstanding.

Brad: While there continues to be pent up desire to move affordability remains a challenge our Q4 outlook takes this into consideration.

Our current expectation is that we will also settle the principal balance of these notes in cash and any conversion premiums and shares of Class C capital stock.

Brad: We expect our rentals revenue to grow in the mid 20% range year over year in Q4, as we benefit from our execution on building our two sided marketplace.

Once these notes are retired, we expect to be convertible debt-free in Q2 2025.

Brad: Our multifamily rentals revenue is expected to grow faster than our overall rentals revenue as we see the benefits of continued property expansion, our national rental brand awareness campaign, and our partnership with realtor Dot com.

As we look in aggregate, 2024 has been an important year for our capital allocation strategy.

$1.2 billion of cash has or will soon be returned to shareholders via the settlement of our convertible senior notes.

Brad: For mortgages, we expect revenue growth to be in the mid 60% range year over year.

We have also had $301 million of share repurchases at a weighted average price of roughly $42.

Brad: For Q4, we expect EBITDA to be between $90 million and $105 million.

Brad: Equating to an 18% margin at the midpoint of our outlook range up approximately 300 basis points year over year.

We are pleased with our execution this year. From the end of 2021 to today, we have repurchased approximately $2 billion of stock at a weighted average price of roughly $45.

Brad: This implies EBITDA expenses will decrease from $454 million in Q3 to an estimated $435 million in Q4.

Our balance sheet is rock solid and we believe the share repurchases we've made since the end of 2021 have been a great use of capital as we execute on our growth strategy and drive share price appreciation over time.

Brad: The majority of the sequential decrease in EBITDA expenses from Q3 to Q4 is expected to be driven by seasonally lower advertising expense.

Turning to our outlook for Q4, we expect total company revenue to be between $525 million and $540 million, implying a year-over-year increase of 12% at the midpoint of our outlook range.

Brad: Additionally, we expect our annual fixed cost run rate will continue to be approximately $1 billion consistent with where we said at the end of 2023.

Brad: We are on track to deliver our original 2020 for full year target of double digit revenue growth with EBITDA margin expansion.

We expect residential revenue to be between $364 million and $374 million.

Our residential revenue outlook for Q4 is driven by the normal seasonality of our premier agent revenue as well as the continued strength of revenue contributions from Zillow Showcase, Showing Time Plus, new construction, and follow-up loss.

Brad: At the midpoint of our Q4 outlook ranges. Our total company revenue in 2024 would be up 14% and our total company EBITDA margin in 2024 would be 22%, which implies approximately 200 basis points of margin expansion versus 2023.

Brad: Before we close I would like to take a moment to highlight the results. We're seeing from the investments we've made over the past few years and our core sales strategy.

While there continues to be pent-up desire to move, affordability remains a challenge. Our Q4 outlook takes this into consideration.

Brad: As Youll recall, we look at revenue per total transaction value or <unk>.

We expect our rentals revenue to grow in the mid-20% range year-over-year in Q4, as we benefit from our execution on building our two-sided marketplace.

Brad: On a trailing 12 month basis as a comprehensive indicator of relative growth against the residential real estate industry.

Our multifamily rentals revenue is expected to grow faster than our overall rentals revenue, as we see the benefits of continued property expansion, our national rentals brand awareness campaign, and our partnership with Realtor.com.

Brad: When we combined residential mortgages revenue categories.

Brad: Which in aggregate represent our for sale revenue or revenue per Ptv in Q3 was up 800 basis points year over year and more than 2000 basis points since the beginning of 2023.

For mortgages, we expect revenue growth to be in the mid-60% range year-over-year.

Brad: This is the culmination of investments we've been making over the past couple of years to improve our customer experiences. So that we can identify high intent movers and connect them with high performing agents.

For Q4, we expect EBITDA to be between $90 million and $105 million, equating to an 18% margin at the midpoint of our outlook range, up approximately 300 basis points year-over-year.

Brad: This has helped us drive more connections and convert more buyers and sellers to transact with us and our partners.

This implies EBITDA expenses will decrease from $454 million in Q3 to an estimated $435 million in Q4.

Brad: We are also beginning to benefit from the early stages of scaling our newer products to more markets, most notably with Zillow home loans, which is grown purchase loan origination volume by over three X from the beginning of 2023 to now.

The majority of the sequential decrease in EBITDA expenses from Q3 to Q4 is expected to be driven by seasonally lower advertising spent.

Additionally, we expect our annual fixed cost run rate will continue to be approximately $1 billion, consistent with where we stood at the end of 2023.

Brad: We expect continued success in 2025, as we expand into more enhanced markets and provide more services within those markets, including offering more of our unique software solutions, such as Zillow showcase to follow us.

We are on track to deliver our original 2024 full-year target of double-digit revenue growth with EBITDA margin expansion.

Brad: On the cost side, we understand it is important for us to demonstrate to our investors that the investments we've been making to increase top line growth will result in expanding markets.

At the midpoint of our Q4 outlook ranges, our total company revenue in 2024 would be up 14%, and our total company EBITDA margin in 2024 would be 22%, which implies approximately 200 basis points of margin expansion versus 2023.

Brad: As we have been saying for some time, we believe we are at the right fixed investment level to achieve our 2025 transaction share target and expect fixed investment costs to grow modestly with inflation.

Brad: Our fixed costs remained just under a $1 billion annualized run rate in Q3, growing only 4% year over year and decreasing as a percentage of revenue by 500 basis points year over year, Despite three acquisitions.

Before we close, I would like to take a moment to highlight the results we're seeing from the investments we've made over the past two years in our for sale strategy.

As you'll recall, we look at revenue per total transaction value, or TTV, on a trailing 12-month basis as a comprehensive indicator of relative growth against the residential real estate industry.

Speaker Change: <unk> follow up off and spruce.

Speaker Change: Looking at variable costs, we have intentionally increased these costs as a percentage of revenue during 2024, as we invest in our rentals and Villa showcase sales teams as well as additional DHL loan officers to support future expected growth.

When we combine our residential and mortgages revenue categories, which in aggregate represent our for-sale revenue, our revenue per TTV in Q3 was up 800 basis points year-over-year and more than 2,000 basis points since the beginning of 2023.

Brad: For marketing and advertising, we have been clear that we make discrete decisions to dial our efforts up or down based on the opportunities we see.

This is the culmination of investments we have been making over the past couple years to improve our customer experiences so that we can identify high-intent movers and connect them with high-performing agents.

Brad: The most obvious opportunity we've had on the marketing front has been for our rentals marketplace and we have invested in a national campaign. This year.

Brad: This investment in Q2, and Q3 has noticeably expanded zillow brand awareness for apartment seekers and we are pleased with the early results.

This has helped us drive more connections and convert more buyers and sellers to transact with us and our partners.

Brad: To close it is clear we are executing on our strategy and we are very excited about the opportunity ahead of us.

We are also beginning to benefit from the early stages of scaling our newer products to more markets, most notably with Zillow Home Loans, which has grown purchase loan origination volume by over 3x from the beginning of 2023 to now.

Brad: We have a beloved brand with the largest most engaged audience of movers.

Brad: Partner network made up of some of the best and most productive agents and teams in the country.

We expect continued success in 2025 as we expand into more enhanced markets and provide more services within those markets, including offering more of our unique software solutions such as Zillow Showcase and Follow-Up Boss.

Brad: Our solid financial foundation, and unmatched expertise to tackle the hard problems necessary to digitize the analog industry.

Brad: As I look forward, we are growing across every part of our business with investments in place to drive future growth. We are disciplined on our cost and we expect to drive sustainable profitable growth on our way to strong GAAP profits over time.

On the cost side, we understand it is important for us to demonstrate to our investors that the investments we've been making to increase top-line growth will result in expanding margins.

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

As we have been saying for some time, we believe we are at the right fixed investment level to achieve our 2025 transaction share target and expect fixed investment costs to grow modestly with inflation.

Speaker Change: Thank you at this time, if you would like to ask a question. Please click on the raise hand button, which can be found on the black bar at the bottom of your screen.

Speaker Change: It is your turn you will receive a message on your screen from the house, allowing you to talk and then your name will be called.

Our fixed costs remain just under a billion dollar annualized run rate in Q3, growing only 4% year over year, and decreasing as a percentage of revenue by 500 basis points year over year, despite three acquisitions, Aereo, Follow Up Boss, and Spruce.

Speaker Change: Please accept our music your audio and ask your question.

Speaker Change: We will wait one moment to allow the key to form.

Speaker Change: Our first question will come from John <unk> from Jefferies. Please go ahead.

Looking at variable costs, we have intentionally increased these costs as a percentage of revenue during 2024 as we invest in our rentals and Zillow Showcase sales teams, as well as additional ZHL loan officers to support future expected growth.

John: Great. Thanks for taking my questions multi parter on real time touring can.

Speaker Change: Can you give us some perspective on how lead conversions, where real time, scoring is comparing to other types of connections and I believe real time touring generally lends itself to agents transitioning to the flex model. So I'm curious if you could detail how agents how many agents are.

For marketing and advertising, we have been clear that we make discreet decisions to dial our efforts up or down based on the opportunities we see.

The most obvious opportunity we've had on the marketing front has been for our rentals marketplace, and we have invested in a national campaign this year.

Speaker Change: Turning to flex in markets you ruled out real time touring and if that transition is providing additional tailwind to revenue given you're now more directly monetizing the commission through a product that has a higher lead conversion. Thanks.

This investment in Q2 and Q3 has noticeably expanded Zillow brand awareness for apartment seekers and we are pleased with the early results.

To close, it is clear we are executing on our strategy and we are very excited about the opportunity ahead of us.

We have a beloved brand with the largest, most engaged audience of movers.

Speaker Change: Hey, Jon this is Jeremy Wacksman.

a partner network made up of some of the best and most productive agents and teams in the country.

Speaker Change: On real time touring we haven't broken out real time touring versus other touring types, but we have for a while talked about how the touring customer in general converts.

a solid financial foundation and unmatched tech expertise to tackle the hard problems necessary to digitize this analog industry.

Speaker Change: Transaction at about three extra rate and the other color I can give is a real time touring is going to be north of 25% of our connections at the end of the year. That's been our goal and we're going to be ahead of that.

As I look forward, we are growing across every part of our business with investments in place to drive future growth. We are disciplined on our costs, and we expect to drive sustainable, profitable growth on our way to strong gap profits over time.

Speaker Change: We did talk a bit in the prepared remarks about seeing conversion improvements and generally touring is obviously a piece of that.

And with that, Operator, we'll open the line for questions.

Speaker Change: Thank you. At this time, if you would like to ask a question, please click on the Raise Hand button, which can be found on the black bar at the bottom of your screen. When it is your turn, you will receive a message on your screen from the host allowing you to talk, and then your name will be called. Please accept, unmute your audio, and ask your question.

Speaker Change: And so thats driving obviously the increased conversion generally as a component.

Speaker Change: In terms of payment model and kind of business model mix realtime touring actually is available across both and again. It just goes back to our strategy of trying to help identify higher intent customers real time touring does it pretty big job of that and then trying to help land them with our best agent partners as a.

We will wait one moment to allow the queue to form.

Speaker Change: Our first question will come from John Colantoni from Jeffreys. Please go ahead.

Speaker Change: Minder.

Speaker Change: We don't work with I mean, we work with lots of agents, but they are represent the top end of the industry. The top 20% of the industry as the majority of our Premier agent base. So we're really pleased as we are able to identify and hand them higher intent customers youre seeing the benefits of that play out in conversion.

John Colantoni: Thanks for taking my questions. I'm a multi-parter on real-time touring. Can you give us some perspective on how lead conversion for real-time touring is comparing to other types of connections?

Speaker Change: Thanks, Jamie.

John Colantoni: And I believe real-time touring generally lends itself to agents transitioning to the Flex model. So I'm curious if you could detail how agents, how many agents are transitioning to Flex.

Speaker Change: Yeah.

Speaker Change: Our next question will come from Brad Erickson with RBC capital markets.

in markets you ruled out, real-time touring, and if that transition is providing additional tailwinds to revenue, given you're now more directly monetizing the commission through a product that has a higher lead conversion. Thanks.

Brad Erickson: Hi, Thanks for taking the question.

Brad Erickson: I guess, it's two <unk>.

Speaker Change: First on the kind of regulatory changes and just curious you guys have obviously rolled out.

Speaker Change: Kind of a light version of the mandated buyers agreements for agents just curious if youre seeing any structural changes to conversion, where particularly those markets, where that's kind of a brand new practice.

John Colantoni: Thank you.

John Colantoni: Hey John, this is Jeremy Waxman.

on real-time touring.

We haven't broken out real-time touring versus other touring types, but we have for a while talked about how the touring customer in general converts.

Brad Erickson: Just curious if that's maybe at all affecting your market share on everything and then second just on the Zillow showcase.

John Colantoni: to transaction at about a 3X the rate.

John Colantoni: and...

Speaker Change: Can you just remind US you gave the overall share of new listings I know in the prepared remarks, and everything but just to remind us.

John Colantoni: The other color I can give is real-time touring.

is going to be north of 25% of our connections.

Speaker Change: Where you've kind of seen your market share of total listings our newest things go in some of the more mature markets like the individual markets. If you could thanks.

at the end of the year. That's been our goal, and we're going to be ahead of that. We did talk a bit in the prepared remarks about seeing conversion improvements generally. Touring is obviously a piece of that.

Speaker Change: Okay.

Speaker Change: Sure. So let me take Zyla showcase first and then maybe we will do in reverse order. So on Zillow showcase yes, we said in the prepared remarks. It is now nearly one 5% share of new listings with.

John Colantoni: conversion generally as a component.

John Colantoni: In terms of payment model and kind of business model mix, real-time touring actually is available across both. And again, it just goes back to our strategy of...

Speaker Change: We just rolled it out nationwide earlier this year and so the growth will have some dispersion in markets, we haven't given out any kind of market mix details.

John Colantoni: trying to help.

John Colantoni: identify higher-intent customers. Real-time touring does a pretty big job of that. And then trying to help land them with our best agent partners. As a reminder, you know,

Speaker Change: I will say across the board.

Brad Erickson: We continue to be really impressed that the product market fit holds as we grow that scale. So that higher engagements that we talked about 80% more page views, 75% more saves 75% more shares those stats.

John Colantoni: We work with lots of agents, but they represent the top end of the industry. The top 20% of the industry is the majority of our premier agent base. So we're really pleased as we're able to identify and hand them higher intent customers. You're seeing the benefits of that play out in conversion.

Brad Erickson: <unk> across markets as we grow availability and we're continuing to see homes sell faster and for more money, so 2% more which is about $9000 on average for home and we continue to see agents, who use it as we talked about in our remarks win more listings. They are winning about 20% of our listings.

Speaker Change: Thanks, Jeremy.

John Colantoni: Our next question will come from Brad Erickson with RBC Capital Markets.

Brad Erickson: And then similar agents, who are not using zyla showcase so we're still really early.

Brad Erickson: Hi, thanks for taking the question. I guess I have two. First, on the kind of regulatory changes, I'm just curious, you guys have obviously rolled out...

Brad Erickson: We just went nationwide earlier this year and we see a long runway ahead of US we talked about a 5% to 10% total active listing goal over time and I think as we get to that level. Brad I think we will have more maturity in markets you talk about the matching nations across price points or geographies, but right now it's still really early.

Brad Erickson: Kind of a light version of the mandated buyers agreements for agents. Just curious if you're seeing any structural changes

Brad Erickson: to conversion where, you know, particularly those markets where that's kind of a brand new practice. I'm just curious if that's maybe...

Brad Erickson: And then on the buyers agreement.

John Colantoni: at all, affecting your market share on everything. And then second, just on the Zillow showcase.

Brad Erickson: We aren't we don't have any concrete data to share other than to say, we look at it as really helpful. Friction for the buyer, it's an education process its getting them through a really necessary education staffing at better prepares them to meet the agent.

Brad Erickson: As we talked about in the prepared remarks, it's available on more than 90% of touring connections nationwide and we've worked really hard to customize it where necessary by state and we see this as a really healthy evolution in processing all the settlement changes to help start to educate the buyers on how this process works to make.

John Colantoni: could.

John Colantoni: and Bradley Berning.

John Colantoni: Sure, so let me take Zillow Showcase first, and then maybe we'll do it in reverse order.

John Colantoni: Zillow showcase. Yeah, we said in the prepared remarks

John Colantoni: It's now nearly 1.5% share of new listings. We just rolled it out nationwide earlier this year, and so the growth, while it has some dispersion in markets, we haven't given out any kind of market mix details.

Brad Erickson: Sure when they meet these great agents, they're even more educated on what to expect both in the initial tour and then and what you expect in the relationship if they choose to move forward.

Speaker Change: Got it that's great. Thanks.

John Colantoni: I will say across the board, we continue to be really impressed that the product market fit holds as we grow that scale. So that higher engagement that we talked about, you know, 80% more page views, 75% more saves, 75% more shares, those stats.

Brad Erickson: Okay.

Speaker Change: Our next question will come from Ron Josey with Citi. Please go ahead.

Ron Josey: Great. Thanks for taking the question Jimmy I wanted to ask a little bit more just about residential.

Ron Josey: Revenue in <unk> was another quarter, where revenue growth outperformed the broader industry and I wanted to understand just the drivers of this outperformance and obviously enhanced mortgage now in 43 markets. Okay. So, let's maybe just talk about any insights on what's driving just a better overall outperformance would be helpful. I think and then another sort of maybe bigger picture question on the overall go to <unk>.

John Colantoni: hold across markets as we grow availability. And we're continuing to see homes sell faster and for more money. So 2% more, which is about $9,000 on average for home. And we continue to see agents who use it, as we talked about in the remarks, win more listings. They're winning about 20% more listings.

John Colantoni: than similar agents who are not using Zillow Showcase.

Brad Erickson: Market strategy I think we saw a new a new head of agent sales has hired back in July I wanted to understand just how premier agent sales might interact with showcase listing sales and just the overall and also the software and services sales team and just understand the go to market strategy overall going forward. Thank you.

John Colantoni: We're still really early, you know, we just went nationwide.

John Colantoni: earlier this year and we see a long runway ahead of us. We talked about a 5 to 10 percent total active listing goal over time and I think as we get to that level, Brad, I think we'll have more maturity in markets to talk about the matching nations across price points or geographies, but right now it's it's still really early. And then on the buyers agreement,

Jeremy Hoffman: Yes, Thanks, Raj Jeremy Hoffman I'll take the first one and then I'll pass it to Jeremy Wacksman for the second one I think on the across the business, we performed quite well in Q3.

John Colantoni: We don't have any concrete data to share other than to say we look at it as really helpful friction for the buyer. It's an education process. It's getting them through a really necessary education step, and it better prepares them to meet the agent. As we talked about in the prepared remarks, it's available on more than 90% of touring connections nationwide, and we've worked really hard to customize it where necessary by state. And we see this as a really healthy evolution in processing all these settlement changes to help start to educate the buyers on how this process works to make sure when they meet these great agents.

Jeremy Hoffman: We grew double digits in residential rentals and mortgages and obviously total growth of 17% year over year, we're quite pleased with within residential the drivers are a few fold. So one.

Jeremy Hoffman: They just benefited from continued conversion improvements, we've been investing pretty heavily and honing our funnel for a while at this point and we're just seeing the benefits of those particularly as we go into more enhanced markets and we get more contributions from real time touring and then beyond that we had another strong quarter of growth from Zyla showcase which is now nearly one five <unk>.

Jeremy Hoffman: <unk> of all new listings in the country and that was all supplemented by the new construction marketplace continues to perform well and the software solutions, we're providing from showing time plus in follow up costs are being well received too. So it really has been across the board and something we're quite pleased with.

John Colantoni: They're even more educated on what to expect, both in the initial tour and then in what to expect in the relationship if they choose to move forward.

Speaker Change: Got it, that's great, thanks.

Speaker Change: And then Jeremy you want to hit.

Speaker Change: Our next question will come from Ron Josie with Citi. Please go ahead.

Jeremy Hoffman: On the new sales leader.

Jeremy: Yes that is the start of maybe more integration and scale for our sales organization to offer just a more seamless and go to market to our agent community.

Jeremy Hoffman: And so you should expect to see us scale some of our products across a larger sales force can start to bring them to market in a more integrated fashion to date, we've been doing that in pockets in places, but our goal over time is to have one one face to the industry at to represent all of our products that will most notably show up in kind of our mark.

Jeremy Hoffman: Based pricing and showcase our offerings, but over time, you can imagine that'll scale beyond that.

Speaker Change: That's great. Thank you guys.

Speaker Change: Our next question will come from Mark Mahaney with Evercore ISI. Please go ahead.

Speaker Change: Thanks, Ron. It's Jeremy Hofmann. I'll take the first one and then I'll pass it to Jeremy Wacksman for the second one. I think across the business, we performed quite well in Q3.

Mark Mahaney: Okay, great. Thanks, when asked two things I wanted to follow up on Brad's question about these NAR settlement changes and you can just talk about what you've seen in the market. So far I guess, where three or four months into this from your perspective is greater friction occurred in the market or has it been largely immaterial. So far and then your comments also on stock.

Speaker Change: We grew double digits in residential rentals and mortgages and obviously total growth of 17% year over year, we're quite pleased with. Within residential, the drivers are a few fold. So one.

Speaker Change: Based compensation being down year over year Whats your goal with stock based compensation kind of going forwards. The next two years I ask that from a perspective of trying to figure out when you get to kind of sustained GAAP.

Speaker Change: PA just benefited from continued conversion improvements. We've been investing pretty heavily in honing our funnel for a while at this point, and we're just seeing the benefits of those, particularly as we go into more enhanced markets and we get more contributions from real-time touring. Then beyond that, we had another strong quarter of growth from Zillow Showcase, which is now nearly 1.5 percent of all new listings in the country. That was all supplemented by the new construction marketplace continues to perform well, and the software solutions we're providing from ShowingTime Plus and FollowUp Boss are being well-received too. So it really has been across the board and something we're quite pleased with.

Speaker Change: Our profitability and stock based compensation will be one key lever for that so just talk about how you plan to manage that going forwards. Thank you.

Speaker Change: Great. Thanks, Mark it's Jeremy helping I'll take both of those so I think I think on the <unk> settlement impact.

Speaker Change: We can't speak to broad commission trends, just because 80% of our Premier agent base is in that top 20% of all producers. So we're really working with top agents versus a broad swath of folks NPA and for our agents across our business. We've seen commission rates stay in a tight band.

Speaker Change: And then Jeremy, you want to hit the...

Jeremy: Yeah, on the new sales leader, yes, that is the start of maybe more integration and scale for our sales organization to offer.

Speaker Change: Obviously Q3 performance was quite wrong being able to grow the total company revenue, 17%, 12% across residential and pretty substantially outperforming the category we were really pleased.

Speaker Change: just a more seamless go-to-market to our agent community. And so you should expect to see us scale some of our products across that larger sales force and start to bring them to market in a more integrated fashion. To date, we've been doing that.

Speaker Change: Beyond that I'd say, we've been pretty consistent here for a while we believe we and our partners are the outsized beneficiaries of any changes in the real estate industry. We have the most customers we work with the best partners and we provide the most technology. So we expect Rps will deliver value and get paid because they provide great service and that we and they are.

Speaker Change: in pockets and places, but our goal over time is to have one face to the industry to represent all of our products that will most notably show up in kind of our market-based pricing and showcase offerings, but over time you can imagine that will scale beyond that.

Speaker Change: Share takers in really any evolution or dispersion of the industry. So that's how we're feeling on that front and then the second question around stock based compensation, we plan to leverage it going forward. So just as a reminder, our fixed cost base is in about the $1 billion range on an annualized basis.

Speaker Change: That's great. Thank you, guys.

Speaker Change: Our next question will come from Mark Mahaney with Evercore ISI. Please go ahead.

Mark Mahaney: Okay, great. Thanks. I'm going to ask two things. I'm going to follow up on Brad's question about these NAR settlement changes. You just talked about what you've seen in the market so far. I guess we're three or four months into this. From your perspective, has greater friction occurred in the market, or has it been…

Speaker Change: 90% of our stock based comp sits with it fits within that bucket. So as we are controlled on the fixed cost front and grow revenue, we will get more and more leverage on the SBC line that will drive to greater GAAP profitability overtime.

Speaker Change: largely immaterial so far. And then your comments also on stock-based compensation, you know, being down year over year. What's your goal with stock-based compensation kind of going forwards, you know, the next two years? I ask that from a perspective of trying to figure out when you get to kind of sustained gap, you know, profitability, and stock-based compensation will be one key lever for that. So just talk about how you plan to manage that going forwards. Thank you.

Speaker Change: Okay. Thank you.

Speaker Change: Our next question will come from Nicholas Jones with JMP Securities. Please go ahead.

Nicholas Jones: Great. Thanks for taking the question.

Speaker Change: Great, thanks Mark. Jeremy Hofmann, I'll take both of those. So I think on the NAR settlement impact

Speaker Change: A follow up.

Speaker Change: The showcase.

Speaker Change:

Speaker Change: As you roll this out like can you kind of speak to the demand youre seeing in market for.

Speaker Change: We can't speak to broad commission trends just because 80% of our primary agent base is in that top 20% of all producers. So we're really working with top agents versus a broad swath of folks in PA and for our agents across our PA business.

Speaker Change: For the product and I guess, what are you learning about how you are pricing it today and potentially where.

Speaker Change: That can go against kind of the intermediate or longer term targets you have for that business. Thank you.

Speaker Change: Yes, no happy to take that so as we said a couple of times.

Speaker Change: We've seen commission rates stay in a tight band. Obviously, Q3 performance was quite strong, being able to grow the total company revenue 17%, 12% across residential, and pretty substantially outperforming the category. We were really pleased.

Speaker Change: It's early.

Speaker Change: We're really pleased that this early we're at nearly one 5% share of new listings.

Speaker Change: And the two things I would say we've learned so far is.

Speaker Change: <unk>.

Speaker Change: Beyond that, I'd say we've been pretty consistent here for a while. We believe we and our partners are the outsized beneficiaries of any changes in the real estate industry.

Speaker Change: Price, which is variable by home price and geography.

Speaker Change: Lands, well with agents and teams the big challenge is helping them work through their workflow and operations to scale listings across them right. So we have folks who have a lifting at a time, where folks who are teams that have hundreds of listings on their team and across our agent force and just working with them to operationalize the change.

Speaker Change: You know, we have the most customers, we work with the best partners, and we provide the most technology. So we expect our PAs will deliver value and get paid because they provide great service.

Speaker Change: It's new media, it's new media capture into new client sales.

Speaker Change: Sales experience with sellers.

Speaker Change: That's what we're working through and doing that with different size types of teams across the country is something we will continue to learn and mature as we go.

Speaker Change: and 90% of our stock-based comp sits within that bucket. So as we are controlled on the fixed cost front and grow revenue, we will get more and more leverage on the SBC line that will drive to greater gap profitability over time.

Speaker Change: We continue to see great results from it I talked about the stats earlier. It continues to remain really engaging with buyers and sellers and we continue to see agents benefited to win more business. That's why we remain confident in that intermediate term goal right, our mid or medium term target is 5% to 10% of total active listings and thats, a $150 million to $300 million annual <unk>.

Speaker Change: Okay, thank you.

Speaker Change: Business for US and of course, we think theres potential beyond that we wanted to give you are kind of a mile marker in the road.

Speaker Change: Our next question will come from Nicholas Jones with JPM Securities. Please go ahead.

Speaker Change: What excites us about villa showcasing the tech powering it is once a buyer and a seller experience that they don't really want to go back to a traditional listing of just photos and text. They kind of have this expectation that that's how a listing should behave they should be able to really immersive. We tour the home that way as a buyer and a seller show to show off their home that way. So we get excited about the ability to drive.

Nicholas Jones: Great, thanks for taking the questions. I guess some follow-ups on Zillow Showcase.

Speaker Change: As you roll this out, can you kind of speak to the demand you're seeing in market for the product? And I guess, what are you learning about how you're pricing it today and potentially where that can go against kind of the intermediate or longer term targets you have for that business? Thank you.

Speaker Change: Adoption of the tech and the product far beyond the goal. We've shared with you that will of course take time to retrain the industry, but you can see the potential of it in the product and as you guys do your channel checks with our agents who have experienced it I think youll see the same.

Speaker Change: Yeah, Nick, happy to take that. So, as we said a couple times, it's early. We're really pleased that it's early. We're at nearly one and a half percent share of new listings. And the two things I would say we've learned so far is, you know,

Speaker Change: Okay.

Speaker Change: Our next question will come from Chris <unk> from UBS. Please go ahead.

Speaker Change: Price, which is variable by home price and geography, lands well with agents and teams. The big challenge is helping them work through their workflow and operations to scale listings across them, right? So we have folks who have a listing at a time. We have folks who are teams that have hundreds of listings on their team and across their agent force. And just working with them to operationalize the change, it's new media, it's new media capture, it's a new client sales experience with sellers. That's what we're working through. And doing that with different size types of teams across the country is something we'll continue to learn and mature as we go. We continue to see great results from it. I talked about the stats earlier. It continues to remain really engaging with buyers and with sellers.

Speaker Change: Great. Thanks for taking the question, maybe just one on the market share doubling within the four oldest enhanced markets I think if I'm looking at the right chart of from an investor deck, a while back that was closer to three 5% in January of 2023.

Speaker Change: So that implies I guess, we're closer to 7% and above that average now can you maybe talk to us a bit about this oldest cohort of enhanced markets and how kind of the puts and takes we should be thinking about as it relates to using that as a case study for some of these newer cohorts of enhanced markets ramping thanks.

Jeremy Hoffman: Yes, I can take that as Jeremy Hoffman.

Speaker Change: What we're referring to in the shareholder letter and then also in Jeremy Wacksman. His prepared remarks is that we've grown in our oldest for enhanced markets. We grew revenue per total transaction value. So it's a combination of residential mortgages grew versus total transaction value in those markets by 50% through the course of 2020.

Speaker Change: continue to see agents benefit it to win more business. That's why we remain confident in that intermediate term goal, right? Our mid or medium term target is five to 10% of total active listings, and that's a 150 to $300 million annual business for us. And of course, we think there's potential beyond that. We want to give you all kind of a mile marker in the road. What excites us about Zillow Showcase and the tech powering it is, once a buyer and a seller experience it, they don't really want to go back to a traditional listing of just photos and text.

Speaker Change: III by 80% in aggregate through the end of June and then doubled by the end of September of this year. So thats really good proof point for why we've continued to roll out these enhanced markets at the pace that we have we went from nine at the end of last year to 43 as of October and what we're seeing from a trend perspective.

Speaker Change: They kind of have this expectation that that's how a listing should behave. They should be able to really immersively tour the home that way as a buyer, and a seller should be able to show off their home that way. So we get excited about the ability to drive adoption of the tech and the product far beyond the goal we've shared with you. That'll, of course, take time to retrain the industry, but you can see the potential of it in the product. And as you guys do your channel checks with our agents who've experienced it, I think you'll see the same.

Speaker Change: The earlier enhanced markets are quite consistent with the older ones, which gives us confidence to keep landing and expanding from here.

Speaker Change: Got it thanks for the clarification, there and maybe just one on the virtual staging AI the.

Speaker Change: The acquisition that you had made in early October apologies, if you've touched on this earlier, but.

Speaker Change: Thank you.

Speaker Change: Our next question will come from Chris Kontarich from UBS. Please go ahead.

Speaker Change: Could you maybe talk to us about how youre thinking about letting this value and integration into solar showcase like how you may let that value accrue to the seller's agents versus potentially offering different tiers of zillow showcase.

Chris Kontarich: Great, thanks for taking the question. Maybe just one on the market share doubling within the four oldest enhanced markets.

Chris Kontarich: I think if I'm looking at the right chart from an investor deck a while back, that was closer to 3.5% in January of 2023. So that implies, I guess, we're closer to 7% and above that average now.

Speaker Change: Yes. This is Jeremy Wacksman I'll take that.

Speaker Change: We continue to look for ways to improve and expand our offerings for sellers and for buyers and I just talked a bunch about zilkha showcase as it exists today virtual staging is a fantastic capability that we're excited to bring to both sellers and agents as well as their photographers right. Because you can digitally stage listing images.

Speaker Change: Can you maybe talk to us a bit about this oldest cohort of enhanced markets and how kind of the puts and takes we should be thinking about as it relates to using that as a case study for some of these newer cohorts of enhanced markets ramping? Thanks.

Speaker Change: In seconds.

Speaker Change: So we're not sharing any changes to go to market other than I think you should expect us to bring that to market on listings.

Speaker Change: Yeah, I can take that as Jeremy Hofmann. What we're referring to in the shareholder letter and then also in Jeremy Wacksman's prepared remarks is that we've grown in our oldest four enhanced markets. We grew revenue per total transaction value, so it's a combination of residential and mortgages, grew versus total transaction value in those markets by 50% through the course of 2023.

Speaker Change: In a broad way.

Speaker Change: Ill comment, we also announced an agreement to share our Zyla III home tours interactive floor plans to realtor dot com this quarter as well again, just back to trying to get the technology out there and well understood by buyers and sellers as they enter the category and experienced content and create this new norm and expectation for for what a digital listing should look like.

Speaker Change: by 80% in aggregate through the end of June and then doubled by the end of September of this year.

Speaker Change: Got it thank you.

Speaker Change: Our next question will come from Michael <unk> with Goldman Sachs. Please go ahead.

Speaker Change: really good proof point for why we've continued to roll out these enhanced markets at the pace that we have. We went from 9 at the end of last year to 43 as of October and what we're seeing from a trend perspective in the earlier enhanced markets are quite consistent with the older ones, which gives us confidence to keep landing and expanding from here.

Michael <unk>: Hey, good afternoon, and thank you for the question I just have two I guess the first one is just on rentals.

Michael <unk>: Really impressive <unk>.

Speaker Change: <unk> traffic growth and it sounds like the marketing campaign that you are leaning into is working well.

Speaker Change: As we head into 2025 do you see opportunities to further expand that marketing campaign or other.

Speaker Change: Got it. Thanks for the clarification there. And maybe just one on the virtual staging AI, the acquisition that you had made in early October. Apologies if you touched on this earlier, but could you maybe talk to us about how you're thinking about letting this value and integration into Zillow Showcase, like how you may let that value accrue to the seller agents versus potentially offering different tiers of Zillow Showcase?

Speaker Change: Advertising levers that you can pull that you see as potential high returns I'm just thinking about the opex outlook for next year. Thanks.

Speaker Change: Yeah.

Speaker Change: Why don't I why don't I start on rentals, and then maybe Jeremy you can talk about maybe how to think about future.

Speaker Change: Yeah, we're as Jeremy Hoffman said, we're really pleased with the results of our demand efforts here that is both our multifamily advertising campaign and our partnership with realtor Dot com.

Speaker Change: Yeah, this is Jeremy Wacksman. I'll take that.

Speaker Change: We continue to look for ways to improve and expand our offerings, you know, for sellers and for buyers. And I just talked a bunch about Zillow Showcase as it exists today. Virtual staging is a fantastic capability that we're excited to bring to both sellers and agents, as well as their photographers, right, because you can digitally stage listing images in seconds. So we're not sharing any changes to go to market, other than I think you should expect us to bring that to market on listings in a broad way. You know, I'll comment, we also announced

Speaker Change: It's really helping develop and mature our strategy right, which is the sustainable supply of unique listings to drive the largest audience right in that that audience like you mentioned large.

Speaker Change: The largest audience of renters in the country up 20% year over year, and well ahead of the competition and that in turn has a strategy, bringing high quality renter of solving their major problem, which is finding as much inventory as possible, it's what's leading advertisers who want to get in front of that audience and that's what's driving.

Speaker Change: an agreement to share our Zillow 3D Home Tours and interactive floor plans to realtor.com this quarter as well. Again, just back to trying to get the technology out there and well understood by buyers and sellers as they enter the category and experience content and create this new norm and expectation for what a digital listing should look like.

Speaker Change: Not just the revenue growth in rentals, but the multifamily revenue growth up 38% year over year. So we expect.

Speaker Change: That growth to continue.

Speaker Change: We saw strong growth in Q3, we expect to in Q4 and Jeremy don't know if you want to talk at all about how to think about 2025, yes.

Jeremy: Yeah, Mike All I would say there is.

Speaker Change: Got it. Thank you.

Jeremy: We're pretty excited about the opportunity in rentals, not just towards the $1 billion plus <unk>.

Speaker Change: Our next question will come from Michael Ng with Goldman Sachs. Please go ahead.

Speaker Change: <unk>, we gave you all which we think will really be on the back of multifamily growth, but beyond that as well. We just think the strategy that we are going after really aggregating both single family homes and multifamily properties and one experience is quite unique and quite differentiated. So the long term opportunity is one we think is well beyond the 1 billion.

Michael Ng: Hey, good afternoon. Thanks for the question. I just have two. I guess the first one is just on rentals, you know, really impressive

Michael Ng: Rentals traffic growth, and it sounds like the marketing campaign that you're leaning into is working well.

Michael Ng: As we head into 2025, do you see opportunities to further expand that marketing campaign or other advertising levers that you could pull that you see as potential high returns? I'm just thinking about the OPEX outlook for next year. Thanks.

Speaker Change: Revenue.

Speaker Change: Mile marker, we put out there and I think marketing will be a mix, but will be part of that mix I think we've always been.

Speaker Change: The types of folks that start with product and then add marketing to accelerate growth and I would assume the.

Bradley Berning: and Bradley Berning.

Speaker Change: Why don't I, why don't I start on rentals and then maybe Jeremy, you can talk about maybe how to think about future.

Speaker Change: The same type of strategy going forward.

Speaker Change: Great. Thank you that's all very helpful color and my second question I was wondering if you could speak to any risks to changes in.

Speaker Change: Yeah, we're, as Jeremy Hofmann said, we're really pleased with the results of our demand efforts here. That is both our multifamily advertising campaign and our partnership with Realtor.com. It's really helping.

Speaker Change: Clear cooperation.

Speaker Change: You made some comments in your prepared remarks, but would.

Speaker Change: develop and mature our strategy, right, which is the sustainable supply of unique listings to drive the largest audience.

Speaker Change: Would just love your view on where we stand today and how you are thinking about any potential changes.

Speaker Change: In the future. Thank you.

Michael Ng: And that audience, like you mentioned, largest audience of renters in the country, up 20% year-over-year and well ahead of the competition. And that in turn, as a strategy...

Speaker Change: Happy to yeah, I outlined in our prepared remarks, I mean, our advocacy principles have been consistent for some time they start with access and Zillow was founded to help turn on the lights and provide free.

Michael Ng: bringing high quality renters solving their major problem, which is finding as much inventory as possible, it's what's leading advertisers to want to get in front of that audience. And that's what's driving not just the revenue growth in rentals, but the multifamily revenue growth of 38% year over year. So we expect

Speaker Change: Free access to buyers sellers and their real estate industry and.

Speaker Change: Changes to rules and cooperation that would pull listings off MLS is so that zillow and others couldn't share as many of them. That's just not good for buyers or sellers. It's also not good for agents.

Michael Ng: that growth to continue, you know, we saw strong growth in Q3, we expect to in Q4, and Jeremy, I don't know if you want to talk at all about how to think about 2025.

Speaker Change: Listings and private networks mean buyers' agents can't show all the available inventory. So it's not as much of a business issue for US right now, especially as the largest audience in the largest brand we will always find ways to get.

Speaker Change: Share our share of inventory to create that experience for buyers sellers and connect them with great agents, it's more about the consumer good for the industry. The U S. Real estate market is the most transparent market in the world because of policies like this and we'd love to see those policy strengthened so we can build great businesses and consumer experiences on top of them.

Speaker Change: First as weekend, so that some can benefit from trying to pull what is a pretty small share of listings behind development rope for their own benefit.

Speaker Change: Great. Thank you Jeremy.

Speaker Change: Our next question comes from John Campbell with Stephens. Your line is open for <unk>.

Michael Ng: the same type of strategy going forward.

John Campbell: Thanks, guys and congrats on a great quarter.

Speaker Change: Just wanted to stick on the <unk> revenue guidance you guys have obviously provided some direction for.

Speaker Change: Pretty pretty sharp growth continuation of growth out of rentals in mortgage so just isolating residential.

Speaker Change: to changes and clear cooperation. I think you made some comments in your prepared remarks, but we just love your view on where we stand today and how you're thinking about any potential changes in the future. Thank you.

Speaker Change: It seems like you have a fairly large subscription mix there. So I'm thinking the swing factor is probably going to be flex, but.

Speaker Change: Just what you guys have given and just kind of taking the back of a napkin here I'm thinking I'm have to assume that premier agent revenue is going to be down year over year. I know you guys don't report them out anymore, but maybe just directionally. If you could if you could help us as does the guide imply up for marriage of decline year over year.

Speaker Change: happy to yeah I outlined in our prepared remarks I mean our advocacy principles have been consistent for some time they start with access

Speaker Change: Zillow was founded to help turn on the lights and provide free access to buyer-sellers and the real estate industry and changes to rules and cooperation that would pull listings off MLSs.

Speaker Change: Yes, Thanks, John It's Jeremy Hoffman, I would think of it as seasonality in the business from Q3 to Q4 and one over over focus on that I think overarching Lee we're pleased with our Q4 guide.

Speaker Change: 12% growth at the midpoint for the company and our continued challenged housing market. We think is quite solid.

Speaker Change: so that Zillow and others couldn't share as many of them. That's just not good for buyers or sellers. It's also not good for agents.

Speaker Change: Putting listings in private networks means buyer's agents can't show all the available inventory. So it's not as much of a business issue for us right now, especially as the largest audience and the largest brand, we will always find ways to get a share, our share of inventory to create that experience for buyer sellers and connect them with great agents.

Speaker Change: And the macro has been and we expect to continue to remain.

Speaker Change: Choppy just because of affordability remains a challenge and in the meantime, we're consistently outperforming the industry just given how many product and partner improvements, we're making and then stepping kind of further back we're on track to deliver double digit growth in margin expansion in both Q4 and full year 'twenty four so assuming the midpoint of the rate.

Speaker Change: It's more about the consumer good for the industry. You know, the U.S. real estate market is the most transparent market in the world because of policies like this. And we'd love to see those policies strengthened so we can build great businesses and consumer experiences on top of them versus weakened so that some can benefit from trying to pull what is a pretty small share of listings behind a velvet rope for their own benefit.

Speaker Change: <unk> will grow revenue, 14% year over year in 2024 for the company and 22% EBITDA margins, which implies 200 basis points of margin expansion. So overarching Lee feeling quite good and then as you think about what we're doing on the residential side, which obviously premier agent.

Speaker Change: Great. Thank you, Jeremy.

Speaker Change: Huge piece of that we're really gaining our share versus total transaction value. We were up 800 basis points year over year in Q3, and we had 2000 basis points of share gains since the beginning of 'twenty three we expect.

Speaker Change: Our next question comes from John Campbell with Stevens. Your line is open, feel free to unmute.

Speaker Change: Continued growth just on the back of the enhanced market Rollouts that we're having and the success, we're having there along with things like lifting showcase rentals follow up off and Shanghai, plus so I think overarching Leigh I think we're well set up.

John Campbell: pretty sharp continuation of growth out of rentals and mortgages, so just isolating residential.

John Campbell: It seems like you have a fairly large subscription mix there, so I'm thinking the swing factor is probably going to be flex, but...

John Campbell: from just what you guys have given.

John Campbell: Just kind of taking the back of a napkin here. I'm thinking I'm going to have to assume that premier agent revenue is going to be down year over year. I know you guys don't report on that anymore, but maybe just directionally, if you could, if you could help us, does the guide imply a premier agent decline year over year?

Speaker Change: Not just in Q4, but beyond that Okay makes sense and then a quick follow up just on follow up off.

Speaker Change: It seems like the adoption uptake has been pretty pretty sharp of late I don't know how much of that is due to the enhanced market expansion. So maybe if you could touch on that and then I saw that you raised the contingent consideration for a follow up also it seems like youre doing really well there. So maybe if you can talk about how you've been able to change to what extent you've been able to change the follow up.

John Campbell: Yeah, thanks, John. It's Jeremy Hofmann. I would think of it as seasonality in the business from Q3 to Q4 and wouldn't over-focus on that. I think, overarchingly, we're pleased with our Q4 guide. 12% growth at the midpoint for the company in a continued challenged housing market, we think, is quite solid. And the macro has been, and we expect to...

Speaker Change: <unk> growth trajectory.

Speaker Change: Maybe I'll I'll hit adoption.

Speaker Change: When you can hit the second piece the.

Speaker Change: John we are seeing really great success with follow up Boston as you remember, it's really a two part strategy. One is just continuing to help the follow up Boston grow their efforts to attract more agent teams.

John Campbell: continue to remain choppy.

John Campbell: just because affordability remains a challenge. And in the meantime, we're consistently outperforming the industry just given how many product and partner improvements we're making. And then stepping kind of further back, we're on track to deliver double-digit growth and margin expansion in both Q4 and full year 24. So assuming the midpoint of the range, we'll grow revenue 14% year over year in 2024 for the company and 22% EBITDA margins, which implies 200 basis points of margin expansion. So overarchingly feeling quite good. And then as you think about what we're doing on the residential side, which obviously Premier Agent is a huge piece of that, we're really gaining our share versus total transaction value. We were up 800 basis points.

Speaker Change: The power of <unk> behind them and helping them.

Speaker Change: Growing onboard more partners broadly that's a big part of the strategy and then the other part of our strategy is to help get our enhanced market partners using follow a boss as we start to build really good integrations between so our customers and as our enhanced market partners and.

Speaker Change: We shared 80% of connections and enhanced markets now are flowing through follow boss.

Speaker Change: So that you are just seeing the adoption of our baas by the lion's share of those partners right alongside just healthy organic follow up boss growth. So.

Speaker Change: It's just now coming up on a year since acquisition and we're just so pleased both with how the team is executing on that dual charter mandate and how the integration has gone and we continue to hear just great feedback from our agent partners on how fall boss is helping them power their business.

Speaker Change: the enhanced market rollouts we're having and the success we're having there, along with things like Listing Showcase, Rentals, Follow-Up Boss, and Showing Time Plus. So, I think, overarchingly, I think we're well set up, not just in Q4, but beyond that.

Speaker Change: Yeah, and then John on your second question around the contingent consideration there is no change to expected payout. We just have a change in fair value based on the time value of money and getting closer to those payout date, so I wouldn't over.

Speaker Change: Okay, makes sense. And then a quick follow-up.

Speaker Change: Overlook at that I think what Jeremy just highlighted is what we're most excited about.

Speaker Change: on follow-up loss. It seems like the adoption uptick has been pretty sharp of late. I don't know how much of that is due to the enhanced market expansion, so maybe if you could touch on that. And then I saw that you raised the contingent consideration for follow-up loss, so it seems like you're doing really well there, so maybe if you can talk about how you've been able to change, you know, to what extent you've been able to change the follow-up loss growth trajectory.

Speaker Change: And we think it's a really great great piece of software that our agents are really enjoying it.

Speaker Change: Great. Thanks, guys.

Speaker Change: Our next question will come from Brian the Kevin <unk> from Zelman <unk> associates.

Brian Kevin: Hey, Thanks, guys. Congrats on the results just just one from me related to how youre thinking about expense growth.

Speaker Change: maybe I'll hit adoption and Hoffman you can hit his second piece the

Brian Kevin: Forward so.

Speaker Change: Jeremy you talked about the variable cost side and the investments outpacing revenue growth and 24, obviously still resulting in margin expansion with low fixed cost growth.

Speaker Change: Yeah, John, we are seeing really great success with Follow-Up Boss. And as you remember, it's really a two-part strategy. One is just continuing to help the Follow-Up Boss team grow their efforts to attract more agent teams, having the power of Zillow behind them and helping them grow and onboard more partners broadly. That's a big part of the strategy. And then the other part of the strategy is to help get our enhanced market partners using Follow-Up Boss as we start to build really good integrations between Zillow customers and them as our enhanced market partners. And we shared 80% of connections in our enhanced markets now are flowing through Follow-Up Boss.

Speaker Change: No. It's early to give any 2025 guidance in terms of revenue or margin.

Speaker Change: If we do assume mortgage rates stay high and we're in this kind of stuck.

Speaker Change: Slow housing market.

Speaker Change: Should we generally expect that trend to continue in terms of variable costs relative to revenue cost growth.

Speaker Change: Or are you, reaching a point, where some of those initiatives have scaled to the point, where maybe that will no longer be the case.

Speaker Change: Yeah, Ryan this is Jeremy helping I'll take it.

Speaker Change: So that you're just seeing the adoption of Follow Boss by the lion's share of those partners, right alongside just healthy, organic Follow Boss.

Speaker Change: You said it right no guidance on 2025, we're quite pleased with execution. This year I think 2025, you should assume more of the same strategy and go to market right. We're going to continue to land in new enhanced markets expand into existing ones and that'll drive residential revenue drive mortgages revenue alongside showcase.

Speaker Change: growth, so it's

Speaker Change: just now coming up on a year since acquisition. And we're just so pleased, both with how the team is executing on that dual charter mandate and how the integration's gone. And, you know, we continue to hear just great feedback from our agent partners on how Fall Boss is helping them power their business.

Speaker Change: <unk>, new construction, and then we keep executing and rentals as well.

Speaker Change: At the same time, we're going to continue to be disciplined on the cost side. We have been I think fairly consistent here that macro has been choppy. We expect it continues to be choppy and will play in the cost structure accordingly.

Speaker Change: Yeah, and then John, on your second question around the contingent consideration, there's no change to expected payout. We just have a change in fair value based on the time value of money and getting closer to those payout dates. So I wouldn't overlook at that. I think what Jeremy just highlighted is what we're most excited about. And we think it's a really great piece of software that our agents are really enjoying.

Speaker Change: You Shouldnt expect much different in terms of how we think about our cost structure, and obviously, we'll dial up and down opportunities on their variable and marketing side, depending on what we see fit but that fixed cost level that we've been at we feel comfortable with to go hit our 2025 share targets.

John Colantoni: Great. Thanks, guys.

Speaker Change: Our next question will come from Brian McEvaney from Zellman & Associates.

Speaker Change: Sounds good thanks very much.

Brian McEvaney: Hey, thanks guys. Congrats on the results. Just one for me related to how you're thinking about extents growth.

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

Brian McEvaney: going forward. So, you know, Jeremy, you've talked about the variable cost side and the investments outpacing revenue growth in 2024, obviously still resulting in margin expansion with with low fixed cost growth. I know it's early to to give any, you know, 2025 guidance in terms of revenue or margin, but

Speaker Change: Okay.

Jeremy Wacksman: I just wanted to close by saying. Thank you all we really appreciate your time this quarter. Thanks for all the questions and we'll see you all next quarter.

John Colantoni: If we do assume mortgage rates stay high and we're in this kind of stuck

John Colantoni: you know, slow housing market, you know, should we generally expect that trend to continue in terms of variable costs relative to revenue cost growth, or are you reaching a point where some of those initiatives have scaled to the point where maybe that will no longer be the case?

John Colantoni: Thank you. Yeah. Ryan, it's Jeremy Hofmann. I'll take it. You know, you said it right. No guidance on 2025. We're quite pleased with execution this year. I think 2025, you should assume more of the same strategy and go to market, right? We're going to continue to land in new enhanced markets, expand into existing ones, and that'll drive residential revenue, drive mortgages revenue, alongside showcase.

John Colantoni: new construction, and then we keep executing in rentals as well.

John Colantoni: At the same time, we're going to continue to be disciplined on the cost side. We have been, I think, fairly consistent here that macro has been choppy. We expect it continues to be choppy, and we'll plan the cost structure accordingly. So you shouldn't expect much different in terms of how we think about our cost structure. And obviously, we'll dial up and down opportunities on the variable and marketing side, depending on what we see fit. But that fixed cost level that we've been at, we feel comfortable with to go hit our 2025 share targets.

Speaker Change: Sounds good. Thanks very much.

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

Jeremy Wacksman: I just want to close by saying thank you all. We really appreciate your time this quarter. Thanks for all the questions, and we'll see you all next quarter.